May 05, 2022
Macy’s, a longtime feature of the mall, is developing a stand-alone store strategy in a way that could change how customers view the retail chain.
In the fourth quarter of 2021, Macy’s saw surprising success from its Market by Macy’s stores, its new smaller-format unit. The retailer has piloted the concept in five suburban “power centers” in Texas and Atlanta over the past two years, according to The Wall Street Journal.
Now, the retailer has announced plans to open 10 new non-mall locations over the coming year, including new Market by Macy’s stores, standalone discount Macy’s Backstage locations, Bloomie’s outlet stores and Bloomingdale’s.
Macy’s discovered that small-format concepts — which are about one-fifth the size of a traditional mall store — are easier to manage and stock. Meanwhile, the chain has closed about half of the 125 underperforming mall locations it announced would close in February 2020. Some non-mall locations will open in areas where mall stores have been closed.
Last summer, Macy’s touted the success of its digital-focused turnaround strategy after a successful second-quarter earnings report, according to CNBC. The report came after vaccines for COVID-19 became widely available, but before the Delta variant of the new coronavirus reinstated some social distancing requirements and slowed foot traffic. This led to speculation that Macy’s was partly monitoring a pandemic lull due to pent-up demand.
Last fall, however, Macy’s reported a successful third quarter, again beating analysts’ estimates, according to a separate report. CNBC article. The chain said it added 4.4 million new shoppers this quarter.
Macy’s isn’t the only mall-based retailer that has recently taken its non-mall presence seriously.
On a conference call in April, Foot Locker discussed plans to continue accelerating its move to non-mall locations, Looking for Alpha reported. The chain plans to expand its non-mall Power Store footprint and community stores to 300 stores over the next three years.
Despite retailers bailing out malls, an expert, Natalie Kotlyar, managing partner at BDO USA, recently said Yahoo! Finance that malls are not dying, indicating an increase in foot traffic as the pandemic appears to be waning.
DISCUSSION QUESTIONS: Do you see moving away from the mall and into smaller, standalone stores as a path of reinvention for Macy’s? What will the company need to do differently to be successful in non-mall retail?
“Finally, reinvention. I like that idea.”