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Macy’s Remains Bullish on Off-Price with Plans to Fuel Growth

Macy’s remains bullish on its off-price Backstage concept, adding more resources to support its growth.

Macy’s, Inc. reported on Monday that it is on track to open 100 Backstage locations within Macy’s stores this year, pushing the concept into new markets. The retailer opened 20 in the first quarter alone. Up next, the company will open a distribution center in Columbus, Ohio specifically for Backstage.

Macy’s has a strong business in Ohio, and we are excited to continue building our presence in the state,” said Jeff Gennette, Macy’s, Inc. chairman and chief executive officer. “We are fueling the expansion of our Backstage concept by adding a new distribution center and creating 400 more Macy’s jobs in Columbus, Ohio. This new distribution center will enable us to move merchandise to our Backstage locations faster and with more flexibility.”

The distribution center is slated to open in Fall 2019.

The company began testing the Backstage format in its existing department stores in the fourth quarter of 2016. Backstage was part of Macy’s test, iterate and scale model, which allows it to try new things and roll out those that work to a larger audience.

While adding off-price to a full-price footprint might sound counterintuitive, Gennette said rather than cannibalize sales, Backstage is lifting the entire box by an average of seven points. Gennette attributes the success to delivering what consumers want. According to Macy’s findings, the majority of millennial customers are already off-price shoppers.

In February, Macy’s announced it would take Backstage from 45 locations to 145.

“Macy’s Backstage brings great deals, the thrill of the hunt and fun into our existing Macy’s locations,” said Michelle Israel, Macy’s senior vice president of off-price. “The focus on value and newness guarantees that with each visit, shoppers will find a compelling assortment of recognizable brands, trends and deals. We’re pleased to be expanding the Backstage shopping experience across all of our regions, including to the West Coast.”