Macy's has three main problems to solve, according to senior retail analyst Oliver Chen:
1. Slowing mall traffic — physically getting people into stores is more difficult.
2. The rise of Amazon and off-price competitors poses a threat.
3. Consumers are fundamentally changing shopping habits, demanding speed.
With more and more innovation happening in the retail sector at large, Macy's needs to focus on its supply chain operations and getting products to customers quickly, Cowen and Co.'s Chen told CNBC's "Power Lunch" Thursday.
Technology and digital will be important areas for all retail companies, especially Macy's, moving forward. E-commerce giant Amazon is growing faster than anyone can expect, he added.
"[Macy's] is closing 100 stores, e-commerce is increasing, and we could see more store closures," Chen warned. "This is their plan for now … and I think they're off to a good start."