Tuesday, February 7, 2017

EXCLUSIVE: Macy's Backstage to Make Atlanta Debut This Spring

A backstage store within a full-line Macy's department store 
Macy's is bringing their "backstage" concept to metro Atlanta. 

Macy's backstage, the new-ish outlet division of Macy's department store, will be opening three new stores in metro Atlanta in the coming months.  The stores will occupy existing space within current Macy's at Cumberland Mall near Smyrna, Town Center at Cobb in Kennesaw and Gwinnett Place Mall in Duluth.    

Macy's piloted the "backstage" concept with four stores in New York in late 2015.  Since then, the brand has been expanded to 22 units in seven states. In 19 of those stores, backstage stores are housed within existing full-line Macy's stores.    

Backstage is essentially Macy's attempt to attract T.J. Maxx and Marshalls shoppers in an attempt to convert them to Macy's shoppers.  In other words, entice the consumer with a deeply discounted widgit and hopefully have them pair that with some full price boots or some high margin makeup, or really anything.  Macy's has been struggling for years with retailers like T.J. Maxx and nordstrom rack, the outlet division of Nordstrom, taking market share.     

Macy's trying to replicate the  Marshalls / T.J. Maxx POP area with impulse items 

TJX Companies (which includes T.J. Maxx, Marshalls, HomeGoods and online retailer Sierra Trading Post) has a market capitalization of $49.2 billion.  Macy's (which includes Macy's, Macy's backstage, Bloomingdale's, Bloomingdale's The Outlet Store and Bluemercury, a cosmetics company, today has a market capitalization of just $10 billion.    

Launched in 2010, there are currently 17 Bloomingdale's The Outlet Stores open throughout ten states, but none in Georgia.   

In metro Atlanta, the backstage stores at Cumberland and Town Center Malls will reportedly occupy space in the full-line store's lower level, while the concept will be situated on the upper floor in Gwinnett Place Mall.  Not surprisingly, in each market in which the new backstage stores will open locally, there are both Marshalls and TJ Maxx stores within close proximity.    

Backstage stores stock a variety of men’s, women’s and kids’ apparel as well as assorted home furnishings and housewares.    

Macy's merchandise being cleared to make way for the new backstage store 
Sources say that existing merchandise is being redistributed within the store to make room for the new backstage stores.  The backstage stores, which will be operated as essentially a "shop in shop," will measure about 20,000 to 30,000 square feet.    Construction is slated to begin next week at all three locations with the company planning to have the backstage stores open by late April or early May.    

While situated within the Macy's, backstage stores will reportedly have their own employees, their own return policy, and merchandise completely different than the full-line Macy's store.  Merchandise purchased in backstage must be returned to backstage and while the Macy's charge card is an accepted method of payment and Plenti points can be earned, traditional Macy's coupons will reportedly not be accepted at backstage.    

Backstage stores will reportedly be stocked with merchandise from different vendors than the full line store and will have a completely separate buying team.    

"LAST ACT," the current name for the clearance area within Macy's stores, will reportedly not change as a result of the backstage openings.  According to multiple employees with whom I spoke at both the upcoming Atlanta area stores and at existing locations, Last Act departments are expected to remain in the full-line stores, furthering the company's notion that the merchandise in the backstage stores is "completely different" than what one can find in the full-line store.   

The LAST ACT clearance area at the Cumberland Mall Macy's store 
The approximately two month renovation process suggests that the company will significantly alter the appearance of the spaces they are turning over to the backstage concept.  Given the expense of this operation, many in Duluth should be pleased given this seems to suggest the company is doubling down on Gwinnett Place with no intention to shutter the store any time soon.     

In addition, I'm told other local Macy's "may" receive backstage stores in the future.   

As a company, Macy's is at a bit of a crossroads.  Last month Macy's confirmed it had or will soon close 68 full-line stores.  The retail giant also said it would be cutting "layers of management'' at its central operations, and paring down the number of managers at individual stores, leading to a loss of roughly 6,200 more jobs.  "We continue to experience declining traffic in our stores where the majority of our business is still transacted,'' Terry Lundgren, Macy's CEO said in a statement at the time of the announcement.  Lundgren, who has been at the company's helm since 2003, will step down as CEO in the coming months.  Jeff Gennette, 55, who was elected president of Macy's in 2014, will assume the CEO position during the first quarter.  Lundgren, 64, is expected to continue as executive chairman and work alongside Gennette for an undetermined amount of time.  

This was the plan.    

Late last week came word that Hudson's Bay Company, the Toronto-based retail conglomerate, was involved in "early stage discussions" to acquire Macy's.  Neither company has officially responded to the report but it is an intriguing idea.   Hudson's Bay already owns Saks Fifth Avenue (and the popular OFF FIFTH outlet division) and Lord & Taylor, among others, but purchasing Macy's would likely be their largest acquisition to date.     

Industry observers, myself included, believe this could either go really well or terribly wrong for Hudson's Bay.  Hudson's would likely need to finance its Macy's acquisition by borrowing against its real estate holdings, or by bringing in a partner.  The purchase of Macy's and its vast real estate holdings could be a huge win, but if it does not go according to plan, it could topple both companies in the process.  With great risk comes great reward but we'll time will tell if this marriage of retailers is meant to be.     

Macy's is due to report fourth quarter sales and earnings on February 21st.  

Are you excited for "Macy's backstage" to be coming to metro Atlanta?  Do you think the "backstage" concept will help or hurt the Macy's brand overall?  Do you think Hudson's Bay is being smart or stupid their would-be pursuit of Macy's?

Please share your thoughts below.  

6 comments:

Anonymous said...

Since it doesn't fit the definition of an outlet, please don't call it that. Companies should be held to task.

Anonymous said...

Used to shop at Macy's quite a bit but hardly ever these days. Their stores seem messy now and the clothing is not organized and is mostly just strewed about. Also not the best place to get assistance if you need it.

I'm a big fan of Nordstrom Rack.

Stacy said...

I'm a big Macy's shopper. But I buy almost all online. With free shipping and return shipping, why bother going to a store, where the service is usually surly and/or I have to hunt someone down to pay?

Anonymous said...

Very surprised they picked Gwinnett. I wish they had picked Northlake.

Lorrie said...

Once Rich's was gone, everything went down hill. Rich's always had unique items, especially at Christmas. And they always had some of the best sales. Miss Rich's.

mirakwok said...

I hope that this won't be another disappointment. I don't shop there often because of their terrible sales and useless coupons.