With sales at smaller stores exceeding expectations in the fourth quarter of 2021, Macy’s will be opening another 10 off-mall locations in the next year, to include new Market by Macy’s and Macy’s Backstage stores, as well as Bloomie’s and Bloomingdale’s outlet stores.
Five Market by Macy’s stores have opened in Atlanta, Georgia, and Texas over the past two years. The pandemic had an influence on this, with Macy’s and other retailers coming to the realization that caution was reducing traffic in malls and large shopping centers.
Market by Macy’s locations are between 22,000 and 58,000 square feet in size, around one-fifth of the size of a Macy’s department store. Macy’s has discovered that the smaller-format concepts are easier to staff and keep stocked, updating their inventory regularly, to keep up with trends.
‘Suburban Power Centers’
Shopping trends, in general, have changed since the pandemic, with more demand for local solutions, curbside pickup and more experiential opportunities. According to Chuck DiGiovanna in the real estate department at Macy’s:
There are so many people working from home. These suburban power centers have really been strong, but we were heading in that direction anyway.
Staying above ‘C’ level
Macy’s will continue their traditional presence in highly considered A and B grade malls while reducing the number of stores in C grade centers. Joe Hodge, senior director of real estate elaborated on the plan:
As of January 29, 2022, of our 446 Macy’s full-line locations approximately 86% of those locations are in A and B grade malls. We believe these malls are still the dominant retail drivers in their communities and will continue to thrive. The fallout will be in the C-graded and below malls. We actively monitor those properties, evaluate redevelopment opportunities, value creation opportunities, and actively plan for possible disruption. We will continue to monitor post-pandemic shopping habits and remain nimble and ready to react to market forces.
