Posts Tagged 'Backstage'

Are “food halls” an answer for mall vacancies?

One of the biggest issues confronting mall developers is how to fill empty space (especially from vacant anchors). There just aren’t enough brick-and-mortar retailers to fill that space without coming up with some original ideas. One recent discussion on RetailWire focuses on the concept of “food halls” as a possible answer:

Anybody who has traveled the world (and has visited department stores in the process) can’t help but be dazzled by the food halls, especially in Europe but also in Asia and elsewhere. I realize that this is an extension of “high street” shopping in densely populated central business districts, so it doesn’t necessarily lend itself to the American department store model. And yet…wouldn’t a food hall (in the European sense) be more compelling than a Backstage installation in a Macy’s store?

The growth in self-contained food halls inside malls (but not necessarily inside a department store) is healthy for several reasons — and not just as a placeholder for another anchor tenant. It capitalizes on shoppers’ growing interest in cooking, healthy eating, locavore dining, etc. — and it provides an opportunity for retailers like Whole Foods/365 or Trader Joe’s to expand their footprint. Besides, if you’re waiting for one department store to fill the anchor space of another…you’re going to have a long wait.

Case in point (from another recent post):

“Signs of the apocalypse” are rampant in some segments, such as traditional mall anchors, but overstated in other high-growth areas like off-pricers. As regional malls suffer one tenant loss after another, it’s hard to see how all of those giant locations are going to be filled — especially if the anchors were in B and C malls to begin with.

One example, in my home market of Milwaukee, is the exit of Sears (three locations) followed by last week’s announced liquidation of Bon-Ton Stores. Boston Store (the local Bon-Ton nameplate) had five locations here — including two stores with over 200,000 square feet. If you’re a mall developer losing two of three anchors, it’s easy to feel like you have a black cloud hanging over your head.

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Backstage a short-term win for Macy’s

As the topic of this post suggests, I am a skeptic about whether a store-in-store location strategy for Backstage really makes sense for Macy’s. Here’s my recent comment from RetailWire:

It’s hard to argue with the sales lift that Backstage has brought to the first group of stores, but I have my doubts 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 JCPenney store.

Department stores expand off-price concepts

Macy’s reported in its year-end earnings call that it plans to expand its Backstage off-price concept to 100 more stores this year. (And Backstage is located inside existing Macy’s locations.) Here’s what I had to say on RetailWire about the wisdom of this trend:

There is a big difference between what Nordstrom and Kohl’s are doing (building out freestanding Rack and Off/Aisle stores) and what Macy’s is attempting by locating its Backstage concept inside its full-line stores. Either way, department stores are jumping on the off-price bandwagon because it’s a hot segment with the “treasure hunt” experience that some shoppers are looking for. But at what point does the segment get overcrowded?

Macy’s may feel strongly enough about Backstage to roll it into more locations, but from my experience it does nothing to enhance the overall store “brand.” (Bob is dead-on regarding the housekeeping.) And the merchandise content is not compelling, since Macy’s “upstairs” brands feel safer dealing with TJX than having their goods show up in Backstage. From what I’ve observed, there is a lot of closeout product from brands that you might find at JCP or Kohl’s but not on the main floor of Macy’s.

Can Macy’s claim a turnaround?

Today’s RetailWire panel focused on Macy’s 2017 holiday results, where they reported a 1% gain for the season. Despite the optimism of their executive chairman Terry Lundgren, most panelists agree with me that the celebration is premature:

As the article points out, Macy’s comp sales of 1 percent paled in comparison to J.C. Penney and Kohl’s, in a season where brick-and-mortar retailers did better than expected. So they actually lost market share during a robust shopping season, and probably ran behind in their physical stores if you assume that most of their growth came from e-commerce.

It’s hard to point out much good news in these numbers, other than being “less bad” than year-to-date. The large number of store closures doesn’t appear to have driven sales to remaining locations, and the jury is still out on the wisdom of the Backstage store-within-a-store strategy. In this panelist’s opinion, it does little to enhance the brand image of the rest of the store.

Macy’s sales problems: It all begins with content

To echo the last post (about JCPenney’s apparel business), here is a RetailWire post about Macy’s. I contend that a lot of Macy’s current sales weakness could be corrected if assortment issues were addressed more forcefully:

Macy’s problems are emblematic of some of the issues that BrainTrust panelists have been discussing recently:

1. Like JCPenney, Macy’s has a merchandising problem at the root of its sales issues. Its women’s apparel, in particular, looks overassorted and too deep in overlapping private brands without a clear point of view. Merchandise content is at the heart of most retailers’ sales problems, I believe, regardless of short-term hiccups caused by weather.

2. Macy’s was a leader in “omnichannel” and is still tying its growth strategy in part to this wagon. Like other department stores, Macy’s is learning that it is tough to maintain service levels appropriate to its brand at the same time that it is asking store associates to execute BOPIS and ship-from-store orders.

3. Macy’s is looking at new formats like Backstage to drive sales, instead of finding solutions inside its own anchor stores. It’s a case of “if you can’t beat ’em, join ’em” and chasing off-price competitors instead of focusing on whatever the Macy’s brand is supposed to stand for.

It’s a complex set of issues to address, but it all starts with merchandise content.

Macy’s “Backstage”: Who’s the target customer?

Macy’s is apparently pleased enough with the introduction of its off-price division (“Backstage”) to roll out more locations. Meanwhile, the company is telling investors that the vehicle is aimed at the “Millennial Mom” who is not shopping in its department stores today, in hopes of trading them up someday. My RetailWire comment expresses some skepticism:

Maybe Macy’s research indicates that the “Millennial Mom” is more likely to shop at Backstage than at its traditional stores—but if so, they have a different problem that they need to address. Simply hoping that the “Backstage” customer will eventually shift her loyalties to a full-line Macy’s store ignores the reality that fast fashion and off-price stores are changing shopping habits on a long-term basis. How does Macy’s make its hundreds of mall anchor stores more appealing and relevant to the fastest growing (and eventually biggest spending) segment of the population?


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