Macy’s Sues Giant Online Retailer Amazon to Block Billboard Above Its Flagship Store
Pedestrians walk by the Macy's flagship store after workers cleaned and boarded up damage sustained during a night of violent protests and looting in Midtown, Manhattan on June 2, 2020 in New York City. In spite of a police-enforced 11pm curfew, dozens of shops were ransacked during the previous evening's violent clashes between the NYPD and protesters demanding justice for George Floyd, an unarmed black man killed by law enforcement in Minneapolis on May 25th. Scott Heins/Getty Images

E-commerce mogul Amazon has found itself entwined in a legal battle with Macy's over the department store chain's attempt to block Amazon from using its space for a billboard advertisement.

Macy has displayed its name on a billboard above its flagship store in Manhattan's Herald Square for 60 years but had to take it down after failing to renew its contract with the space's landlord, according to a CBS News report.

Macy's claims that a 1963 agreement prohibits other retailers from advertising on the billboard, according to a lawsuit it filed against commercial real estate firm Kaufman Organization.

The complaint added that Macy's would suffer "incalculable damage" if Amazon were to advertise on the billboard.

Benjamin Brotzman, a principal in Macy's retail group, noted in the court filings that it would be as if a competitor hung its "flag" on top of Macy's flagship department store and announced victory.

Brotzman added that one should imagine if Pepsi were advertising on a Coca-Cola building or Mercedes on a BMW dealership.

Macy's agreement with the Kaufman Organization had already expired on August 31; and by that time, the commercial real estate firm was already talking with a known online retailer.

Macy's believed the other party to be Amazon.

Meanwhile, representatives for Amazon and the Kaufman Organization have yet to comment on the matter.

Macy's spokeswoman said in an email that the department store chain still has rights linked to advertisements at the corner of Broadway and 34th Street.

She added that they expect to realize the benefits to the said right and have asked the court to protect them, according to a CNBC report.

Amazon Launching its Own Department Store

Amazon was reportedly eyeing to launch its own chain of department stores, with a focus on apparel, electronics, and household goods.

However, an Amazon spokeswoman said that they do not comment on rumors and speculations, according to a Washington Post report in August.

Neil Saunders, managing director of GlobalData, noted that traditional department stores have been declining for years due to failure to innovate and adapt.

Saunders, who is with the research and consulting firm that tracks the retail market, added that stores such as Macy's, J.C. Penney, and Kohl's had about 15 percent of retail sales in 1985, which now account for less than three percent.

Reports noted that the online retail giant was looking at Ohio and California for its department stores' locations.

Saunders said that if it manifests in a serious way, this can pose a serious threat to traditional department stores.

He further claimed that the traditional department stores' defenses are very weak due to lack of innovation, adding that the last thing they need is "to fend off a new invader to their space."

As of June 30, Amazon had $443 billion in annual sales and was expected to surpass Walmart by next year.

Amazon was founded by Jeff Bezos and started as an online bookseller in 1994. It has gained momentum when it took over Whole Foods Market in 2017.

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Written by: Mary Webber

WATCH: Amazon is set to open department stores - What it means for the e-commerce giant - from CNBC Television