Are strip centers where it’s at for Macy’s and Sephora?
Macy’s and Sephora recently announced plans to focus their expansion on non-mall locations to take advantage of steadier traffic flows seen there vs. indoor malls.
At its Investor Day held on Feb. 5, Macy’s CEO Jeff Gennette said the department store operator would be “proactive in addressing stores in unhealthy malls,” but also pursue expansion with smaller stores in non-mall locations. Mentioned were two units making use of the retailer’s off-price Backstage and Market by Macy’s concepts.
The first new Market by Macy’s concept, which opened in a lifestyle center in Dallas, measures 20,000 sq. ft. and features an ever-changing collection of merchandise, a beauty shop, café and bar. It also serves as a space for community oriented events.
Mr. Gennette noted that consumers no longer purchase the majority of their apparel and home needs at mall-based stores. For example, only 43 percent of handbags purchases are now made at the mall versus 57 percent in non-mall. In housewares, only four percent of purchases are now made at the mall.
He continued, “The reality is we have a large base of customers who are no longer shopping regularly in malls, but we know they have shopped Macy’s in the past.”
In early February, Sephora announced plans to open 100 locations this year in North America, double 2019’s openings. The focus will be on local neighborhoods and community centers that are “close to where customers live and work.” Locations for new stores include street and local centers as well as a mix of new and established shopping centers.
Jean André Rougeot, CEO of Sephora Americas, said in a statement, “As we look at ways to continue to be more inclusive and accessible, brick & mortar continues to be a huge opportunity for us to deepen emotional connections with our clients and local communities.”
A recent Wall Street Journal article noted that grocery sellers — a category largely immune from online selling — often help drive regular traffic when located in strip centers. Fitness centers, plentiful food and entertainment options and banks also support more routine visits versus enclosed malls.
- Macy’s, Inc. Announces Three-Year Polaris Strategy to Stabilize Profitability and Position the Company for Growth – Macy’s
- Sephora Announces Largest Store Expansion in Its History, Opening 100 New Locations Across North America In 2020 – Sephora
- Macy’s Still Wants To Open New Stores—Just Don’t Go Looking For Them In A Mall – Forbes – Forbes
- Macy’s to close 125 stores, cut 2,000 corporate jobs, in hunt for growth – CNBC
- Macy’s is turning its back on the mall and focusing on off-price stores and trendy lifestyle concepts to win over millennial shoppers – Business Insider
- Strip Centers Shine as Some Shoppers Sour on Malls – The Wall Street Journal
DISCUSSION QUESTIONS: What’s driving the apparent healthier traffic trends at strip centers versus enclosed malls? Do you see big growth opportunities for Macy’s and/or Sephora at non-mall locations?