Macy’s is hooked on the financial lift that Backstage provides – even at the risk of cannibalizing their full-line offerings. Shoppers love discounts, so I would hesitate to call Backstage a wild success – anyone can give product away. That said, there’s no question that Backstage is providing a much needed traffic and revenue bump to Macy’s, but the long-term implications are very uncertain. Given the struggle Macy’s (and department stores) have had it’s not surprising that management is running with the strategy that has delivered a glimmer of success.

Macy’s continues to have a real identity problem. I no longer know who they are and who they strive to be as a department store. This move is another way of sending the public the wrong message. I get it that it’s all about sales and any time there is a discount opportunity, i.e., outlets or in this case a store outlet inside of a full price-store, it is going to bring sales. However, the damage long term is that more people will shop in the Backstage department than the rest of the store. Macy’s will then make the Backstage department larger and eventually convert some of their smaller stores to Backstage stores. So how does this help build the brand? When Macy’s finally becomes a full discount chain competing with all the other off-price chains, the trend will have changed as new full-price retailers will emerge. Then Macy’s will be kicking themselves because they lost the lead in that business and they will no longer be able to go back to being the great… Read more »

Have any of you seen or been in one of these? Are they supposed to be a competitive swat at dollar stores? Trashing an already denigrated brand is not the way to go IMO. Hey skipper! Reverse course! Not only am I not a fan, but i just don’t get it at all. Nordstrom Rack? Ok. Backstage? Huh?

In the age of omnichannel, there is an important question of whether retailers can drive traffic to department stores. There is an even more critical question of conversion — if customers come looking for off-price value, can Macy’s convert higher-end sales from department store lines? Same-store sales volume gains mean little if there is not a corresponding increase in gross margin profitability.

Merging both full-price and off-price concepts within the same space may drive some additional overall traffic, however, what may result from this move is more confusion about what the real Macy’s brand messaging is. Macy’s has aspired to move to an experience-first, omnichannel, digital, customer-focused model with the introduction of a more curated experience, introducing pop-ups and more creativity within their stores.

While the Macy’s Backstage concepts shops are building momentum, positioning them within the Macy’s full-price department stores may detract from the full-price, more premium retail traffic, as the targeted customer will only be seeking discounted merchandise. There may or may not be an overlap, as the bargain-seeking consumer may not be motivated to buy any impulse driven full price products.

The purpose of Backstage is twofold. First, it is a format which gives Macy’s access to the popular off-price part of the market. Second, it provides Macy’s with a channel to clear down excess and unsold inventory. Both of these things make it a worthy venture.

As a stand-alone concept, I am a fan. However, I remain more skeptical about adding Backstage to full-line stores.

From our customer data, we see evidence that such a move pulls customers away from the full price offering at stores and ends up cannibalizing sales. It also sends confusing messages to the customer about the Macy’s brand.

True, it may generate short-term sales, but it could ultimately damage the health of larger stores in the long-term. What’s more, I am skeptical of the numbers being bandied about. I expect they have been measured over the robust period in the run-up to the holidays when trade in all segments of the market was on the up.

Critic doesn’t begin to describe it. Department stores are in free fall and, ironically, one of the best and one that’s — well, far from best — are speeding the decline in exactly the same way. Nordstrom may be the best department store chain out there but they are killing their flagship brand through a radical expansion of Nordstrom Rack units which work as a kind of “anti-brand” format, not as the “starter store” the chain intended. By the same token Macy’s, which is totally lost when it comes to brand identity, is building exactly the wrong branding, merchandising and customer development model through Backstage. Lee is right, the stores are a total mess. While Rack will slowly erode Nordstrom’s brand over time, Backstage is rapidly attacking whatever is left of Macy’s brand appeal. The difference? In the worst case Rack might be able to stand on its own as a chain, absent the parent brand, while Backstage wouldn’t last long as an independent. Macy’s may be enjoying an infusion of sales through Backstage, but… Read more »

It’s hard to argue with the sales lift that Backstage has brought to the first group of stores, but I have my doubts about the long-term strategic impact. From the local Macy’s store with a Backstage installation, I see a messy collection of “stuff” that doesn’t even meet the housekeeping standards of my local Marshall’s — not to mention the standards of the rest of the Macy’s store. And the off-price space is getting very crowded, at the risk of oversaturation.

It would be worth knowing more before passing judgment: Is the sales increase driving any kind of gains in Macy’s “upstairs” departments? And what kind of product is selling in Backstage? Again, from my observation, the “upstairs” brands at Macy’s have no interest in selling their labels inside Backstage, so the brands I shopped could just as easily be found at a Kohl’s or J.C. Penney store.

Execution, execution, execution. Off-price stores like TJX aren’t slapdash; they’re meticulously merchandised with ever-changing assortments. One TJX IT leader told me that the company will remove items from assortments if they get too popular, because the element of surprise is lost. Does Macy’s have the right people to make this happen?

I have mixed feelings about this approach. Yes Macy’s is seeing a sales uplift in stores that have Backstage shops vs. stores that do not, but is this sustainable long term? It’s possible that the numbers are misleading. I would argue that the real test is to look at that sales uplift by department within the store. If the uplift is exclusively coming from the Backstage shop versus the mainline departments, then the only thing proven is that Backstage has a customer base that likes the concept. The problem with that is that every shopper likes to find a great discount! Macy’s need to find new, interesting, experiential ways to drive that motivated foot traffic from the Backstage shop into the rest of the store. We see pockets of this with examples like the VR furniture application Macy’s is deploying to their furniture gallery stores. We see this when they add b8ta shops within their mainline stores. Macy’s needs more of these types of tactics to move those shoppers from Backstage into other departments. The… Read more »

The only way it makes sense is if the merchandise in the Backstage area keeps changing AND if Macy’s continues with other innovations. If the merchandise continues to change so that there are new finds on every visit to the store, then consumers will come back. However, one tactic does not spell long-term success. Focus needs to be on the experience of consumers who patronize a particular store — what is interesting to them? What will keep them coming back?

As I wrote in this recent post, Macy’s Off-Price Retail Cannot Be The Way Forward, Customer Service Must Be, orphaned clothes, man-handled, stretched and laid out on ’60s chrome fixtures in underused and underlit parts of their stores are their way forward.

Macy’s feels shoppers have changed …

Karen Hoguet, chief financial officer of Macy’s, when talking about shoppers in their stores was quoted as having said at an investor conference last year, “Lots just say, ‘Leave me alone — let me get the shoe I want and move on.’”

Well of COURSE they said that!

When all an employee can parrot is, “can I help you find something?” Or, “looking for anything special?” — what do you expect shoppers to say?

Shoppers used to make a special trip to discover items presented with care and thought along with employees who not only liked working there but were trained in how to engage them.

And shoppers haven’t changed. But let’s be honest, Macy’s stores have …

The problem I see with Macy’s Backstage store-within-a-store concept is its implementation of that store-with-in-a-store concept. The Backstage areas I have visited are plunked in the middle of other departments and, other than signage, there is nothing else that identifies or segregates it from the rest of the store. Uninitiated consumers may not even realize what they are looking at because it’s confusing to see carefully-merchandised new and full-priced items displayed across the aisle from “Last Chance!” product that’s stacked on tables. Backstage needs its own look so that stands out, otherwise it’s just another big clearance sale.

I am of a fan of Backstage store-in-store, for the reason that it seems to be working. It gets more customers into the space and there will be inevitable bleed between the “off-price” goods and full price goods. The overlap should create surprises for each customer type.

As for setting up standalone Backstage stores, I wonder how that supports the Macy’s brand and does not just become another discount store in a crowded market. I am sure if they do this they will have researched heavily to support the business case.

Brand be damned! Sell whatever and however is necessary to stay in business.

If taking floor space from Macy’s and giving it to Backstage is their idea of good strategy then they’ve fallen farther than I imagined. It is another unintended consequence of teaching your clients that one should never buy anything unless it is on sale.

I predict that Backstage will creep to be the dominant brand inside many of the stores formerly known as Macy’s.

Did anyone else think of the phrase, “…you can’t make a silk purse out of a sow’s ear”? It used to be called a clearance section! We use our language to embellish or mask the truth. Simply branding a clearance section doesn’t change the obvious. I’m certain George Carlin would be able to create a bit around what is happening in retail today. I guess we’re all guilty of it.

I think the interesting part of this strategy is that it allows Macy’s to evolve the offer in one physical plant, vs. in two as others such as Nordstrom and Saks 5th Avenue have done. As Macy’s locations which have Backstage evolve in both the sources of revenue and profit contribution (Backstage square footage vs other categories), Macy’s could ultimately decide to convert a particular location to fully Backstage back to fully Macy’s, or shutter the location. In most locations, the heritage Macy’s department store is now too large and Macy’s must find a way to make that real estate productive. They have been trying subleases, e.g. Sunglass Hut, pop up spaces, and now Backstage. I think we will continue to see more locations shutter that can’t reach the necessary profit contribution hurdles, as well as others which will convert to fully Backstage locations (likely subleasing or giving back excess space). Like others on this thread, I personally don’t like the mixed branding message but I do think the longer term strategy of ensuring location… Read more »