Macy’s is accelerating plans to open small stores outside of malls

In 2020, Macy’s opened its first Market by Macy’s store, which was in the Dallas-Fort Worth area.

Source: Macy’s

Macy’s is accelerating plans to open smaller stores that are not attached to suburban malls, in a bid to scale with its customers’ shopping preferences in the wake of the Covid pandemic.

The department store chain announced Wednesday that it will open three stores this fall, each representing how Macy’s plans to reposition its real estate going forward. Including:

  • Bringing together some of its various activities under one roof
  • Closure of one of its large stores in a traditional mall to open a smaller-format Macy’s store, known as The Market by Macy’s, in a more densely populated part of town nearby
  • Added another Market by Macy’s location in an area where it already has several of these stores

“We want to be practical and we want to make it easy,” Marc Mastronardi, Macy’s stores manager, said in an interview. “Customer behavior keeps changing. And the more agility we have as an organization to change and respond, it feels like the next natural evolution.”

This is part of a broader strategy that Macy’s presented to investors in February 2020, shortly before Covid-19 cases began to rise in the United States. At the time, the company said it planned to close 125 stores in lower-tier malls within three years and would explore formats outside of malls.

Since then, Macy’s has opened five stores under the Market by Macy’s banner, which are approximately one-fifth the size of its full-line locations and offer services such as online shopping, in-store pickup. It will reach eight by the end of this year.

Being small and away from the mall has become a trend in the retail industry. It’s a plan that retailers from Gap to Nordstrom have followed. Kohl’s also said it aims to open 100 smaller footprint locations over the next four years. Last year, Macy’s opened its first pint-sized Bloomingdale’s store, called Bloomie’s.

Some of America’s malls have lost their appeal – and their tenants – as consumers today tend to seek a quick and convenient shopping experience. Shoppers are also much less interested in spending hours browsing sprawling, multi-level stores, leading retailers to test slimmed-down versions.

“Some malls are underperforming and this is an opportunity to enter a market in the right place and in a new format,” Mastronardi said.

This fall, Macy’s will open its first-ever dual-store Market by Macy’s and Macy’s Backstage, which is a competitor to lower-cost chains, including TJ Maxx, in the Chicago metro area.

Second, it plans to close one of its mall-anchored department stores in the Chesterfield neighborhood of St. Louis in order to open a smaller market near the nearby Macy’s location in a mall in open air known as Chesterfield Commons.

And third, Macy’s will open a Market by Macy’s store in downtown Johns Creek, Suwanee, Georgia, marking its third such location in the Atlanta metro area.

Mastronardi said the Atlanta market has proven to be a place where people show an affinity for the Macy’s brand, and it’s also a high-traffic area, giving Macy’s reason to have a stronger presence.

He also said Macy’s customers spend three times more online, on average, in markets where the retailer also has physical stores.

“When we can be close to a customer with a physical format, our digital business is significantly better,” he said.

Macy’s had 511 of its namesake locations, 55 Bloomingdale’s stores and 160 Bluemercury makeup stores, as of April 30.

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