Macy’s M -1.51% debuted its new discount concept called Backstage last week, offering up a sneak peak of the department store chain’s off-price format. Is this a case of too little too late, or the end of the era?
Perhaps a little of both.
Macy’s Backstage is a discount outlet much like Nordstrom’s JWN -1.39%Rack, Off Fifth by Saks Fifth Ave and Neiman Marcus’ Last Call. It’s positioned to compete with off-price chains Kohl’s KSS -2.00%, Marshall’s and T.J. Maxx , retailers that continue to claim a growing portion of shopper’s apparel and home dollars.
It’s an edited down selection of apparel discounted from Macy’s department stores with the addition of some new names and merchandise. There are shopping carts and big dressing rooms with charging stations, something that should appeal to younger shoppers, the very ones Macy’s has been courting with its marketing and mobile programs.
Making Macy’s cool with Millennials has been a difficult task for the retailer, something management openly acknowledges. Off-price retailers are popular with younger, value-oriented shoppers. They like a bargain and enjoy the treasure hunt-like experience.
Many have asked what took Macy’s so long to come up with the concept. Backstage could very well be too late, as fellow Forbes contributor Barbara Thau has pointed out.
But it also could be the idea that finally saves Macy’s from a doomed future as a mid-priced department store tied to the dying mid-priced mall.
At 30,000 sq. feet, the store is small enough to put in modern shopping centers alongside The Rack, Off Fifth and Marshall’s. It frees the retailer from the regional mall, and puts it right in the parking lot where its shoppers spend much of their time.
Macy’s has spent too much time trying to be upscale, and outside of the first few floors of the Herald Square flagship store in Manhattan, it’s an attempt that is sorely misplaced. Neiman Marcus and Nordstrom are better luxury retailers and the Macy’s-owned Bloomingdales banner is better suited to the task.
So why did it take Macy’s so long to come up with the concept? In many ways, management had a lot on its plate — absorbing acquisitions and creating the first truly national department store brand. So much of Macy’s operations were outdated that getting its existing house in order has been the priority.
And in that regard, Macy’s has done remarkably well, but improved performance-based store remodels, new brands and mobile marketing campaigns is nearing its end. Macy’s needs something more dramatic.
Macy’s is testing these stores in the New York Metro area, not necessarily the best test for what plays in the rest of the country. It will have six in total there by the end of the year. But I suspect Macy’s has a pretty good idea as to how well these will translate to other markets. It’s already a time tested and very successful retail concept. One that should provide Macy’s with a formula that could save it from an otherwise dismal future tied to large, mall-based stores.