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Macy's new off-price format launches

Written by Tom Ryan

Early previews indicate that Macy's Backstage, the department store's first foray into the off-price channel, will offer much more of a treasure hunt experience than the more destination-driven experience of its flagship chain.

The first three will open on Sept. 2 in the New York City region.

The Associated Press described a visit to a Queens location as a "no-frills experience" with shopping carts lined up at the front entrance, blatant signs signaling the direction to departments, and plenty of large fitting rooms.

Macy's is promising discounts of between 20 and 80 percent off original prices as well as comparable prices for similar goods sold elsewhere. The mix includes many designer brands, greater offerings of Macy's private labels, and brands the flagship chain doesn't carry, such as Fila and Reebok.

"You're going to get a little bit of a different vibe from what I would call our older sister, Macy's,' Vanessa LeFebvre, SVP of Backstage, told the Associated Press. "Here, we're trying to attract new and different customers.'

Macy's Backstage
Source: Macy’s email promotion

In its review of a Brooklyn store, Women's Wear Daily said the goal is to encourage young moms to graduate from shopping Macy's Backstage to Macy's. Quirky signs such as "Fake it 'til you make it" highlighting faux leather jackets underscore that message.

"We are building a brand here — a sub-brand," Peter Sachse, Macy's chief innovation and business development officer, told WWD. "The young Millennial mom is the focus."

The new concept, averaging about 30,000 square feet, will compete with off-pricers such as T. J. Maxx, Ross Stores and Burlington that have thrived post-recession. The off-price world is becoming crowded as other department-store spinoffs such as Nordstrom Rack and the Saks Fifth Avenue's Off 5th ramp up expansion. In June, Kohl's first off-price store, Off-Aisle by Kohl's, debuted.

Macy's just reported a below-plan second quarter, in part due to "very promotionally focused" consumers. In an interview with Bloomberg, Terry Lundgren, Macy's chairman and CEO, asserted that spending on discretionary items such as apparel and accessories will eventually pick up to support the Macy's chain. But many consumers also continue to "trade down" and Macy's Backstage will help the company reach a customer Macy's is missing.

"I think, frankly, I was the obstacle in the way here because I didn't really want this business. I thought we could do enough of this ourselves," Mr. Lundgren admitted in late June at the Consumer Goods Forum global summit in New York, according to Fortune. "But the research doesn't lie: the data said there is a customer who is going in this direction and not coming to our stores."

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