Macy's Opening 30 Small Format Off Mall Stores

[veteran+]

I discontinued this markdown culture and donated all items to the local food banks. Waste numbers decreased drastically but some customers complained to corporate (very angrily). When the bosses saw the numbers and the increased profit margins they came in to study what I did and tried to replicate it chain wide (they waited to long so buy buy F&E).

So customers complained about a lack of markdown merchandise? I'd laugh that complaint out the door/off the phone. Gosh I don't know what to tell you- we didn't have anything to mark down (none of their business it went to a food bank instead). Maybe you can go look for markdowns at Whole Foods or Trader Joe's (or at the time Sprouts as at that time Sprouts didn't have a markdown program like they do today) instead, oh wait they don't mark down anything...

Or were they complaining that the stuff expiring today was still full price?

They were AGRESSIVE because there was no markdown merchandise to buy. They never purchased FRESH. It was cult like.

We were dilligent with expiring foods. If per chance we missed something we of course marked it down (they would complain as well that it was not marked down enough). After a time we discovered in many stores that they would hide stuff and recover it the next day for a markdown.

So.............................we stopped all markdowns and saved them for the Foodbank.

[mbz321]

Adding to that, the market has changed drastically and they just do not have the skillset to adjust and reinvent for sustainable success.

This. Their key demographic, and their wallets, are disappearing fast. I think Macy's is overall seen as an expensive store for 'old people', and it is going to be near impossible to shake that image without becoming indistinguishable from Kohl's or Target. They should have been downsizing and moving out of malls 20 years ago (same with JCPenney, which at least attempted to, to some degree). I don't see this small-store format going anywhere and I don't even see Macy's as a 'department store' being around 10-15 years from now (maybe leaving a few flagship locations at best).

[babs]

Adding to that, the market has changed drastically and they just do not have the skillset to adjust and reinvent for sustainable success.

This. Their key demographic, and their wallets, are disappearing fast. I think Macy's is overall seen as an expensive store for 'old people', and it is going to be near impossible to shake that image without becoming indistinguishable from Kohl's or Target. They should have been downsizing and moving out of malls 20 years ago (same with JCPenney, which at least attempted to, to some degree). I don't see this small-store format going anywhere and I don't even see Macy's as a 'department store' being around 10-15 years from now (maybe leaving a few flagship locations at best).

For the small format Macy's to be the dominant part of Macy's,.they will need to narrow their focus and the customer they are going after. Continuing to be all things to everyone just in a smaller space will fail as Target is learning. I don't have the answer but so far it seems neither does Macy's.

[ClownLoach]

I think that would actually have the potential to be effective...

Moving the Backstage format into these big box center locations? I couldn't agree more. And they need to integrate the clearance merchandise into the Backstage. It makes no sense that they segregate the clearance like this. Basically if they buy a liquidation type lot then it goes to Backstage, but if it didn't sell at Macy's at full price it doesn't?

The other concern customers mentioned was that "the store is new so not much has gone on sale yet..." but I think that's the entire point of the store, they carry very little stock and what is there will be the top 10% of Macy's SKUs so therefore they won't go on sale or clearance. Macy's and all the other department stores are still unable to get themselves out of the high-low pricing game they've made customers expect, that if it isn't on sale today (and you're coupon-less) then you should wait for a sale because it is assuredly going to be discounted in a week or two. I don't see them operating in that fashion on these small format stores as they need every profit they can get since they're paying rent vs typically owned anchor stores. Once the customers figure out these are full price only boxes they'll just use them as return centers which will bleed away all the profit. At least if they were Backstage they could directly sell anything that gets returned because they don't have to worry about planograms, branded departments and counters etc.

I love that high/low pricing game you mentioned.

Kind of related, but Fresh & Easy had a severe version of that.

Customers depended on deep mark downs to shop. They would not buy FRESH. They would even HIDE close dated merchandise and come in to shop those items they hid. AMAZING!

I discontinued this markdown culture and donated all items to the local food banks. Waste numbers decreased drastically but some customers complained to corporate (very angrily). When the bosses saw the numbers and the increased profit margins they came in to study what I did and tried to replicate it chain wide (they waited to long so buy buy F&E).

Exactly. I had a similar problem with seasonal goods where I put a stop to return and rebuys because they were de facto price adjustments which we only offered for a week after purchase. Customers would try to return their full price purchased items after the holiday and rebuy it at 70% OFF. I said we are not going to play this game anymore and told my employees not to restock any seasonal returns until the next day, just put them in a cart in the back. They were furious and tried complaining to corporate that we were not putting their returns back on the shelf to be repurchased... by them! Sometimes they had carefully tucked in the price tags or reattached them after using the products as their homes decor, hoping we wouldn't notice.

[ClownLoach]

Adding to that, the market has changed drastically and they just do not have the skillset to adjust and reinvent for sustainable success.

This. Their key demographic, and their wallets, are disappearing fast. I think Macy's is overall seen as an expensive store for 'old people', and it is going to be near impossible to shake that image without becoming indistinguishable from Kohl's or Target. They should have been downsizing and moving out of malls 20 years ago (same with JCPenney, which at least attempted to, to some degree). I don't see this small-store format going anywhere and I don't even see Macy's as a 'department store' being around 10-15 years from now (maybe leaving a few flagship locations at best).

For the small format Macy's to be the dominant part of Macy's,.they will need to narrow their focus and the customer they are going after. Continuing to be all things to everyone just in a smaller space will fail as Target is learning. I don't have the answer but so far it seems neither does Macy's.

They're not trying to be all things. Look up the list of departments on the Macy's website for the Arroyo Crossing store in Vegas then compare to others nearby. They have dropped dozens of categories. It's basically clothing only, virtually no home items for example, no furniture etc. But Target also drops entire categories out of the small format stores and upsets their customers who do expect if they see a red bullseye on the front then it has everything they want inside, no limitations outside of maybe foods as debated elsewhere here.

Here's the problem, they started cooking this small tiny Macy's project up when the word got out Amazon was working on a similar size department store replacement. That has already come to fruition, failed, and died with the only two sites to ever open closing their doors at the end of this week.

Second problem is they're competing with DTC brands (brands that sell their clothing direct to customer at their own stores as well as dept. stores). The only purpose for a Department store is to get all those brands under one roof for easier comparison shopping and usually some sales or coupons, plus some store brands that are similar in quality and style at a discounted price. Remove the comparison shopping and selection, remove the sales, and you've left the customer with no reason to go there when they can go to the brand themselves and get more choices from them (like a Levi's store, or Adidas store, etc.).

Third problem is that they're not adding new customers to the fold with this but instead relocating existing customers. Problem is Macy's still is mainly owner of their own stores and/or only pays percentage rent as an anchor. These new stores are new added expenses and all rented. Their cost structure and customer base obviously can't support their existing overhead so why would we expect adding onto it would result in anything but disaster? They're basically going to need these small format stores to deliver probably 10X the sales per square foot of the owned anchor department stores to break even, and frankly I don't see that happening at all especially when the revenue line each day is being eaten by returns hitting the store.

[ClownLoach]

Adding to that, the market has changed drastically and they just do not have the skillset to adjust and reinvent for sustainable success.

This. Their key demographic, and their wallets, are disappearing fast. I think Macy's is overall seen as an expensive store for 'old people', and it is going to be near impossible to shake that image without becoming indistinguishable from Kohl's or Target. They should have been downsizing and moving out of malls 20 years ago (same with JCPenney, which at least attempted to, to some degree). I don't see this small-store format going anywhere and I don't even see Macy's as a 'department store' being around 10-15 years from now (maybe leaving a few flagship locations at best).

I think the ship has sailed. Ron Johnson was right about what department stores needed to be to survive - basically mini shopping malls that are brand centered shops within a store. Then the department store would be outside of a mall thus accelerating the demise of the mall while still enabling brands to get their own branded space. Where he was dead wrong was all the other infrastructure and pricing changes he made, but he was correct that there is nobody steering the ship in the industry and if that didn't change quick then the industry would go away as brands repositioned themselves to go direct to customer in their own boxes. That is exactly what has happened, and now that Pandora's box has opened it can't be closed. The big brands have recognized they don't need to sell tons of units to Macy's and others at a discounted price when they can sell them under their own roof at full price because they don't have to worry about the coupons and price slashing that devalues their brands. The best brands run their own stores now, like Levi's, Lululemon, Coach etc. and they're never going to close their own stores and move back into a old dingy, dusty Macy's or JCPenney that can't portray their brand as well as they can themselves. Department stores are down to 1% of the market I read somewhere? They're already dead, they just haven't realized it yet.

[veteran+]

Adding to that, the market has changed drastically and they just do not have the skillset to adjust and reinvent for sustainable success.

This. Their key demographic, and their wallets, are disappearing fast. I think Macy's is overall seen as an expensive store for 'old people', and it is going to be near impossible to shake that image without becoming indistinguishable from Kohl's or Target. They should have been downsizing and moving out of malls 20 years ago (same with JCPenney, which at least attempted to, to some degree). I don't see this small-store format going anywhere and I don't even see Macy's as a 'department store' being around 10-15 years from now (maybe leaving a few flagship locations at best).

Yep!

And I think THAT is what they should do, close most of the stores (where they should not have been anyway) and keep select Flagship stores in the areas that match a Modern higher end demographic. Totally different concept and demographic but Supreme Stores is a good example.

People would travel far to visit the famous Macy's. I think they can create a niche, higher concept, below Bloomies, Saks, Neiman's, etc. and above Kohls, Dillards, Penneys, etc.

So, go back to what they were with a drastically lower store count.

I visited the Macy's at the Beverly Center at the south edge of West Hollywood and it made me sad. I would not consider this store to be Flagship status but like Dadeland Macy's in Miami it is high volume with better selection. The store presentation was beautiful and the employees (not many around - weekday staffing) were friendly and helpful.

I was looking in housewares and could not find anything I wanted. Of course their website did not match the store's inventory, OF COURSE!

I spoke with a wonderful lady about it and she said "I know, I have been in charge of this department for a long time and they keep on discontinuing lines and categories every few months".

[storewanderer]

They were AGRESSIVE because there was no markdown merchandise to buy. They never purchased FRESH. It was cult like.

We were dilligent with expiring foods. If per chance we missed something we of course marked it down (they would complain as well that it was not marked down enough). After a time we discovered in many stores that they would hide stuff and recover it the next day for a markdown.

So.............................we stopped all markdowns and saved them for the Foodbank.

That is very bad. I shop markdowns for certain types of merchandise (bagged salad for one, some dairy items), won't touch them for some other things (like any bread product and generally meat), but I never expect a markdown. If I find a markdown great, if not then oh well. I recall hearing F&E customers were waiting in the store for a certain time of day when markdowns occured and followed around employees or something. I have also read on coupon websites that Wal Marts do markdowns starting at 7 PM or something in deli, bakery, produce, meat, so some of those websites suggest you go hang out in the department and wait for the markdown to occur. So that is basically suggesting the same thing I heard happened with F&E markdowns. However in going to Wal Mart I have noticed not many stores follow that schedule, some don't seem to mark down at all some days, or do it earlier/later, some mark it all down then put it behind the counter and put it out the next morning, etc.

[storewanderer]

I was looking in housewares and could not find anything I wanted. Of course their website did not match the store's inventory, OF COURSE!

I spoke with a wonderful lady about it and she said "I know, I have been in charge of this department for a long time and they keep on discontinuing lines and categories every few months".

What happened to their home program? Macy's used to have a really good (and also really busy at least here) home/luggage department. Not even that long ago- maybe 7-8 years ago it was still good/BUSY. They have cut floor space (put mattresses in a lot of the space) and the merchandise mix just seems off and constantly in a flux. There are usually only 2-3 employees up there on the entire floor (including one guy sitting at a mattress desk who looks about to fall asleep due to lack of activity) and rarely more than a handfull of customers.

[BreakingThrough]

That is very bad. I shop markdowns for certain types of merchandise (bagged salad for one, some dairy items), won't touch them for some other things (like any bread product and generally meat), but I never expect a markdown. If I find a markdown great, if not then oh well. I recall hearing F&E customers were waiting in the store for a certain time of day when markdowns occured and followed around employees or something.

I know it's veering into the off-topic F&E discussion, but I lived walking distance to the Hermosa Beach small-format F&E and would go in every night around 8:30pm to find cartfulls on cartfulls of marked-down goods. At the time, that time of evening was when I had time to shop. I didn't go there to bargain hunt, but after a couple weeks I realized there were tons of markdowns every day, so...why pay full price for anything? I probably tried almost every prepared dish they offered, all marked down ~75%. The markdowns around Thanksgiving one year were absolutely obscene. So much food wasted even marked down to near zero.

I never EXPECTED a markdown, though. And certainly never hid items. The markdowns were just always there! In the 2 years (?) the store was there, I probably paid full price for maybe 15-20% of everything I bought there. Everything else massive markdowns.

I specifically remember the Family Spaghetti & Meatballs regular price $10.99 markdown like $1.99 or something. Regularly. And cookies down to like 25 cents. Daily. Good times. Adjusting my budget back to "normal" prices (and this was pre-pandemic) was painful. It almost felt like a subsidized government program.