∙ U.S. Consumer Spending Falls for Sixth Straight Month [Bloomberg]
∙ Macy’s to lay off 1,400 at S.F. headquarters [Business Times]
∙ SocketSite’s Residential Real Estate Outlook For 2009 [SocketSite]
San Francisco real estate tips, trends and the local scoop: "Plug In" to SocketSite™
∙ U.S. Consumer Spending Falls for Sixth Straight Month [Bloomberg]
∙ Macy’s to lay off 1,400 at S.F. headquarters [Business Times]
∙ SocketSite’s Residential Real Estate Outlook For 2009 [SocketSite]
The Macy’s news is a pretty big deal.
My wife ran a division at Federated (which owns Macy’s) 10 years ago and is very plugged in to the SF retail scene. She says that the vast majority of these HQ jobs are in the $150-300K range and that very few will be offered jobs in NYC. The Macy’s West division absorbed the former Seattle operations when they shut down after the 2000-02 recession, and now the whole thing has been absorbed back east. She says that there is almost nothing comparable for these people in SF and very few will be able to find comparable employment (only Gap and Williams Sonoma, and both are struggling badly).
LMRiM – I’m disapointed in you – Federated doesn’t own Macy’s. Federated is the former name of the company now called Macy’s. The Federated name was dropped several years ago.
I’m sorry Brutus. Actually, Federated went through bankruptcy in the early 90s (result of the Campeau disaster), and so did Macy’s (R.H. Macy & Co, I think). After they both emerged from bankruptcy Federated merged with Macy’s in the mid-90s. The old timers still look at it as Federated owning Macy’s (because in fact many of the Federated people supplanted the macy’s people, and the old RH Macy stock went poof). In fact, when my wife cashed out her substantial options in 1999 on her retirement (that timing was a lucky break for us!), they were Federated shares 🙂 Recently, Federated changed its name to Macy’s, reflecting the branding of its most prominent division.
Thanks for keeping me honest. We haven’t thought about jobs and business in a decade or so, and we get sloppy and use all the old names and relationships 🙂
I’ll take any chance I can to catch you on something that I can correct 😉
Just kidding, of course…
No problem, I welcome the criticism – keeps me on my toes 🙂
Macy’s was just a division of Federated from the mid-90s through to today, but Federated changed its name. Regardless, closing the HQ in SF is something that the NYC people have been pushing for for years. The “long knives” have been out for the SF HQ for a while, and they finally “got” them. Too expensive, no productivity, and impossible to find good people (in retail) were the complaints about SF from the merchants in NYC HQ.
A sad/scary anecdote:
My husband went to Specialties downtown for a late lunch yesterday, and noticed there was a long line out the door. At first he thought everyone was in line to buy a sandwich. Turned out they were in line for a job application!
Oh, I know about it being a former division – a friend of mine worked for Marshall Fields corporate for five years or so and then stayed on with Federated for a few months after that takeover. She left for a much better consulting job with C&A in Brazil – gives me a good excuse to head down to Brazil every now and then, so I can’t complain. She makes roughly the same amount, but spends pennies to live down there for now (and her contract pays her in dollars, so she doesn’t have to fret about being paid in reais – though maybe she should have been asked to be paid in yen;)).
“My wife ran a division at Federated (which owns Macy’s) 10 years ago and is very plugged in to the SF retail scene. She says that the vast majority of these HQ jobs are in the $150-300K range and that very few will be offered jobs in NYC. The Macy’s West division absorbed the former Seattle operations when they shut down after the 2000-02 recession, and now the whole thing has been absorbed back east. She says that there is almost nothing comparable for these people in SF and very few will be able to find comparable employment (only Gap and Williams Sonoma, and both are struggling badly).”
Pretty good knowledge for a couple who “haven’t thought about jobs and business in a decade or so”!
What can I say – we have some friends who cry on our shoulders. Mostly about the value of their houses now :), and many of them work in retail (Gap) and one of our best friends left Macy’s West in 2005 or so to go back to NYC (selling her Pac Heights condo she bought in mid-90s for a very nice profit).
We (or I should say my wife) still knows what’s happening in the SF retail world I guess. And it’s pretty grim.
Federated/Macy’s went on a huge buying spree over the last few years, buying up tons of competition in order to shut their competition down.
downsizing was always in the plan. The downtubn may have worsened/accelerated this, but they were going to lay off anyway IMO. It is logical to downsize as much from SF as possible, due to SF’s sky high costs. Why pay high cost when you can insource cheaper? NYC is more expensive clearly than SF, however NYC is more important/central from a retail standpoint than is SF.
there are other organizations that I’m sure are looking to do similar moves. move out of high COL areas to lower COL areas. as long as the talent can be found in the lower COL area of course.
I’ve said this before, but I have a friend who is a pseudo-activist investor in Wells Fargo who is trying to get them to move more operations to Minneapolis, since it’s a cheaper COL and has equally bright talent. (similar to what BofA did when Nations Bank bought BofA and moved operations to Charlotte).
High COL is not a good thing for many many reasons, even though it’s glamorous to talk about 1,000/sq ft domiciles.
it’s insane to start up a non-tech business in the Bay Area. costs are just too high from every standpoint. taxes, wages, insurance, real estate costs, etc.
that said: I wish the people well who will lose their jobs. almost all of us will be affected in some way by this downturn. Luckily, there’s more important things than money. let’s hope we remember that.
Add to this the loss at EA, and announcement of 1,100 job cuts (not all in the Bay Area, though). Obviously not enough people went to Macy’s to buy the new Madden this holiday season!
http://www.marketwatch.com/news/story/electronic-arts-lay-off-1100/story.aspx?guid=%7BCA39321C%2DB1BC%2D408E%2DB7B5%2D4462B1D53AE9%7D&siteid=yhoof
waiting2nest – Frightening, seriously? He asked, or is this assumption?
@GWTF: he asked.
She says that the vast majority of these HQ jobs are in the $150-300K range
You’re claiming that they have 1,400 people making $150K to 300K?
Yeah, it does sound a bit high for “vast majority”. I’ll ask her tomorrow. That being said, almost anyone with some experience in the merchandising, creative and (certainly) exec side of things is making past $150K (they were making more than that 10 years ago when she had 4 direct reports and 27 indirects – but that was NYC). Most of the real “back office” staff is in Cincinnati. Our friend at Macy’s West was a $250K salary VP/DMM, and that was late 90s.
Coming from a background in financial services, where secretaries were making $100K+ (all in) 10 years ago, I have to say my critical thought patterns regarding salary structure have atrophied 🙂
“What can I say – we have some friends who cry on our shoulders.”
Are they comforted when you tell them that what is happening is good and that they should be happy about rationality returning to home prices and the economy as the credit bubble bursts?
Some can see the good in it. In any event, I warned a few back in 05 and 06, so there’s really no excuse. Now I point them to the mises.org website 🙂
But, to tell you the truth Rillion, I am always surprised at how troubled people are by their property values falling. I can understand specuvestors’ concerns, but most of the people we know who are unhappy (not everyone we know is unhappy of course about property values, and that’s true even for some owners) bought their places to live in and at least appeared to be in it “for the long term”.
I suspect that it is dawning on people just how much risk they took on, and how much they paid to take that risk. It’s suboptimal from a purely financial point of view, but they’ll be fine if they can hold on 10-15 years. If they have to sell before then, well I bet it will be a big shock.
“more than that 10 years ago when she had 4 direct reports and 27 indirects”
wow you really do have an incredible memory for numbers LmRIm.
the exact number of indirect reports (27!) your wife had in another city over than 10 years ago.
Good work!
fluj, if you ever get to the point where you have a direct or indirect report, I suspect you’ll remember the number. Any good business person knows how many people work for him or her.
But do they know how many work for there spouse?
Direct/Indirect reports are the kind of info you put into a resume.
That along with the budget under management and other aspects about your achievements that can be quantified.
…if you were working and sending out resumes
Here we go, again. I post some info to try to get the discussion started, and 4 or 5 posts questioning my veracity.
If the job is the last position one’s spouse held, I don’t think it would be stretching the imagination to think that a husband just *might* have helped keep her resume current back then? Although it might be hard to grasp for contractors and realtors, keeping specific numbers like that in one’s head might not be too difficult. Of course, realtors and contractors spend all their time thinking about the great questions of humanity, what with their deep insights and vast intellectual reserves, so perhaps they don’t have the time to spare….
After asking her again, she revised her statement, btw. She said that the average salary was probably around $30K for those HQ jobs. But even these low salaries were too much in view of their value to the franchise, in the view of their NYC masters. She thought there might be 10 or so talented execs in SF retail (certainly no more), and that these people would be offered positions in NYC, a city that still matters for this large part of the US economy.
Thanks 152 DOM. I just saw that.
Lol, sparky. Execs generally keep their resumes current, especially in NYC. There are a number of cities with limited talent, and headhunters are often recruiting. That’s one of the reasons why so many NYC retail (and financial services) execs used to get recruited to SF to help out the natives.
(I’m not saying anything about tech talent. That’s not an area I know, and I bet the talent here in tech is top notch – homegrown and recruited.)
Contractors and Realtors are not known for their math skills. Actually, they have special scales such as “200 man hours with 3 workers = next week” or “800K 20%down 30Y/mortgage + 500HOA < 2500 rent”.
Just kidding. Keep up the good work.
So I post what was obviously a joke, and DOM and LMRiM make actually digs about my math skills, what I can “keep in my head” and my “vast intellectual pursuits”. While at the same time LMRiM totally and completely changes the numbers he quoted. That’s cool thanks.
And as I’ve said before, I am a contractor by choice because I like it. I will put my education, math skills, my intellectual interests, and my humanitarian efforts up against you guys any day of the week.
Did you just change your average salary for these people from between $150k-300k to $30k?? Wow.
Is that really being “very plugged in to the SF retail scene?
From flujanon:
“if you ever get to the point where you have a direct or indirect report, I suspect you’ll remember the number. Any good business person knows how many people work for him or her.”
True, but not the salaries they make, it seems.
I’m kind of astonished, actually.
As they say, a brain is a terrible thing to waste. Seeing educated and highly capable people (yes, I am talking about fluj + sparky) going into non-intellectual work always saddens me. What if the smart guys making a killing in RE/contracting had gone into medicine or renewable energy and actually changed the world, instead of building/selling houses for a buck? Not that I am doing much better, btw, but I am using my training as much as I can.
I angel invest in green energy, medical devices, and technology among other things. That’s what I do with my money. Plenty of friend of mine work in these fields are driven and enjoy it, I wouldn’t enjoy it so I wouldn’t change the world.
LMRiM is a smart fellow who sits at home and daytrades, but that doesn’t sadden you.
[Editor’s Note: Tits for tats and now back to the topic (rather than people) at hand…]
LOL. You guys actually think I was serious about a $30k average salary for HQ in San Francisco?? ROFLMAO. Everything NYCers say about SFers is true 🙂 (And if you’ll notice, I was never one of the ones to really get into discussions of Chicago vs SF or NYC vs SF, etc. But come on, $30K? lol)
Seriously, I did ask her again. She said that she thought 400 or so of those 1400 jobs were 200K+ jobs, some substantially in excess of that number. Almost certainly more than half (total) are over $150K. The only reason I mentioned her previous position was to emphasize that she had a reasonable grasp of salary structure in the industry and in Federated/Macy’s specifically, since she was responsible for allocating a budget for a large number of employees in the corporate structure.
Anyway, it’s all academic. The point is that this is fairly significant from the SF employment point of view, and is a sign of the relative sinificance of SF in the retail industry. Mervyn’s is gone, Gap has been on a secular decline, specialty retailers like The Body Shop have been folded up and moved to North Carolina, and now the largest “department store” retail model has shut its SF HQ down. There is more opportunity in retail in Minneapolis than SF, to say nothing of course about LA or NYC.
This trend of SF becoming relatively less important in the US economy I think is set to continue. For most of its history, SF was not that important, and I’ll bet that in the fullness of time much of the tech-driven and credit-bubble driven significance of the last 20 years is going to prove to be fairly anomalous. That’s not to say that SF won’t stay a great place to live, but it’s probably not going to be the most expensive housing market in the US. We’ll see – it’s not worth arguing about now because only time will tell. Remember that the most expensive housing on average in the early 1960s was Detroit and its suburbs.
I guess I missed that sweet joke, so lump me in what what all the NYers say about us.
Ohhh so that was a joke…
still waiting for the punchline…
OK, still off-topic, I know…
Sparky,
I didn’t say LMRiM’s occupation looked like a good use of his potential. Simply that people with good potential would go into occupations that used to be reserved for good looking drop-outs is kind of a waste. But it’s a free world. I hope LMRiM uses his brains as much as his guts for day-trading.
The reason I raised this issue is because I was confronted with this precise choice 3 years ago. I put my career on hyatus as I needed to sell my places (ka-tching) and that seemed to be the best use of my time. After I redecorated/sold my apartments for 2 years, I thought of going more serious and try and making a day job out of it. Buy, fix, sell, rinse, repeat, why not? But I realised that 1 – gravy trains usually do not run forever and that one was pretty long already, and 2 – I missed the constant intellectual excitement of my previous job. It was not boring compared with the day to day routine of dealing with property. Sure I got to meet lots of interesting folks and kept a few good friends, but I just needed to have the brain juice pumping again.
Speaking of sweet jokes:
The Hershey Co. said Tuesday it plans to close Scharffen Berger’s West Berkeley manufacturing plant as well as the San Francisco factory that makes Joseph Schmidt chocolates and consolidate production at other facilities.
Goodness, what a bad trend. Joseph Schmidt has been in SF for decades.
And what a difference 6 months makes. Remember when someone came on here and crowed about Genentech being bought out and how all of those options would immediately vest and the stock would soar and so everyone would go out and buy homes.
Now, the buyer came back with a lower price, the stock is underneath that price, and a lot of the staff will be laid off, of course, which is the reason for buying the company. So very few of them are going to be in a position to buy any real estate for awhile.
Not only is the bad economy forcing companies to eliminate jobs, but it’s forcing them to move jobs too.
DOM,
That’s not really my day to day. Otherwise I wouldn’t be sitting at a computer. I pay people for the day to day on-site dealing. Plus I do all of my own drafting and design. And I like making stuff, so I’m starting a new furniture business as well. Quality custom furniture pricing is a joke so I see a market there.
But most importantly I wear jeans and a t-shirt, walk my kid to school, work at home, hang out with my wife and little one and set my own schedule. And so I guess I’ve made a lifestyle vs. intellectual pursuit decision. It is sort of like burritos vs. French laundry ya know…
[Editor’s Note: And with that, once again back to the topic at hand…]
LMRiM,
Great posts. Dead on with what I’m hearing and its double edge. My Gap person is really on the ropes, think Babay G. My long time Macys baggy jeans rap star is on the skids. I’m looking forward when SF goes back to 83′ and the cool crowd can afford to come back. By the by, there is a new section 8 prospect that pays 10 times bettter than the old sec 8! I love a melt down!