An off-price division from Macy’s?

When Macy’s announced its year-end sales and earnings, it mentioned development of an off-price division as one of its strategies to drive top-line sales faster. Here’s my comment from RetailWire:

For starters, I would be cautious about applying the Macy’s brand to the new division. Based on the success of Rack stores in particular, it might make more sense to leverage the Bloomie’s brand instead of undercutting what is already a highly promotional strategy for Macy’s core business. But that doesn’t appear to be the game plan; TJ Maxx seems to be the business model.

To some degree this sounds like a financial strategy — lower expenses, higher inventory and asset turnover — to drive total-company ROI. From that standpoint it’s a smart move…but only if it produces incremental sales instead of cannibalizing the Macy’s core brand.

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