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Macy’s Launches ‘Dark Stores’ for Holiday

Macy’s Inc. is converting two stores into fulfillment centers to meet surging online demand.

The two store locations—one at Macy’s Southwest Plaza in Littleton, Colo., and the other at Dover Mall in Dover, Del.—will fulfill digital orders for the holiday season.

“We offer Macy’s customers a variety of options to shop with us – including Macy’s mobile app or shopping on, shipping to their nearest store or visiting a store. As a result, we’ve seen an increase in demand across the network to get our customers their product when and how they want it,” a Macy’s spokeswoman said.

The existing stores will operate as Macy’s Omni Service Centers. While a portion of the store will be dedicated to support fulfillment operations, another section will continue to operate Macy’s At Your Service Center, which provides in-store pickup orders, curbside pickup orders, returns and bill pay. These locations are sometimes branded “dark stores” because they are open and operating for a specific purpose that does not include regular in-store shopping.

The two locations will serve as a pilot of a new model that could help “further integrate our stores into the fulfillment pipeline,” the spokeswoman added.

Store associates will be considered for potential opportunities to continue with Macy’s in new roles at their current location or be placed in open positions at nearby Macy’s stores. Those not selected for these opportunities may be eligible for severance.

It wasn’t clear what would happen to these two stores after the holiday season winds down, nor was there any guidance on how long Macy’s was piloting the two-store program. The spokeswoman did not respond to a request for additional information. There was also no information provided on whether more stores would be added to the pilot program and, if so, when.

When department stores that closed down amid the pandemic began to reopen their store fleets, some found that many customers preferred to continue shopping online instead of heading back into brick and mortar.

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In the case of Macy’s, stores closures sparked a $3.58 billion first-quarter loss on top of a 45.2 percent drop in sales. CEO Jeff Gennette said the retailer’s digital business showed sings of strength, driving a significant uptick in customer acquisitions.

Gennette also said Macy’s big concern was that consumers might still be wary of gathering in large crowds during November and December. For that reason, the company focused on how to create fewer pressure points on sales days and ensure speedy digital fulfillment capabilities.

Executives, including Gennette, who participated at Goldman Sachs’ 27th Annual Global Retailing Conference said the team has been reviewing how to use its current footprint to support its digital business. He believes digital will remain in the “40 percent or higher” range of the retail company’s overall business.