Macy's, Inc. (NYSE:M) declared on Tuesday that it plans to significantly expand its small-format store strategy, potentially tripling the total number of these stores by fall 2025. This move is part of the company's approach to enhance its store portfolio, diversifying with a mix of on- and off-mall locations, and providing a seamless shopping experience across channels.
Starting from 2024, Macy's intends to open up to 30 new small-format locations across the U.S. This expansion will be in addition to the nearly 15 small-format Macy's and Bloomie's locations that the company currently operates. The smaller stores, ranging in size from 30,000 to 50,000 square feet, are about one-fifth the size of traditional Macy’s outlets.
Adrian Mitchell, chief operating officer and chief financial officer for Macy's, Inc., expressed excitement about accelerating the expansion of their small-format strategy. He emphasized that these stores provide customers with a shopping alternative within the company's omnichannel ecosystem and present an opportunity to target high-traffic shopping centers. "Our small-format strategy is one way we intend to harness the full power of the Macy's brand to deliver sustainable, profitable sales growth for Macy's, Inc. beginning in 2024," Mitchell said.
The company also revealed that Bloomie's, Bloomingdale's smaller store concept, announced its inaugural West Coast location in Seattle, Wash., set to open in November. This will be the third Bloomie's location to open, adding to existing stores located in Fairfax, Va., and the Chicagoland area.
Small-format stores play a pivotal role in Macy’s omnichannel strategy as one of its five growth vectors. The company aims to expand in existing markets and enter new ones while replacing less productive stores in existing markets. These stores are strategically located in off-mall shopping centers to bring the brand closer to existing and desired customers while encouraging more frequent visits. Macy's small-format stores that have been open for more than one fiscal year have achieved positive comparable owned plus licensed sales growth year-to-date through spring 2023.
Despite this strategic move, Macy's shares dipped 0.35% in premarket trading on Tuesday. The department store stock is down more than 40% on a year-to-date basis.
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