Macy’s Accelerating Small-Store Rollout

Macy’s Inc is fast-tracking the opening of its smaller department store footprint, expecting that retail outposts with fewer products and more digital services in areas where customers run daily errands will attract more shoppers, according to a Tuesday (May 3) report in The Wall Street Journal.

The COVID-19 pandemic sped up retailers’ willingness to shift to smaller stores, with the realization that shoppers’ interests when they came to brick-and-mortar locations were changing and that they wanted more experiential opportunities and digital capabilities than they had in the past, the report says.

Even the location of the smaller stores has changed, with retailers focusing more on opening shops in suburban shopping areas, with people making more trips to grocery stores and using curbside pickup services more often than before the outbreak.

Open-air shopping centers have been the “backbone of retail over the last five to 10 years,” Brandon Isner, head of Americas retail thought leadership at CBRE Group Inc., a commercial real-estate services firm, told WSJ. That includes centers with grocery stores as the anchor and strip malls with smaller convenience and service-focused tenants, the report says.

Macy’s opened five Market by Macy’s locations in Texas and Atlanta in the past two years. The stores, which measure 22,000 to 58,000 square feet, about one-fifth of the size Macy’s department stores. The smaller stores update their inventory regularly to keep up with trends, the report says.

“There are so many people working from home, these suburban power centers have really been strong,” said Chuck DiGiovanna, head of real estate for Macy’s, in the WSJ report. “But we were heading in that direction anyway.”

Sales at the smaller stores exceeded Macy’s expectations in the fourth quarter of 2021, DiGiovanna told WSJ, and they brought in new customers at a higher rate than Macy’s department stores in those markets. The company plans to add an additional 10 off-mall locations this year, including Market by Macy’s, the off-price Macy’s Backstage, Bloomie’s and Bloomingdale’s outlets.

Related: Macy’s Adds More Backstage Stores as Bargain Hunting Business Booms

In March, announced plans to open 37 off-price Backstage locations within existing stores by the end of June—including in its New York and Chicago flagship stores.