Macy’s is speeding up the rollout of its small-format stores as well as trying out its first dual Market by Macy’s and Macy’s Backstage off-price store, joining other retailers that have been combining some of their concepts at a single site.
New York-based Macy’s plans to open four new off-mall small stores this fall, in one market replacing a full-line Macy’s that it plans to close. The locations will include Market by Macy’s, a smaller store that offers a curated assortment of the latest fashion trends, as well as Macy's Backstage, an off-price retail outlet.
Macy’s also announced on Wednesday the planned combination Market by Macy’s and Macy’s Backstage store planned for Evergreen Plaza at 9700 S. Western Ave. in Evergreen Park, Illinois, outside Chicago. Customers will be able to shop at both stores under one roof, with Market by Macy’s occupying the first floor, and Backstage located on the second.
Macy’s has been repositioning its store footprint to better serve its customers and more efficiently support its online and brick-and-mortar sales growth. To do that, its “Polaris” strategy is to either expand its presence in a current market, to maintain its market presence by replacing under-performing locations or to enter new markets where Macy’s doesn’t have a presence.
That’s where small-format Market by Macy’s comes into play. Like a number of other U.S. retailers, Macy’s has been opening smaller stores to expand its physical reach rather than having big-box anchors in malls. And with off-price retailers such as T.J. Maxx and Burlington Stores thriving in this period of high inflation, Macy’s has sought to tap into that consumer market with its Backstage stores.
Off-price retailers buy branded merchandise from manufacturers with excess inventory at prices below wholesale. In contrast, a discount store, such as Walmart, offers a retail format in which products are sold at prices that are in principle lower than an actual or supposed “full retail price.” Discounters rely on bulk purchasing and efficient distribution to keep down costs.
Although this fall Macy’s will have its first dual Market by Macy’s and Macy’s Backstage location, it has already been combining some of its concepts together. There are Backstage sections in a number of full-service Macy’s stores, in addition to standalone Backstage locations. But the dual location Market by Macy’s and Macy’s Marketplace store will be the first of its kind, the first putting those two banners together in one place as well as the first with each having its own distinct floor, essentially still separate.
Amanda Lai of the Chicago-based retail consulting firm McMillanDoolittle, in an email to CoStar News, said “the dual concept allows Macy’s to attract two different, but not necessarily mutually exclusive, customer types to one location by offering both on-trend items and a treasure hunt all in one.” She called the Evergreen Park location “a good test store for Macy’s to learn more about customer cross-shopping behaviors between the two concepts,” adding that Macy’s likely received lower rent per square foot than if it were to take standalone space for each.
Macy’s isn’t the only retailer to combine or have side-by-side sites for its different chains. TJ Cos. has done it before, such as placing a T.J. Maxx and a Home Goods side by side sharing one retail space, for example. And discounter Dollar Tree, after experimenting with operating its flagship banner and its sibling Family Tree side by side in at least one location in New Jersey, is now instead launching “combo” stores where merchandise from each chain is sold together in a store with no delineation between Dollar Tree and Family Dollar.
“I believe the national brands are finding the combo-store concepts, whether it be Marshalls and Home Goods or Market by Macy’s/Backstage, are much more efficient,” Danielle Brunelli, president of Old Bridge, New Jersey-based brokerage R.J. Brunelli & Co., said in email to CoStar News.
“As an example, having one storage room rather than two, they are cost effective, and these stores drive more traffic to a location because there is a greater variety,” said Brunelli, who has worked with Dollar Tree. “When it comes down to it, a landlord does not have to create two separate spaces with separate utilities, installing a demising wall [a partition that separates two different uses or occupancies], so essentially it brings the cost down for the landlord, which the tenant benefits from as well with a lower overall rent.”
The additional Market by Macy’s shopping center openings include a debut at Johns Creek Town Center on Aug. 20 at 3630 Peachtree Parkway in Suwanee, Georgia. That store marks the chain's third location in the metro Atlanta area, after Market by Macy’s openings in the past year at Presidential Markets and Southpoint.
In the fall, Market by Macy’s will debut in the St. Louis area on THF Blvd. in Chesterfield Commons, “with an immersive shopping space focused on discovery and convenience,” according to Macy’s. That store will replace the nearby existing full-service store in Chesterfield Mall “as part of its ongoing assessment of its store portfolio,” Macy’s said. That Macy’s is 267,000 square feet, according to CoStar data.
“We’re pleased to continue to serve the St. Louis area and look forward to welcoming our customers to Market by Macy’s,” Marc Mastronardi, chief stores officer at Macy’s, said in a statement. “This announcement marks both our first replacement location and, separately, our first, off-mall dual location.”
In 2020, the first Market by Macy’s debuted in the Dallas-Fort Worth area of Texas at Southlake. In 2021, four new stores were introduced, namely Presidential Markets and South Point in the Atlanta area and WestBend and Highlands at Flower Mound in the Dallas-Fort Worth area.
By the end of this year, Macy’s plans to expand Market by Macy’s to eight total locations. Since 2015, Macy’s Backstage has expanded to more than 300 Macy’s stores nationwide, including nine freestanding locations. The newest Backstage freestanding location, Grapevine Mills, opened this spring in the Dallas-Fort Worth area.
“At Macy’s, we thrive on retail being a dynamic business requiring continuous analysis, reinvention and innovation,” Mastronardi said. “As customer preferences and buying behaviors change, we continue to evolve to deliver the experience our customers expect. As exciting brand extensions, Market by Macy’s and Macy’s Backstage each offer unique shopping experiences — one celebrates discovery and convenience, while the other appeals to the customer who loves the thrill of the hunt for a great value.”