Size matters: Macy's opens small stores across the country and moves away from department stores

For over 150 years, Macy's has been one of the most iconic names among US department stores. But at the end of 2021, Macy's loyal customers received some potentially bad news. best life.

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The company announced that it plans to close 125 stores over the next three years, with 60 closures planned for 2022 alone. However, this is not the only change that Macy's is going to initiate this year.

Shoppers are steadily moving away from large indoor malls.

Retail trends have changed significantly over the past few years. Shoppers have moved away from large indoor malls and have instead turned their attention to smaller suburban centers such as grocery malls.

Brandon Isner, Head of Americas Retail at CBRE Group Inc., said the centers have become "a mainstay of retail over the past 5 to 10 years."

According to CRE, retail affordability in both grocery centers and malls has dropped from nearly 13 percent in 2012 to less than 8 percent now, providing a clear picture of how many retailers have taken notice of opening stores in these smaller centers. . On the other hand, availability in indoor malls has increased over the years as retailers close stores there.

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As a result, Macy's has begun experimenting with smaller stores in 2020.

The mass exodus from the malls has only accelerated. The rise of online shopping and the migration of millennials to the suburbs have contributed to the decline of malls, but the pandemic has greatly exacerbated this shift. To avoid the severe impact of mall decline, Macy's began opening smaller department stores in 2020. Named Market by Macy's, the stores cover only 2000 to 5000 square meters, about one-fifth of the department store chain's original size.

“It's the Macy's you know and love—just a smaller version,” Macy's explains on its website. “Each store offers convenient services, fun events and the latest trends to make shopping quick and easy.”

This store format has already begun to attract new customers to Macy's.

Over the past two years, Macy's has opened five Market by Macy's stores in Atlanta, Georgia and throughout Texas, and the results look promising. Chuck DiGiovanna, head of real estate at Macy's, said not only had these stores successfully attracted new and existing customers, but sales at Market by Macy's for the fourth quarter of 2021 had exceeded the company's expectations. The smaller stores were also attracting new customers faster than regular Macy's department stores, DiGiovanna said.

The company plans to open several more smaller stores this year.

As a result of positive customer feedback, Macy's decided to accelerate the rollout of smaller stores.

The company currently plans to add 10 more off-mall outlets, which will include Market by Macy's stores, as well as the company's other smaller outlets such as Macy's Backstage, Bloomie's and Bloomingdale's.

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“A lot of people are working from home, these suburban centers are really strong,” DiGiovanna said. “But we still went in that direction.”

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