Macy’s embracing smaller stores in department store shuffle

Chain kicking up rollout for outposts with adjusted inventory, e-commerce services

A photo illustration of Market by Macy's located at 321 State Street in Southlake, Texas (Google Maps, iStock)
A photo illustration of Market by Macy's located at 321 State Street in Southlake, Texas (Google Maps, iStock)

Macy’s is using fewer square feet to embark on a big change to its retail strategy.

The department store chain plans to accelerate the rollout of a slew of smaller locations, the Wall Street Journal reported. The outlets carry fewer products than the brand’s traditional stores and can quickly update inventory to mix trendy items with household staples.

Macy’s is shooting to add another 10 off-mall stores this year, which will include Market by Macy’s, Macy’s Backstage, Bloomie’s and Bloomingdale’s outlets. Some will open in markets where more traditional Macy’s stores are closing as the company is roughly halfway to its goal of shuttering about 125 department stores by early 2023.

The chain’s plans are similar to plays by retailers like Nordstrom that unveiled scaled-down outposts offering pickup and alteration services. The seven locations in New York City and Los Angeles encompass 1,200 to 3,000 square feet, around 15 percent of the brand’s department store size.

Macy’s unveiled its plans to open smaller, off-mall stores in 2020 after the company’s flagships were hit hard by the onset of the pandemic. The company unveiled the idea shortly after posting a dismal quarter, reporting a net loss of $431 million.

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In the months since, Macy’s has opened five Market by Macy’s locations between Texas and Atlanta. The stores range from 22,000 to 58,000 square feet, roughly one-fifth of the company’s typical department stores.

The Market by Macy’s stores allow customers to pick up or return items purchased either online or at another location. Chuck DiGiovanna, Macy’s head of real estate, told the Journal sales at the stores surpassed expectations in the fourth quarter and brought in new customers at a higher rate than other Macy’s stores in the same markets.

Macy’s has also been experimenting with “dark stores,” or fulfillment centers closed to in-person shopping. These stores in Colorado and Delaware, for instance, can be used to fulfill online and curbside orders.

Last year, Macy’s teamed up with Toys ‘R’ Us to revive the toy retailer within 400 department stores beginning in 2022. The partnership was targeted at drawing more customers into the store, particularly for one-stop holiday shopping.

[WSJ] — Holden Walter-Warner