Macy’s Ready To Ramp Up Competition With Off-Price Chains

Macy’s has been slowly rolling out its off-price brand in select locations.

Over the past few years, one segment of the retail industry has been making some significant headway - and we’re not just talking about online retail giant Amazon. Off-price chains like TJ Maxx, Marshall’s and Ross have found the sweet spot with consumers: appealing fashions being sold at reasonable prices in a welcoming atmosphere. That simple strategy has not gone unnoticed by other retail heavyweights, and at least one of them is preparing to encroach on their turf.



Over the same time frame, Macy’s has been slowly rolling out its off-price brand in select locations. Macy’s Backstage originally started as a standalone concept, but it has evolved to become a dedicated section in the company’s other stores as well. The company is ready to ramp the concept up, and another 30 of those types of locations are expected to open up by the end of the year. 

"We hope that by the end of 2017, what we're going to exit with is a viable off-price concept that is on-mall, not off-mall like our ferocious competitors," explained Macy's new CEO Jeff Gennette. 

While it may seem counter-productive to offer up a dedicated discount section in the midst of all of your other sale items, Gennette notes that the impact has been quite the opposite. For each Macy’s store in which the concept has been tested, the performance of the overall store has improved. 
 
"It wins if we get an extra purchase. It wins if we get another visit. And it is a home run when you get a new customer," he said.  

Nonetheless, critics are quick to point out that Backstage may pull attention away from the retailer’s full priced goods, but Gennette counters by explaining that Backstage features items that pertain to either new categories or different brands entirely from what Macy’s regularly offers. 

In other Macy’s news, there has been a ton of talk of late about Macy’s extensive real estate portfolio and what lays ahead for the venerable retailer. Gennette is taking steps to address that, and the company is being proactive by opening its doors to even more brands and stepping up its game on the experience front by offering exciting new dining options. 

"These stores are being reengineered for the new century and the new generation," says Dana Telsey, CEO of the Telsey Advisory Group. 

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