Macy’s Adds More Backstage Stores as Bargain Hunting Business Booms

In a move touted to put “luxury and off-price under the same roof,” Macy’s fast-moving plan to open three dozen off-price Backstage locations within existing stores over the next three months is not only a reflection of the times but a statement on a changing industry.

In announcing the addition of 37 new store-in-store sites to its existing fleet of 300 Backstage locations, the department store said the rapid rollout will get underway next month and be completed by the end of June — including in its New York and Chicago flagship stores.

According to a company statement, the strategic shift reflects current consumer trends and will not only serve growing customer demand for “quality merchandise and brands at great prices” but will also meet the needs of shoppers who enjoy a “thrill of the hunt” type experience when they shop.

“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, adding that the new store-in-store locations will range from 11,000 to 16,000 square feet and stock a constantly changing assortment of on-trend merchandise. In addition to men’s, women’s and children’s apparel, the Backstage brand will also carry toys, housewares, beauty products, designer handbags, activewear and pet products.

“Macy’s Backstage inspires customers to express their personal style through its offerings of quality merchandise and brands at great prices, which is why we look forward to bringing Macy’s Backstage into more of our local communities,” said Michael Hersh, Macy’s vice president of off-price.

The Price is Right

To be sure, Macy’s is far from alone in its pursuit of the off-price customer, where it directly competes against the bargain-hunter division of its department store rivals, including Off Saks and Nordstrom Rack, as well as pure play discounters like TJ Maxx and Marshalls.

The change by Macy’s will leave it almost in a dead heat with Nordstrom, which also operates about 350 off-price locations which led to a rebound in the retailer’s Q4 results which were released earlier this month.

“We are laser-focused on the three key areas,” CEO Erik Nordstrom said on the company’s webcast, “Improving Nordstrom Rack performance, increasing profitability, and optimizing our supply chain and inventory flow.”

Read more: Rack is Back: Nordstrom Gets Huge Bounce From Gains at Off-Price Unit and Digital

It is also no coincidence that Macy’s hasty rollout of additional discount stores comes at the exact time when consumers are undergoing a period of belt-tightening and bargain hunting as record high gasoline prices and inflation that is running at a 40-year high crimp buying power and erode disposable income.

In each case, however, the addition of off-price stores — whether in-store or free-standing — is also being used as a way to introduce new customers to full-priced merchandise in the main store or brand.

At the same time, while these department stores continue to undergo a retooling that broadens their appeal to more shoppers, rival Kohl’s finds itself embroiled in a buyout bid, where at least two outside buyers are mulling acquisition plans.