Macy’s to close a full-line store in St. Louis amid small-format expansion

Dive Brief:

  • Macy’s continues to inch away from the mall, in what it says is an acceleration of its off-mall, small-format brick-and-mortar strategy, with the opening of three “Market by Macy’s” locations and one off-price Backstage location.

  • Among those, in Evergreen Park, Illinois, outside of Chicago, a Market by Macy’s and Backstage will share space, with Backstage taking the second floor, according to a company press release. That location will open in the fall.

  • Market by Macy’s will debut at Chesterfield Commons in the St. Louis area at an undisclosed time, replacing a full-line Macy’s store in the area the company has decided to close. In addition, the banner will open at Johns Creek Town Center in Suwanee, Georgia, on Aug. 20, the third in the metro-Atlanta area.

Dive Insight:

“Market by Macy’s” was first unveiled in early 2020, when the department store presented its Polaris turnaround strategy, a series of planned reforms that almost immediately got derailed by the pandemic.

In February, just before the company and retail in general began to juggle furloughs, layoffs and temporary store closures as COVID-19 threatened public health, the first Market by Macy’s opened in Texas. The second opened nearby about a year later, and three more were also added in 2021. With the openings announced this week, Macy’s has achieved its plan to get that fleet to eight locations by the end of the year.

The stores are merchandised with a “curated assortment of the latest fashion trends” and located in more convenient strip-style centers rather than traditional malls. The merchandising and site selection twists are worthy endeavors, according to GlobalData Managing Director Neil Saunders.

“Opening more smaller formats is a sensible move for Macy’s and there are many advantages to the strategy,” he said by email. “However, using the word ‘acceleration’ to describe opening 3 stores, years after the small store idea was first conceived, isn’t an appropriate use of the English language. This is a very small step from a company that desperately needs to take a few giant strides.”

That includes addressing issues at existing stores, which Saunders says are “a shabby, disorganized, unappealing mess, even in malls which are thriving.”

Backstage similarly is a distraction at a time when Macy’s needs to address the issues at its full-line stores, according to Nick Egelanian, president of retail development firm SiteWorks.

“There’s just no evidence that what they’re doing is needed nor that it will be competitive, either in merchandising or pricing,” he said by phone, noting that locating Backstage in strip centers places it in direct competition with off-price stalwarts like TJX, Ross and Burlington. “And so far, they have a track record of batting zero — every time they tried to do something in a smaller format, it’s failed.”

Saunders sees the move as promising, if Macy’s can follow through.

“There is an undeniable advantage of adding smaller stores into the mix. People are shopping more locally, they want more edited collections, they desire faster and easier shopping experiences, and there is a general trend away from malls to off-mall locations,” he said. “That said, smaller stores can be more difficult to manage than larger ones. Smaller stores force retailers to edit and curate ranges, they have to think carefully about what to include and what to leave out. Getting this right requires a lot of skill and local knowledge and whether Macy’s is up to this task remains to be seen.”