What: Macy’s Inc. sees potential for growth through smaller format stores.

Why it is important:  The smaller format stores offer Bloomingdale's a path to growth with major potential ahead, as they are tailormade for customers who demand more from a shopping experience than just products to buy.

Macy's Inc has found a model to shrink Bloomingdale's to prosperity following the closure of around 80 stores in recent years throughout the company portfolio.

This year, the company plans to open four new Market by Macy’s to add to the existing ten and one new Bloomie’s to the two that are already operating.

Because Bloomingdale’s has a higher-income target market, is better shielded from any potential downturn than the middle-income customer base of Macy's.

This is proving true based on a company report, as Macy's active customers dropped 4% from last year, while Bloomingdale's grew 5%.

The smaller stores give the retailer an opportunity to reach affluent shoppers in emerging luxury hubs in second-tier cities and suburban locations.

Bloomingdale’s SVP and director stores described the Bloomie’s stores as sharper, specifically in terms of the productivity of its resources.

By opening one store per year, the retailer is able to digest learnings from each store and apply them more broadly. While each store is individually designed for its specific location, the retailer has been able to use its learnings to pivot and meet customers’ expectations.

The smaller format stores will also help deliver the meaningful shopping experiences younger generations expect as they want more than just products to buy, which is also important to the lifecycle of the company’s business.

Because of the smaller format, Bloomie’s is poised for a successful future as they are able to slide into street-side and outdoor mall locations through a three-pronged strategy: In-fill, where the retailer can open a Bloomie’s in an area with an established flagship store, Replacement, where a Bloomie’s replaces a flagship store, and New Market, where a Bloomie’s opens in a new area.

Bloomie’s is how Bloomingdale’s can shrink itself to growth