Macy’s is going even bigger with its small-format store launches, planning up to 30 openings at off-mall locations next year through fall 2025 as it looks to drive its sales growth with a real estate practice spreading across the industry.
The New York-based company — the parent of its namesake chain as well as Bloomingdale's and Bluemercury — on Tuesday said it will accelerate the expansion of its small-format store strategy, potentially tripling the total number of those pint-sized brick-and-mortar locations. Beginning next year, Macy's said it will debut up to 30 new Macy’s small-format locations across the nation. Their geographic locations and timing details will be disclosed at a later time, according to Macy's.
The stepped-up store rollout is in addition to the nearly 15 small-format Macy’s and Bloomie’s, a small version of Bloomingdale's, that the retailer currently operates. The just-announced move is also part of Macy's effort to reposition and optimize its store fleet to accommodate e-commerce and the shopping preferences of its customers, putting less focus on malls. The retailer closed some anchor mall locations, opened more off-price Backstage sites and tested off-mall, small-format versions of its Macy's and Bloomingdale's chains.
Macy's is part of a bevy of retailers — including such chains as Target, Kohl's, Ulta Beauty and Burlington Stores — that have launched small-format versions of their stores. In Macy's case, it's using the smaller stores — which are about one-fifth the size of their traditional locations — to expand in existing markets, enter new markets and maintain a presence in existing markets by replacing stores that may not be as productive, such as those in mall locations.
“Our small-format stores are efficient to operate, provide the customer with a shopping alternative within our omnichannel ecosystem and present a unique opportunity to target high-traffic shopping centers," Adrian Mitchell, Macy's chief operating officer and chief financial officer, said in a statement. "Our small-format strategy is one way we intend to harness the full power of the Macy’s brand to deliver sustainable, profitable sales growth for Macy’s, Inc. beginning in 2024.”
Macy's is part of a bevy of retailers — including such chains as Target, Kohl's, Ulta Beauty and Burlington Stores — that have launched small-format versions of their stores. In Macy's case, it's using the smaller stores — which are about one-fifth the size of their traditional locations — to expand in existing markets, enter new markets and maintain a presence in existing markets by replacing stores that may not be as productive, such as those in mall locations.
"Macy’s small-format stores are strategically located in off-mall shopping centers to bring the brand closer to existing and desired customers while also encouraging more frequent visits," Macy's said in a statement. "Year-to-date through spring 2023, Macy’s small-format stores open for more than one fiscal year have achieved positive comparable-owned-plus-licensed sales growth."
On a second-quarter earnings call in August, Macy's said it planned to bring its small-store concept to the U.S. Northeast and West, with openings in the Boston, Las Vegas, San Diego and Chicago areas. The locations at Highland Grove Shopping Center at 10353 Indianapolis Blvd. in Highland, Indiana; South Bay Center at 8 Allstate Road in greater Boston; and Arroyo Market Square at 7200 Arroyo Crossing in Las Vegas have already opened their doors. Another in Santee Trolley Square at 9918 Mission Gorge Road in Santee, California, is slated to debut next month.
That will add up to 12 Macy’s small-format stores by the end of the year.
The first small-format Bloomie's is slated to open on the West Coast on Nov. 2 in the University Village at 2603-2685 NE 46th St. in Seattle. It will be the third Bloomie's location to open, adding to existing stores in Fairfax, Virginia, and Skokie, Illinois, for three total by year-end.
"Bloomingdale’s intends to further expand its small-format store footprint in the future," according to Macy's.
For its small-format stores, Macy's targets locations in high-traffic centers where its "unique products and brands provide a differentiated shopping option," according to the retailer.
“Over the past three years, we've gained valuable insight and have been methodical in our approach to our small-format stores,” Marc Mastronardi, chief stores officer for Macy's, said in a statement. “We have taken the time to test and iterate a distinct shopping experience that focuses on convenience, curated merchandise, local events and services that have allowed us to cultivate a highly engaged customer base.”
In a video on the announcement, Macy's Chairman and CEO Jeff Gennette interviewed Mastronardi about the planned expansion, which will take place over 18 months.
There has been "limited to no cannibalization" of sales by small-format stores of existing Macy's locations so far, according to Mastronardi.
He added that the small-format stores are partnering with local businesses and allowing them to set up pop-up shops or events on-site in some cases.
"Localization helps customers identify with the [Macy's] brand," Mastronardi told Gennette.
Macy's opened its first two-small format Macy's stores in the Dallas-Fort Worth market in 2020, and its first Bloomie's in Virginia in 2021.