Macy’s Adds 10 Backstage Locations As Off-Price Sector Takes Off

Macy’s is expanding its off-price division, Macy’s Backstage, with 10 new locations that will open by July.

The expansion will grow Backstage to 319 locations, 310 of them inside Macy’s department stores, and nine freestanding stores.

All of the new locations announced today will be located in existing Macy’s stores.

The move comes as the off-price segment is showing added strength as consumers become more cost-conscious due to inflation and economic uncertainty.

Off-price popularity

Macy’s launched its first Backstage shop in 2016, and the positive response to the concept has fueled its growth, Michael Hersh, vice-president of off-price for Macy’s, said in an interview.

“The results that we were able to deliver early on in the concept gave us the confidence to where we have, seven years later, expanded this concept to 300 plus locations nationwide,” he said.

Customers have shown, Hersh said, that they “love a treasure hunt and they love great values and great finds.”

Macy’s reported in its fourth-quarter earnings presentation in March that for fiscal 2022, comparable sales for Backstage store-within-a-store locations open more than one year were outperforming Macy’s full line stores by 2 percentage points.

Of the customers at those store-in-store locations, 18% cross-shopped at both Backstage and the full-line Macy’s where the Backstage is located, and those Backstage customers drove 32% of the building sales, Macy’s reported in the earnings presentation. Those combo Backstage and Macy’s customers shop 6.6 times a year, versus 3.2 times for all shoppers, according to Macy’s.

Backstage outperforms

Foot traffic analytics firm Placer.ai has been tracking strong increases in visits to off-price chains. It reported double-digit traffic spikes, year-over-year, in January at T.J. Maxx (up 140.6%), Marshalls (15%) and Burlington (11.5%). The overall off-price category, based on data from selected chains, was up 5.7% during the first quarter of this year, according to Placer.ai.

Placer.ai reported yesterday that Macy’s stores with Backstage locations are outperforming the Macy’s stores that don’t have the off-price offering, in terms of attracting visitors.

In picking new locations for Backstage, Macy’s looks for places “where there’s an opportunity to serve a local consumer that really engages off-price, and a value-conscious and fashion-savvy customer that loves the thrill of the hunt,” Hersh said.

“We’re also looking for places in a given location where we have the appropriate space for Backstage,” he said. Macy’s typically uses between 11,000 to 18,000 square feet within an existing Macy’s department store for its Backstage shops.

Macy’s currently has Backstage locations in more than half of its full-size department stores. The expansion focus, Hersh said, is on rolling out more of the store-in-store locations.

The Backstage merchandise is not sold online on Macy’s e-commerce website. “The off-price treasure hunting experience is more difficult to replicate online,” Hersh said.

Unique off-price niche

“The opportunity for Macy’s Backstage, and really why we got into the store-within-store business, is the opportunity to establish ourselves as a national on-mall, off-price retailer,” he said.

“This is kind of a unique space that we’ve carved out for ourselves nationwide,” Hersh said. “It gives the Macy’s customer the opportunity to shop the fullness of the Macy’s brand, from off-price, which is Backstage, right up to luxury on the full-line side as well.”

Macy’s is hoping that niche – of being a place where consumers can move easily between treasure hunting for bargains, and visiting a full-scale department store with luxury brands, all in a single shopping trip – will give it an edge over the competition.

And the competition is growing too. Placer.ai noted in its February report on the off-price category that off-price retailers TJX Companies, which operates the T.J. Maxx and Marshalls chains; Ross Stores, and Citi Trends are doubling down on their expansion plans, with many store openings scheduled for this year.

Here is the list of the 10 new Macy’s Backstage locations announced today. They set to open in May, June and July.

Macy’s at Francis Scott Key Mall, Frederick, MD

Macy’s Bellevue Square, Bellevue, WA

Macy’s Columbia Square, Kennewick, WA

Macy’s Orland Square, Orland Park, IL

Macy’s Chesterfield Towne Center, Chesterfield, VA

Macy’s Firewheel Town Center, Garland, TX

Macy’s Irving Mall, Irving, TX

Macy’s Mall at Robinson, Pittsburgh, PA

Macy’s Southland, Cutler Bay, FL

Macy’s Woodfield Mall, Schaumburg, IL