Macy's speeds up plans to open smaller stores outside of malls

Macy’s is accelerating its plans to open smaller stores that aren’t attached to suburban shopping malls, in a bid to evolve along with its customers’ shopping preferences coming out of the Covid pandemic.

The department store chain said Wednesday that it will open three stores this fall that each represent ways Macy’s is thinking about how it aims to reposition its real estate in the future. That includes:

• Combining some of its different businesses under one roof
• Closing one of its department stores at 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
• Adding another Market by Macy’s location in an area where it already has multiple of those shops

“We want to be convenient and we want to make it easy,” Marc Mastronardi, Macy’s chief stores officer, said in an interview. “Customer behavior just keeps changing. And the more that we have the agility as an organization to shift and react, this feels like the next natural evolution.”

This fits into a broader strategy that Macy’s laid out to investors in February 2020, shortly before Covid-19 cases began to ramp up in the United States. At the time, the company said it planned to shutter 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 about one-fifth of the size of its full-line locations and tout services such as buy online, pick up in store. It will reach eight by the end of this year.

Going small and getting away from the mall has become somewhat of a trend in the retail industry. It’s a blueprint that retailers from Gap to Nordstrom have been following. Kohl’s also said it’s aiming to open 100 smaller-footprint locations over the next four years. Macy’s last year opened its first pint-sized Bloomingdale’s shop, called Bloomie’s.

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

“There are malls that are underperforming and this is an opportunity to get into a market in the right spot and in a new format,” said Mastronardi.

This fall, Macy’s will open its first-ever dual Market by Macy’s and Macy’s Backstage store, which is a competitor to off-price chains including T.J. Maxx, in the Chicago metropolitan area.

Second, it plans to shutter one of its mall-anchored department stores in the Chesterfield area of St. Louis in order to open a smaller Market by Macy’s location nearby, in an open-air strip mall known as Chesterfield Commons.

And third, Macy’s will open a Market by Macy’s store in Johns Creek Town Center, in Suwanee, Georgia, marking its third such location in the metro-Atlanta 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 highly trafficked area, giving Macy’s a reason to have a beefed-up presence.

He also said Macy’s customers are spending three times more online, on average, in markets where the retailer also has bricks-and-mortar stores.

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

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