Backstage, the off-price division of Macy’s Inc., is taking center stage.
Continuing its rapid rollout, 37 Backstage departments inside Macy’s locations around the country — including the Herald Square and State Street flagships — will be opening from April 9 through June of this year.
Backstage stores-within-store occupy a big chunk of space — from 11,000 to 16,000 square feet each — and offer bargains on apparel and accessories for women, men and children; toys; housewares; beauty products; designer handbags; activewear, food and pet products, among other items.
It’s a mix of brands and items that may or may not be sold at Macy’s. Part of the discount strategy is to encourage consumers to eventually graduate from shopping Macy’s Backstage to shopping Macy’s full-price, just like Saks Off 5th sees its shoppers over time graduating to Saks Fifth Avenue and Nordstrom Rack sees customers migrating to Nordstrom full-line stores.
Macy’s last year added Backstage to 45 full-line stores, and with the 37 more this year, there willbe about 300 Backstage in-store departments. There are also six freestanding Backstage stores, and a few more are expected to open this year.
At the Herald Square flagship in Manhattan, Backstage will occupy over 15,000 square feet and open for business in May. At Macy’s State Street flagship in Chicago, Backstage will debut on April 9.
Backstage is part of Macy’s efforts to diversify its brick-and-mortar portfolio, from being mall-based with large department stores, to also having a significant off-mall presence by layering in smaller, specialized formats such as Market by Macy’s, Bloomingdale’s The Outlet, and Bloomies — all of which are part of the Macys Inc. portfolio.
Bloomie’s, which launched last year with one unit in Alexandria, Va., offers contemporary and luxury brands, services, tech-enabled stylists, new store design concepts and a restaurant. Additional Bloomies locations are in the works.
Market by Macy’s, currently with three units in Texas, and two in Atlanta, will also expand to additional markets. The specialty format has branded and private-label fashion, products from local designers and direct-to-consumer brands, food, an apothecary, plants, home items and a café.
Last year, two new free-standing Backstage locations opened in Dallas.
“Macy’s continues to shift its store fleet to meet the needs of changing consumer behaviors and plans to open additional off-mall locations throughout 2022,” the company said in a statement Tuesday.
One challenge for Macy’s will be to find labor for its new formats. Macy’s Backstage posts job openings on macysinc.com/careers. Backstage has a distribution center in Columbus, Ohio.
Macy’s was a Johnny-come-lately to the off-price sector, long seeing no need to operate off-price units because its department stores had become very price promotional. It wasn’t until 2015 when Macy’s introduced the Backstage concept, after research indicated the company was losing share to off-pricers like T.J. Maxx — as well as the off-price sector’s high level of profitability. Macy’s needed to find new growth avenues.
Last September, Macy’s Inc. chairman and chief executive officer Jeff Gennette said that the average price of an item at Backstage is $13 to $14, whereas at Macy’s full-line department stores, the average is $35 to $36. At the Bloomingdale’s division, the average price is just under $100.
According to Gennette, 18 percent of those visiting Backstage also visit the full-line departments at Macy’s, and spend 29 percent more. “Those customers are very profitable for us,” Gennette said. “They are also younger and more diverse.”
Despite supply chain issues which plagued the retail industry last year, Gennette said Backstage was in a good stock position, even in apparel. Off-pricers such as Backstage would have an opportunity to procure merchandise that arrives late due to factory and port delays around the world, out-of-season merchandise that regular price stores would not necessarily want to display in their stores and on their websites.