Bigger is not always better — at least that is what Macy’s’ executives believe when it comes to the scaled-down versions of their department stores. In response to heightened demand accelerated by the pandemic, the retailer announced May 3 it will be taking its smaller-footprint concepts to more suburban shopping centers in 2022.
Macy’s is known for its department stores, but off-mall locations outperformed expectations at the end of last year.
Macy’s plans to add 10 additional off-mall locations this year, including Market by Macy’s, Macy’s Backstage, Bloomie’s and Bloomingdale’s outlets, per a new report by The Wall Street Journal. Sales at these stores outperformed company expectations in Q4 2021 and had higher foot traffic than traditional department stores, Chuck DiGiovanna, head of real estate for Macy’s, told the WSJ.
Market by Macy’s stores range from 22K-58K SF, which is about a fifth of the size of the traditional department store, per the WSJ. Five Market by Macy’s locations opened in Texas and Atlanta over the past two years and feature a more narrow selection than what is found at department stores.
Some of the smaller stores will open in areas where Macy’s is closing an underperforming mall location. According to an October report from Institutional Real Estate Inc., malls in high-migration metropolitan areas, especially in the South, perform better than those in older, slow-growth cities, where markets tend to be oversaturated. The metro areas with the largest percentage of high-vacancy properties include Cincinnati, Chicago, Philadelphia and Baltimore, per IREI.
The rollout of smaller-footprint Macy’s stores precedes Covid, but demand for retail in power centers, or complexes with several anchors where shoppers can knock out multiple errands in one trip, accelerated during the pandemic. Off-mall locations also make it easier for customers to pick up and return items bought online or from other Macy’s stores, DiGiovanna told the WSJ.
“There are so many people working from home, these suburban power centers have really been strong,” he said in an interview with the WSJ. “But we were heading in that direction anyway.”