对于这家零售企业来说，今年的圣诞节生死攸关

如果想知道梅西百货为什么需要自我改造，为什么这家百货巨头想做出改变以及为什么这样做是如此的富有挑战，大家或许可以从对比它最近发给顾客的两份宣传材料开始。

其中之一是一份短小精悍的价目表，针对最重要的假期购物旺季，是一次新营销活动的核心。这份宣称材料名为《我们所爱的礼物》，囊括了125种商品，是出于战略考虑从梅西百货销售的数万种商品中抽出来的一小部分。它用丰富的精美照片和优雅的字体向人们展示了舒适的Ugg长袍以及180美元的星战主题无人机等商品，而且通篇未提到打折，“40%折上折”、“全场3-7.5折”等以画圈强调的文字均无处可寻。如果非要说点儿什么的话，。那就是这本宣传册更像出自像Nordstrom和Saks一类更高端的零售商之手。

同时，它和梅西百货短短几天前发的另一份宣传册几乎截然不同。后者着力宣传的是夏令时行将结束之际的大幅折扣——就算真有这样的促销活动，这份宣传材料体现出的执行情况也不足以取信（那里面说Tommy Hilfiger休闲装打6.5折）。这本宣传册布局混乱，跟超市打折券邮件差不多，流露出一丝垂死挣扎的意味。

《我们所爱的礼物》代表了梅西百货向往的未来。作为美国最大百货连锁，该公司正设法让全美664家店重拾高端品牌潮流引领者的名号，这项工作影响深远，而《我们所爱的礼物》正是其中的一部分。夏令时末段的打折活动则反映了梅西百货难以逾越的现状：大型零售商所经营的商品非常相似，它们吸引购物者的唯一途径就是打折，这也是为什么它们都在“乐此不疲”发宣传册的原因。

这出“双册记”是梅西百货长期以来身份危机的一个缩影，而且它需要迅速化解这场危机。梅西百货同时拥有开了38家分店的Bloomingdale’s百货连锁。今年11月梅西百货披露，同店销售额（也就是剔除新开设和刚刚关闭店面的销售数据）连续第11个季度滑坡。和2015年的高点相比，公司股价已下跌70%以上。扭转颓势的任务落在了今年3月份升任首席执行官的杰夫•甘内特身上，他已经在梅西百货工作了34年。假期购物旺季约占梅西百货年销售额的30%，而且是部分消费者一年中光顾梅西百货的唯一机会。甘内特及其团队推出的举措将面临首次大考。

甘内特的计划代号“北极星”，和梅西百货的标识相呼应。这项计划非常倚重《我们所爱的礼物》所代表的方法，它强调梅西百货不光是商场，还是零售“权威”——56岁的甘内特很喜欢用这个词。他告诉《财富》杂志：“顾客到我们这儿确实是为了时尚策划和指南，我们在这方面超过了其他零售品牌。”他希望在时尚、美容、居家用品、甚至科技方面更充分地利用对顾客的这种影响。这就意味着梅西百货需要淡化打折概念，让店内变得更有条理一些，以便其围绕较热门品牌营造出精挑细选的氛围，从而吸引更多顾客并提高销售利润。

但有一个潜在问题——如果不打折的商品过多，梅西百货就有可能赶走那些打算“抄底”的购物者，而后者在该公司250亿美元的年销售额中占了很大一块。简言之，甘内特想擦亮梅西百货的“品味”招牌，同时仍成为零售商所说的“现象级商场”，而要完成这项穿针一般精准的任务，其难度不亚于把满满一袋子玩具从烟囱眼里抖下去。

相信梅西百货将轻松地再次获得购物者青睐，这可能有点盲目乐观。这家连锁商场的市场份额一直在流失，面对地位稳固的零售商时也在节节败退，其中包括实力强大的亚马逊以及从购物网站起家、而今处于优势地位的公司，比如Stitch Fix和Revolve。年轻消费者正成群结队地离梅西百货而去。寇驰、Michael Kors和Ralph Lauren也压低了百货商场的销售占比，而且抱怨说百货业的打折文化有损于它们的品牌，这可不是个好兆头。就连耐克最近也含含糊糊地说“平庸的”零售商已经让它受够了，而且将更加依赖自营商店和电子商务网站。

这些都是甘内特忙着解决问题。从此前长期担任CEO、现为执行董事长的特里•伦德格伦手中接过指挥权后，甘内特对商场的杂乱和购物者的离去开诚布公，从而赢得了投资者赞誉。咨询公司SW Retail Advisors总裁斯泰西•韦德里茨说：“我们听到梅西百货在探讨设实际问题，而不是说那些华尔街想听的话，这很好。”甘内特牵头对高管团队进行了调整（三年内的第三次），挖来eBay高层霍尔•劳顿担任他的副手，并且整合了梅西百货不断膨胀的销售策划部门。

今年的假期购物旺季消费者将看到“北极星”计划对梅西百货旗下商场的影响。店内关键位置将摆放以“我们所爱的礼物”为主题的展板，被称为“我的造型设计师”的个人导购将为此提供支持并进行推广，他们是梅西百货的一个小团队，但重要性与日俱增（假期旺季过后，梅西百货将继续按“It List”的内容管理那些必须陈列的商品）。它要吸引的是消费较多的购物客。同时，按照调整后的会员积分奖励计划，梅西百货将为最重要的那十分之一顾客提供更多优惠，比如独家销售商品和赠送美容沙龙服务。这10%顾客每年的平均消费为1200美元。

随着此前几年采取的行动取得成果，密切关注梅西百货的人还将看到其他变化。更多梅西百货商场正在采用新方式销售美容产品，其中的创意则来自Ulta Beauty和Sephora这样灵活而且快速增长的竞争对手。现在有20家梅西百货商场设立了Bluemercury专区，这是梅西百货2015年收购的高档美容连锁。在更多的商场，清仓商品如今都放到了一个独立区域，称为“最后一幕”，其目的在于不让这些大打折扣的商品和那些全价销售的流行品牌共处一室，或者掩盖了后者的光辉。

传统观点认为百货商场无法在21世纪生存。从J.C. Penney到Sears，再到Dillard’s和高档商场Neiman Marcus，零售商的艰难处境印证了这种说法。但和同类企业相比，可以说梅西百货走出当前低谷的条件最为完备。它属于少有的几家同时销售较高档商品和大众市场商品的零售商，而且拥有令人敬畏的营销和供应链部门。梅西百货的电商业务也很强大，年销售额为43亿美元，在美国排名第六。这些优势已经帮助梅西百货从投资者和分析师那里争取到了更多时间，甚至是在它很难判断今后局势的情况下。

零售行业资讯公司Marvin Traub Associates首席执行官莫蒂默•辛格说：“让战舰掉头需要很长时间，而且存在让人难以相信的危险。”现在甘内特身上的压力就是要在不断变化的消费者口味造成梅西百货这艘战舰倾覆前让它变得焕然一新。

几乎没有哪家零售公司像梅西百货这样在美国历史上占据着重要位置。梅西百货由罗兰德•H•梅西创立于1858年，最初是纽约市的一家纺织品商店。到20世纪初，它已经成为美国多个主要城市的基石。1947年的经典圣诞电影《34街奇迹》奠定了它在流行文化中的龙头位置。面积达百万平方英尺的梅西百货旗舰店是纽约五大游客最多的景点，它每年一次的独立日烟花表演和感恩节游行吸引着数以百万计的电视观众。如今，每年至少在梅西百货购物一次的美国人多达4100万。

梅西百货在特里•伦德格伦治下成为真正的零售巨无霸。伦德格伦担任CEO十年后，销售额翻了一番，在2014年达到约280亿美元的顶峰。梅西百货的一些举措给自己的增长注入了动力，比如先于竞争对手进入电商领域，以及进行了几次大规模收购，其中最引人关注的是2005年买下了May Department Stores。

不过，这些让梅西百货成为行业领跑者的行动也为当前的问题埋下了种子。公司管理层膨胀成了一个笨重的官僚机构，对变化反应迟缓。由于采购决策多由总部而非各地管理层做出，梅西百货提供的商品和其他百货商场趋于一致，特别是服装。这让它进一步陷入打折的恶性循环中——梅西百货及其对手共同创造了一片“同质海洋”，这让购物者感到无趣，并且迫使零售商靠折扣来重新吸引顾客。零售咨询机构SageBerry Consulting总裁、Sears和Neiman Marcus前高管史蒂夫•丹尼斯说：“就如何在消费者眼中显得特殊而言，他们真的是没有眼光。”

目前服装是梅西百货损失最大的商品类别之一。T.J. Maxx等折扣零售商已经变得规模巨大，来自亚马逊的威胁也与日俱增——亚马逊不光推出了自己的时尚品牌，还提供名为“Amazon Prime Wardrobe”的订购服务。研究机构Magid Retail Pulse的数据显示，梅西百货47%的服装顾客同样在亚马逊上买衣服。金融公司Cowen & Co.则已做出让梅西百货颜面扫地的预测——今年亚马逊将取代梅西百货，成为美国最大服装零售商，而且到2021年亚马逊的市场份额将是梅西百货的三倍。

就在梅西百货开始失去增长动力之时，甘内特异军突起。在首席采购，也就是决定梅西百货销售哪些商品的位置上坐了五年后，甘内特在2014年升任总裁，成为伦德格伦的继任者。甘内特参与了多项让梅西百货重回正轨的行动，而这些行动也凸显了梅西百货做了多少尝试及其取得的了了成绩。

美容产品就是一例，这类商品为百货商场带来约15%的客流。从大约五年前开始，美容产品成了梅西百货的长期弱项，市场份额落入了Ulta和Sephora等公司之手。这些精品店的竞争优势之一是“开放式销售”，也就是消费者在不受店员干扰的情况下进行产品试用。梅西百货却坚持着上世纪40年代做法，把要销售的商品摆在柜台里面；直到现在，也就是销售额常年滑坡后，梅西百货才开始在约200家商场试行“开放式销售”。

梅西百货对打折时尚品牌Backstage的处理很含糊。最初定位为折扣店的Backstage发展缓慢。伦德格伦2015年承认：“我不是真的想要这项业务。”购物者选择了T.J. Maxx和Marshalls等折扣零售商而不是梅西百货的局面变得清晰以后，梅西百货才改变了主意。现在它决定把这样的概念引进主要店面，并在45家商场为Backstage划出了2.5万平方英尺的营业面积，约占普通梅西百货商场的20%，同时还有数百家店铺可能设立这样的Backstage专区。

据甘内特介绍，Backstage入驻后，商场销售额同比上升了7%。但宝贵的时间和机会已经丧失。零售咨询机构GlobalData Retail董事总经理内尔•桑德斯说：“以前我们已经探讨过许多好的措施。他们有予以支持的精力和信心吗？”

身材高大、衣着整洁的甘内特似乎不缺信心。在今年夏天以及秋天和《财富》的对话中，他都重申正在把自己的精力转向聪明的战略性压缩上。

有些压缩集中在供应链上。甘内特想要的独家产品提供商要少得多。包括成衣在内，这些店选品牌目前占梅西百货销售额的29%。甘内特想把这个数字提高到40%，而他采取的措施之一就是砍掉三分之二的提供商，并且要求剩下的厂家把很大一部分产能留给梅西百货，从而加快产品上市速度——根本目的是为了和Zara和H&M等快时尚品牌竞争。梅西百货已将某些品类从订购到上架的时间从几个月缩短到了八个星期。

但更重要的压缩出现在商场，甘内特正在消除梅西百货到处都是店员的形象。他说：“我们知道自己的店里面过于杂乱。”为解决这个有损声誉的问题，梅西百货正在新泽西州Woodbridge Township的一家商场尝试甘内特所说的“极度剪裁”法——当地购物者追踪时尚的倾向高于梅西百货的全国平均水平。这家商场将商品种类削减了40%左右，而且会迅速撤下那些过于同质化或者已经跟不上时尚步伐的商品，取而代之则是更流行的商品。这家店的部分主要商品平均收入上升了10%，甘内特对《财富》杂志表示，他能让所有梅西百货商场都实现这样的成绩。

在Woodbridge Township的测试验证了甘内特希望通过压缩库存而取得成效。理论上讲，这样做会减少清仓处理的商品种类，同时让商场看起来更高档，从而提高视觉愉悦度。更小、更容易跟踪的库存将带来更快、更顺畅的电商业务，而且如今商场在这个过程中发挥着关键作用。

最重要的一点是，甘内特认为压缩品类的好处在于改善顾客服务。这样店员就不必总是往返于营业区域和仓库，从而有可能成为某些产品的“专家”，比如“It List”上的那些商品，同时和顾客建立更好的关系。现在梅西百货有150家店都只有250名个人导购；在更为精简的文化中，担任类似职务的普通员工有望增多。前10%顾客给梅西百货带来的收入略低于50%，而这些顾客光临的次数较少。营造专属范围并提供相应服务有可能提高这些高消费顾客所占的比重，并降低他们等待打折的可能性。

甘内特知道自己必须小心处理。除非拥有其他零售商没有而购物者真正想要的东西，否则减少折扣就可能无异于自杀（2012年J.C. Penney的类似举措就造成销售额暴跌，并带来了一场持久危机）。“我们仍会是促销型百货商场”已经成了甘内特和投资者交流时的口头禅。但他正在努力为大幅打折商品和他希望凸显的知名大厂产品划清界限。

初步迹象表明，梅西百货已经让一些知名时尚品牌相信自己的折扣不会给他们带来负面影响。一些强大品牌，比如服装巨头PVH旗下的Tommy Hilfiger和Calvin Klein，在梅西百货的销售额已经开始反弹，这在一定程度上要归功于更好的商品展示。甘内特说梅西百货可以为Michael Kors和Ralph Lauren做出类似的业绩。类似的成功增多有可能消除厂家的疑虑，甚至有助于梅西百货拿下新的热门品牌。就像咨询人士辛格所说：“梅西百货需要记住他们能把别人造就成王者。”

今年秋季的一天，梅西百货的投资者就有过成为王者的感觉——11月9日，该公司股价上涨了10%以上，原因是2017年前三季度净利润同比增长54%。梅西百货披露，清仓商品减少，香水、女鞋和珠宝首饰销售大幅上升。

不过，利润上升的同时收入却在下降，而且这还不是唯一滑坡的指标。梅西百货的实体店规模同样骤减。到2018年底，该公司要关闭的商场数量将占2014年所经营商场的20%。这家百货连锁已经压缩了一些商场的营业面积，并重新将部分商场卖给了General Growth等商场开发商。今年10月，梅西百货卖掉了西雅图市中心商场的最上面几层，这几乎是对该公司全面调整的最佳诠释。入驻其中的则是亚马逊。

梅西百货甚至有可能面临关闭更多店面的压力。研究机构Green Street Advisors今年1月估算，按坪效计算，只有40%的梅西百货店铺属于“强大”商场；剩下的60%缺乏吸引力，客流不断下降，商场里显得特别空旷和冷清。而且正如最新盈利数据所凸显的那样，关掉业绩欠佳的商场可以提高梅西百货的利润。

不过，甘内特告诉《财富》杂志，梅西百货目前的“商场数量基本合适”。他不愿意进一步削减规模的原因显而易见。关闭店铺会形成恶性循环——品牌知名度下降会影响附近店面的销售，从而造成厂家降低这家零售商的优先等级。虽然梅西百货的电商业务很强，但总的来说它并未提振业绩。梅西百货表示，在关闭实体店的地区，在线业务或另一店铺平均仅能保留12%的销售额。SW Retail Advisors总裁韦德里茨说：“就那种[百分比]水平而言，我们并不需要梅西百货。”

店铺难题反映了甘内特面临的挑战。在他让梅西百货商场中的商品再次熠熠生辉的努力中，“以退为进”也许是主基调。但退的太多就，嗯，真的成了后退——急剧紧缩存在同时赶走消费者、品牌和投资者的可能。

甘内特本人避开了那些更小、更集中对梅西百货来说更好的言辞。相反，他把赌注押在店内商品减少、价格上升以及电商业务增长将带动收入反弹上。

甘内特认为，零售行业全面洗牌将产生赢家和输家。他说：“我们为梅西百货的盘算是跻身胜利者行列。”但设法面面俱到是一场很难取胜的战斗，而2017年的艰难购物旺季假期有可能迫使梅西百货缩短战线。

本文将刊登在2017年12月1日出版的《财富》杂志上，题为《梅西百货胜败在此圣诞》（Macy’s Make-or-Break Christmas）。

If you want to know why Macy’s (M, +1.05%) needs to reinvent itself—why the department store ¬giant wants to change, and why doing so will be so challenging—you could start by comparing two of the most recent circulars that the chain sent to shoppers.

One brochure is a snappy mini-catalog for the all-important holiday season, a centerpiece of a new marketing campaign. Called “Gifts We Love,” it features 125 items—a tiny, strategically chosen slice of the tens of thousands of products Macy’s sells. It uses lush, high-quality photography and elegant fonts to showcase offerings like a cozy Ugg robe and a $180 Star Wars drone. And there’s not a single mention of a discount, not one “Extra 40% Off” or “30%–75% Off Storewide” bubble to be found. If anything, the brochure looks like something a higher-end retailer, a Nordstrom or a Saks, might produce.

It also looks almost nothing like Macy’s previous circular, which came out just days earlier. That one touts canyon-deep discounts pegged to the end of daylight saving time—a flimsy excuse for a shopping event if ever there was one. (One such deal: 65% off Tommy Hilfiger sport coats.) The brochure looks cluttered, almost like a supermarket coupon mailer. It gives off a whiff of desperation.

“Gifts We Love” represents the future to which Macy’s aspires. It’s part of a far-reaching effort by the nation’s largest department store chain to regain its former mantle as a tastemaker among better brands at its 664 stores nationwide. The daylight saving discount-orama, meanwhile, represents the reality Macy’s is struggling to transcend—a circular firing squad where big retailers that offer very similar products can lure shoppers only by slashing their prices.

The Tale of Two Brochures epitomizes Macy’s long-standing identity crisis, and it’s one that the company needs to resolve soon. In November, the company, which also owns the 38-store Bloomingdale’s chain, posted its 11th consecutive quarter of declines in comparable or “same-store” sales, a metric that strips out results from recently opened or closed stores. Its stock is down more than 70% from its 2015 peak. The task of reversing this slide falls to Jeff Gennette, Macy’s CEO since March and a 34-year veteran of the company. This holiday season—during the gift-buying rush that generates about 30% of annual sales, and is the one and only time all year that some shoppers will visit a Macy’s store—the initiatives Gennette and his team are rolling out will face their first major test.

Gennette’s plan, dubbed “North Star” in a nod to Macy’s logo, leans heavily on the “Gifts We Love” approach, stressing the idea of Macy’s as not just a store but a retail “authority”—a favorite word of the imposing 56-year-old CEO. “Our customers really look to us for fashion curation and guidance, more so than to other retail brands,” Gennette tells Fortune. He wants to capitalize more fully on that clout with customers, in fashion, beauty, home goods, and even tech. That means de-emphasizing discounts and cutting clutter in stores, so that Macy’s can build a selective aura around hotter brand names that can draw more customers and sell at bigger profits.

There’s a catch, though: If Macy’s eliminates too many discounts, it risks chasing away the deal-hunting shoppers who account for much of its $25 billion in annual sales. In short, Gennette wants to burnish Macy’s tasteful patina while remaining what retailers call a “promotional store.” And threading that needle may prove to be as difficult as shimmying down a chimney flue with a sack full of toys.

It would be pollyannaish to believe that Macy’s will easily win its way back into shoppers’ good graces. The chain has been bleeding market share, losing ground to established retailers, including the almighty Amazon, and to ascendant digital-first companies like Stitch Fix and Revolve. Younger customers are staying away in droves. And in an ominous turn of events, big brands like Coach, Michael Kors, and Ralph Lauren have reduced the amount they sell through department stores, complaining that the industry’s culture of discounting has contaminated their brands. Even Nike, without naming names, recently said it had had enough of “mediocre” retailers and would rely more on its own stores and e-commerce site.

These are the fires that Gennette is racing to douse. Since taking the reins from longtime CEO and current executive chairman Terry Lundgren, he has won kudos from investors for his frankness about store clutter and shopper defections. “It’s been nice to hear Macy’s talk about reality rather than tell the Street what it wants to hear,” says Stacey Widlitz, president of consulting firm SW Retail Advisors. Gennette has led a reorganization of top management (the third in three years) that included poaching a top eBay executive, Hal Lawton, to be his second-in-command, and consolidated the retailer’s sprawling merchandising bureaucracy.

This holiday season, customers will start seeing North Star’s influence on the sales floor. Macy’s will set up displays at key spots in stores to highlight the “Gifts We Love”—supported and promoted by Macy’s small but increasingly important army of “My Stylist” personal shoppers. (After the holidays, Macy’s will continue to “curate” must-have items under a new “It List” rubric.) The chain is wooing higher-¬spending customers, meanwhile, with a revamped loyalty program that lavishes the top 10% of its customers, people who spend an average of $1,200 a year, with more goodies like exclusive sales and beauty-salon pampering.

Close observers will spot other changes, too, as moves initiated years ago bear fruit. More Macy’s are selling beauty products in ways that borrow ideas from nimbler, fast-growing competitors like Ulta Beauty and Sephora. There are now 20 stores with a kiosk from -Bluemercury, the luxury beauty chain the company bought in 2015. And in more locations, clearance merchandise now dwells in segregated areas, called “Last Act,” intended to keep their deep discounts from sharing space with, or dimming the luster of, trendy brands that sell at full price.

Conventional wisdom holds that department stores can’t survive in the 21st century—and the woes of retailers from J.C. Penney to Sears to Dillard’s to the upscale Neiman Marcus reinforce that argument. But of its cohort, Macy’s arguably is the best equipped to pull through the current slump. It’s one of the few chains offering a mix of higher-end and mass-market merchandise, and it wields a formidable marketing and supply-chain apparatus. The company is also an e-commerce powerhouse, with $4.3 billion in annual sales, ranking it sixth nationwide. These strengths have helped Macy’s buy more time from investors and analysts, even as it struggles to figure out what comes next.

“It takes a long time to turn around a battleship, but they’re incredibly dangerous,” says Mortimer Singer, CEO of retail consultancy Marvin Traub Associates. Now the pressure is on Gennette to retrofit the U.S.S. Macy’s before changing consumer tastes capsize it.

Few retailers enjoy as prized a place in U.S. history as Macy’s. The retailer, opened in 1858 by Rowland H. Macy in New York City as a dry-goods store, became a cornerstone in many major American cities by the early 20th century, and its primacy in popular culture was cemented by the 1947 holiday movie classic, Miracle on 34th Street. The million-square-foot Macy’s flagship is among the five most visited tourist spots in New York, and its annual Fourth of July fireworks and Thanksgiving Day parade attract millions of TV viewers. Today, 41 million Americans shop at Macy’s at least once a year.

The company reached true retail-behemoth status under Terry Lundgren. Sales roughly doubled in the decade after Lundgren became CEO, hitting a peak of about $28 billion in 2014. Macy’s fueled that growth by getting ahead of its rivals in e-commerce, and by undertaking several major acquisitions, most notably its 2005 purchase of May Department Stores.

But the deals that made Macy’s the industry leader also sowed the seeds of its current problems. Macy’s management swelled to become a lumbering bureaucracy, slow to react to change. And as more buying decisions flowed from national headquarters rather than local management, its product offerings, particularly in clothing, converged with those of other department stores. That drew the company deeper into the lethal spiral of discounting: Macy’s and its rivals created a “sea of sameness” that left shoppers bored and forced the retailers to resort to discounts to lure them back. “They really took their eye off the ball in terms of how to be special for the customer,” says Steve Dennis, president of SageBerry Consulting and a former Sears and Neiman Marcus executive.

Today clothing is one of the categories where Macy’s is hurting most. Discounters like T.J. Maxx have been juggernauts, and the threat from Amazon.com, which is launching its own fashion brands as well as a subscription service called Amazon Prime Wardrobe, is only growing. Already, 47% of Macy’s clothes customers also shop for clothes on Amazon, according to Magid Retail Pulse. And Cowen & Co. is forecasting a new indignity: The Wall Street firm says Amazon will eclipse Macy’s as the top seller of apparel in the country this year, and that Amazon’s market share will be three times as big as Macy’s by 2021.

Gennette’s star rose just as Macy’s momentum began to run out. After five years as chief merchant—the executive in charge of deciding what Macy’s sells—he became president, and Lundgren’s heir apparent, in 2014. Gennette has been involved with multiple efforts to get the retailer back on track, efforts that underscore how much spaghetti Macy’s has thrown at the wall, and how little has stuck.

A case in point: Beauty products, which generate about 15% of department store visits, became a chronically weak spot for Macy’s about five years ago, as it ceded market share to the likes of Ulta and Sephora. One edge those boutiques brought to the battle was “open sell,” where customers can try out products without intervention from clerks. But Macy’s stayed wedded to the 1940s, products-behind-the-counter method of selling; only now, after years of sales erosion, is Macy’s testing “open sell” at 200 or so stores.

Macy’s also waffled in handling Backstage—its separate brand for selling discounted fashion. Originally conceived as a chain of outlet stores, its development was slow; as Lundgren admitted in 2015, “I didn’t really want this business.” Only after it became clear that shoppers were choosing discounters like T.J. Maxx and Marshalls over Macy’s did the company relent. It has now decided to bring the concept into its main stores, giving Backstage 25,000 square feet, or about 20% of the space of a typical store, at 45 locations, with hundreds more stores potentially getting one.

Stores with a Backstage section are seeing a seven-percentage-point improvement in sales year over year, according to Gennette. But valuable time and opportunities have been lost. “In the past they’ve talked about a lot of good initiatives,” says Neil Saunders, a managing director at GlobalData Retail. “Do they have the stamina and confidence to see them through?”

Tall and immaculately dressed, Gennette doesn’t seem to lack for confidence. And in conversations with Fortune this summer and fall, he reiterated that he was directing his energy toward smart, strategic cutting.

Some of the cuts focus on the supply chain. Gennette wants to use far fewer suppliers for Macy’s exclusive products. Those house brands, including INC apparel, now generate 29% of the company’s sales. As part of an effort to boost that to 40%, Gennette is cutting out two-fifths of those suppliers and requiring the remaining ones to set aside much of their capacity exclusively for Macy’s so it can speed up the time it takes to bring merchandise to market—essential to competing with “fast fashion” brands like Zara and H&M. For some items, Macy’s has shrunk the time from order to shelves from several months to eight weeks.

But the more important cutting is happening on sales floors, where Gennette is chipping away at Macy’s image as a bazaar that overflows with stuff people can find anywhere. “We know that we have too much clutter in our stores,” the CEO says. To fix that prestige-destroying problem, Macy’s is testing what Gennette calls “extreme editing” at a store in Woodbridge Township, N.J. Shoppers in that area skew “fashion forward” compared with Macy’s national average. So the store cut about 40% of the selection, rapidly eliminating items that were too similar, or that didn’t catch on, and replacing them with trendier fare. The average revenue generated by some key items is up 10% at the store, and Gennette tells Fortune he thinks he can replicate those results throughout the chain.

The Woodbridge test exemplifies the benefits Gennette wants to reap from a leaner inventory. In theory, it’ll lead to fewer items being sold on clearance, while creating a more visually pleasing store that looks more upscale. A smaller, easier-to-track inventory will enable faster, smoother e-commerce deliveries, transactions in which stores now play key roles.

Above all, Gennette sees smaller selections paying off in improved customer service. Rather than continually running between store floor and stockroom, clerks could build expertise in products like those on the “It List” and develop more of a rapport with customers. Right now Macy’s employs just 250 personal shoppers across 150 of its stores; in a leaner future, more of the rank-and-file could play a comparable role. Macy’s gets just under half its revenue from the top 10% of its customers, who have been visiting less often. Creating a sense of exclusivity and service could swell the ranks of those bigger spenders—and make them less likely to hold out for discounts.

Gennette knows he has to tread carefully. Unless you have products that other retailers don’t carry and that shoppers genuinely want, pulling back on discounts can be suicidal. (A similar move by J.C. Penney in 2012 led to plummeting sales and an enduring crisis.) “We’re going to remain a promotional department store” has become a mantra for Gennette in talks with investors. But he’s striving to draw a clear boundary between the sharply discounted deals and the products from the big, distinctive vendors he hopes to emphasize.

Early signs suggest that Macy’s has convinced some big names in fashion that its discounts no longer taint them. Stalwart brands like Tommy Hilfiger and Calvin Klein, both owned by apparel giant PVH, are enjoying a sales rebound at Macy’s, thanks in part to better presentation. Gennette says Macy’s could deliver similar results for Michael Kors and Ralph Lauren. More such wins could soothe vendors’ anxiety and even help Macy’s line up hot new brands. As consultant Singer puts it, “Macy’s needs to remember that they can be kingmakers.”

For one day this fall, Macy’s investors felt like kings. The stock jumped more than 10% on Nov. 9 on news that net income was up 54% year over year through the first three quarters of 2017. Macy’s reported that it was selling fewer items at clearance and seeing booming sales of fragrances, women’s footwear, and jewelry.

Still, the bump in profit coincided with continuing declines in revenues. And that isn’t the only metric that’s shrinking: Macy’s is also inexorably trimming its physical footprint. By the end of 2018, the chain will have closed 20% of the stores that it operated in 2014. The chain has shrunk space at some stores and sold others back to mall developers like General Growth. In a near-perfect metaphor for retail’s upheaval, Macy’s sold the top floors of its downtown Seattle location in October—and Amazon is moving in.

Nicolas Rapp

Macy’s will likely face pressure to close even more stores. According to a January tally by Green Street Advisors, only 40% of Macy’s stores are in “strong” malls as measured by sales per square foot; the other 60% are in the sorts of uninviting shopping centers where foot traffic is dwindling and department stores can feel especially vacant and gloomy. And as the company’s latest results underscore, shutting underperforming locations can boost profits.

Still, Gennette tells Fortune Macy’s is now at “about the right number of doors.” It’s easy to see why he’d resist culling the fleet further. Closing stores can create a vicious cycle in which reduced brand visibility hurts sales in nearby stores, and vendors stop giving that retailer priority. And while Macy’s e-commerce is strong, it doesn’t generally pick up the slack: The company says that in areas where it has closed a physical store, it holds on to an average of only 12% of its sales, either online or at another store. “That [percentage] says, ‘We don’t need Macy’s,’ ” says Widlitz, the retail consultant.

The store conundrum is a metaphor for the challenges Gennette faces. “Less is more” may be a leitmotif in his efforts to restore luster to the products on Macy’s sales floor. But too much “less” is just, well, less—shrinking too drastically risks driving away customers, brands, and investors alike.

Gennette himself avoids language that suggests that Macy’s would be better off as a smaller, more focused retailer. Instead, he’s betting that with fewer products in stores, a combination of higher prices and continued growth in e-commerce will create a revenue rebound.

The way Gennette sees it, the big retail shakeout underway will have winners and losers. “We intend for Macy’s to be one of the winners,” he says. But trying to be all things to all people is a hard battle to win—and a tough holiday season in 2017 could force Macy’s to fight on fewer fronts.

A version of this article appears in the Dec. 1, 2017 issue of Fortune with the headline “Macy’s Make-or-Break Christmas.”