Macy's Opening 30 Small Format Off Mall Stores

[Alpha8472]

Macy's is opening 30 small format off mall stores. The small stores have good sales and good customer experience scores.

These small format stores replace a larger Macy's store in some cases. The large Macy's stores seem to be largely wasted space. They are often ugly and tired looking.

These new off mall stores seem new and stylish looking. They attract new customers who want to shop in a trendy and hip environment.

If it works at attract the younger people, then why not. These small stores are probably much cheaper to run than those huge old stores.

These small stores used to be called The Market by Macy's, but now they will just use the regular Macy's name.

https://chainstoreage.com/macys-open-30 ... all-growth

[rwsandiego]

From the few pictures on Google Maps, the Highland, IN store looks pretty nice. More power to them!

[storewanderer]

If they can curate the assortment this might work. Their large stores have so much dead space and many sections feel like they need to just go- tired/worn fixtures, lack of staffing, poor lighting, stained flooring, then in other parts of the same physical location store you have updated and modern well kept looking fixtures and departments.

[storewanderer]

Went into the small format Macy's in the Arroyo center in Southwest Las Vegas.

I'm not sure what this was previously. Macy's has a cement floor. Whatever was here previously had some kind of square tile floors because there are old glue marks in random places throughout the Macy's. There is also evidence of rectangular shaped type flooring remnants around the back sales floor area of the store because the old glue marks from that are visible in various areas of Macy's too.

The restrooms were not remodeled from whatever this previously was.

As far as the product mix goes the store has a very curated mix of items. I would not call it a well curated mix but it felt like they made a good effort to get branded items in the store and if anything it felt like they were downplaying private label a bit. For what it is I think the store is too overpriced. But if they can get a few customers to buy these items at these prices this format may work out for them. The store also seemed to have far less sales/promotional activity than larger stores.

Staffing was very minimal with maybe 4 employees total in the store (including 2 in the cosmetics areas). The store had almost no customers. Everything was neat as could be. I was surprised the small shoe department was a mixture of self serve shoes (boxes on sales floor) and employee serve shoes.

They didn't spend much money on the interior; it looks very low budget. It looks like they could fold this thing up and be gone quickly. It is like they demolished the interior of whatever was here before (except the restrooms that are left untouched) but really didn't do much beyond lighting install and removable fixture install. Maybe they did more to the walls than I noticed.

Overall I wouldn't shop this store. However maybe this format will work for Macy's to get more control over their mix and store condition. Macy's large stores are so uneven in quality.

[ClownLoach]

I think Macy's large formats are neglected and need downsizing for sure.

I think the pendulum swings too far in this small format, just like it did with the failure of Target small format. And I think the trend is dying.

The difference is Target has the capacity and capital to play around and try new things. Macy's does not. Macy's needs to fix their execution in their existing stores (which in many cases may mean closing the store) and once those are stable then they can play with these baby size stores.

[storewanderer]

I think Macy's large formats are neglected and need downsizing for sure.

I think the pendulum swings too far in this small format, just like it did with the failure of Target small format. And I think the trend is dying.

The difference is Target has the capacity and capital to play around and try new things. Macy's does not. Macy's needs to fix their execution in their existing stores (which in many cases may mean closing the store) and once those are stable then they can play with these baby size stores.

What I wonder is Macy's basic claim that the presence of these small stores somehow enhances online sales in a given radius of the store. I think that is somewhat fuzzy, but depending on how true that really is, maybe this makes sense. The Wal Mart there at that shopping center is jam packed, recently remodeled, sort of odd to see Macy's next to Wal Mart.

Taking it a step further I did notice a couple people going into the store with boxes and returning items. So these would appear to be online order returns. I wonder if Macy's could do something better where they try to recover the sale. For instance you order something and the size is not right. So you initiate a "return" online but then it gives the option for an exchange at the small store in your neighborhood they will fulfill with your "exchange need size (s)" next business day from a large store nearby. They would just accumulate the requests, pull them from nearby stores, and courier them to the small store. Then for unwanted items the small store could just send them back to the large store end of day. I guess they'd be needing to process dozens of these transactions in a day for it to be worth it, and I suspect the volume isn't even close enough yet for this idea to be viable.

[submariner]

Went into the small format Macy's in the Arroyo center in Southwest Las Vegas.

I'm not sure what this was previously.

According to Street View, it was previously a Babies R Us:

[storewanderer]

No wonder I couldn't place what the store seemed like. I was in a total of ONE Babies R Us ever (the Reno one) and only a few times.

[ClownLoach]

I think Macy's large formats are neglected and need downsizing for sure.

I think the pendulum swings too far in this small format, just like it did with the failure of Target small format. And I think the trend is dying.

The difference is Target has the capacity and capital to play around and try new things. Macy's does not. Macy's needs to fix their execution in their existing stores (which in many cases may mean closing the store) and once those are stable then they can play with these baby size stores.

What I wonder is Macy's basic claim that the presence of these small stores somehow enhances online sales in a given radius of the store. I think that is somewhat fuzzy, but depending on how true that really is, maybe this makes sense. The Wal Mart there at that shopping center is jam packed, recently remodeled, sort of odd to see Macy's next to Wal Mart.

Taking it a step further I did notice a couple people going into the store with boxes and returning items. So these would appear to be online order returns. I wonder if Macy's could do something better where they try to recover the sale. For instance you order something and the size is not right. So you initiate a "return" online but then it gives the option for an exchange at the small store in your neighborhood they will fulfill with your "exchange need size (s)" next business day from a large store nearby. They would just accumulate the requests, pull them from nearby stores, and courier them to the small store. Then for unwanted items the small store could just send them back to the large store end of day. I guess they'd be needing to process dozens of these transactions in a day for it to be worth it, and I suspect the volume isn't even close enough yet for this idea to be viable.

That's a busy shopping center, the Sam's Club also is very busy and is testing their newest prototype which has a large full service meat and seafood counter. I am unaware of any other Sam's in SoCal or Nevada with that "Fresh Market" counter which I'm assuming they only piloted in top volume stores. It is a difficult shopping center to drive through, two long strips of big box stores that face each other and thus share parking lots with the store directly across. It may be one of those examples where "less is more" and the stores are so high volume that shoppers may be sometimes deterred and decide to visit lower volume stores nearby to avoid the chaos. That Walmart and Sam's are probably going to be so wildly busy in December that they will crush any chance of this Macy's getting established.

I'm not sold on this idea that these help the company as a whole and may just enable unprofitable omnichannel and e-commerce sales. I feel like one of the biggest problems with most omnichannel operations is in store returns, because most of the time the store gets flooded with big returns that are now negative sales for them plus they're stuck with merchandise they don't sell. I studied this a bit at my last company as I was getting criticism for a deteriorating sales trend in parts of my market, specifically my more affluent areas, and summed it up that my stores that underperformed the region had return rates 4%-5% higher. Their sales were actually better up front until the returns were factored in, and these were bolstered by massive e-commerce returns. Where customers have high credit limits they have no qualms about ordering dozens of items online to choose the single item they want, and then they fill up the back of their Navigator or Escalade and return the rest to the store. They keep a single item priced around $50 and return $1500-$2000 at once. At one point I got so irritated with being reamed by my boss that I had my stores track large online returns and I took so many in a week that I would have otherwise had the top performing group in the company when I came in on the bottom 10% instead. When I visit my local Macy's I see many e-commerce items in their vast clearance area (note I'm not talking about "Backstage" discount product which is different). They usually have a tag that says something to the effect of not on plan for the store so they are marked down. I'm sure that other retailers like Target wind up taking this stuff and it becomes the pallets sold to the blowout store operators that were discussed previously on other threads. The returns are a very serious problem and I just cannot comprehend why anyone would invest in leasing new buildings to encourage them unless they have a malicious intent.

I could very easily see where this Macy's small format encourages this type of excessive purchasing and return behavior, makes the online sales look good for the Wall Street buffoons, and then the retail store eats it when it all comes back. If the company is being pressured by Wall Street to show that magical e-commerce sales figure even if it isn't really profitable then this might help deliver it and then raise the stock price (which in turn due to bought back shares may be temporarily subsidizing these locations until the wind changes on Wall Street and they decide to start scoping some other figure, if you want a perfect example of that look at what happened when they stopped caring about streaming service subscription counts and started asking about the profits instead....) Meanwhile the company has spent hundreds of dollars in shipping and handling costs plus has to mark down thousands of dollars in product that isn't on program for the store it was returned at. They obviously haven't made any money at all and would have been far better off if that customer never bought that $50 item and took their business elsewhere.

I think at some point someone with half a brain is going to start questioning all this e-commerce crap and how much it's contributing to inflation as it adds unreasonable costs to these stores that inevitably get passed along to every customer, and when it does I expect to see a massive culling of curbside pickup programs, free shipping and free returns, and all of this nonsense that just makes everything cost more for all of us. When that happens I would expect this entire fleet of small Macy's stores to slam their doors shut with little fanfare.

Where I do see this potentially being more valuable is the Bloomie's small format. Those large stores are clogged with very high end goods, especially housewares, that are slow turning inventory. I am sure that if they didn't have to sit on so much inventory they could open many of the smaller Bloomie's stores in new markets and then use them as a platform to sell the slower moving goods which get delivered to the customer or to the site. The distinction between the two is that Macy's is still very widespread with hundreds of locations while Bloomingdales is only a handful of stores and far too high of a cost to open a full scale store in areas they don't currently service since they obviously have to house hundreds of millions in inventory with the full size format. If say luggage didn't have to span 10,000 square feet of the floor and maintain multiple units of each size and color of the suitcase, but instead they carry the 2 or 3 most popular in each brand/line with signage to educate the customers about the additional sizes/colors available, and then a salesperson can immediately order any different size for next day delivery, I think the cost savings from the reduced overhead would cover the shipping costs plus they are going to be bringing in new customers from the new market entry. I don't see Macy's acquiring new customers with these boxes but rather just rearranging their existing ones to different channels or buildings while they're still sitting on deteriorating assets (big owned stores) that are further undermined by renting these smaller spaces. Of course only the best and most productive large Macy's would be worth anything to sell to another retailer while they replace the store with one of these smaller boxes elsewhere; the less productive sites just sit and these accelerate the rot. Basically I think Macy's is grown out as far as it will go, probably more than it should be, while there are numerous markets they could expand the Bloomingdales business into with a smaller format store.

[buckguy]

When department stores started opening branches--just before and after WWII, they usually were small and those stores survived for a long time until malls popped up nearby. Macy's had a bunch of small stores (2-40K sf) in small towns into the 80s. Upscale stores kept small stores in resort areas even longer. There is a model for this even if the institutional memory for this is long gone. The addition of pickup/returns for web sales could make this workable.

Department stores can still fill the typical 150-200K sf buildings with stuff, but not the bigger stores that came with the second wave of branches especially in LA and the big Northeastern cities, as well as places like Detroit Those stores were supposed to bring downtown to the suburbs, including tea rooms and departments that vanished long ago like major appliances and bargain basements. The smaller stores started out with small versions of departments that did ok downtown like candy, bakeries, stationary, and books, but they never worked as small departments in suburban mall stores. Chains inside the mall took on that business. Suburban department stores probably did benefit from the demise of full-line mens stores and better women's stores, but put it all together and they became clothing stores with varying amounts of home goods and changing clothing styles mean they have to compete more with casual clothing chains. It's not hard to pare down what's left for smaller stores.