What: Macy's has been repositioning its store fleet and seeking to open more off-mall locations. They will contribute “a material level of volume over time.”

Why it is important: Market by Macy’s, whose sales are reportedly beyond expectations, and Bloomie’s small store format are critical to the growth of the store's channel and critical to the growth of the omnichannel business.

The number of new customers shopping at these stores is materially higher than mall-based stores. The off-mall strategy focuses on doing business at a very local level, has customer experience scores meaningfully higher than Macy’s mall-based stores, and features easier navigation, quick and easy checkouts, and colleagues available to help customers.

Additional Bloomie’s stores are in the works: they will offer contemporary and luxury brands, services, tech-enabled stylists, new store design concepts and a restaurant. Market by Macy’s, with three units in Texas and two in Atlanta, will expand to additional markets. The specialty format has branded and private-label fashion, products from local designers and direct-to-consumer brands, food, an apothecary, plants, home items and a café.

One hundred sixty Macy department stores have “curated” assortments focused on customers under 40 and a diverse audience, and weighted toward certain brands such as Michael Kors, Steve Madden, Cotton On and private brands such as And Now This. Adjacencies have changed for better flow and navigation, and there’s cross-merchandising of brands.

Some Macy’s store closures have delayed in order to maintain a physical presence in many markets while the off-mall format stores are scaled up. They also serve as fulfilment hubs supporting the digital operations. Keeping these cash-positive stores open also helps to fund the investments to reposition the fleet over the next several years.

On the digital side, Macy’s and Bloomingdales’s are developing marketplaces this year, to offer consumers more products, more brands, more categories and greater depth in categories already carried. Digital sales are seen growing to the mid 40% range as a percent of total sales of Macy’s total volume, from around 35% last year, and 25% the year before.

Macy’s off-mall strategy