What: The department store is on the move, into off-price and new merchandise categories, and toward some fierce competition.

Why is it important: Expanding its off-price Backstage business is a short-term solution, is detrimental to the brand and won’t allow Macy’s to drive trade into the full-price business. The retailer should also look at Target when developing new product categories.

Macy's calmed investors this week with a first quarter performance that beat most expectations and a plan to rehabilitate its faltering business. Macy's now faces the thorny issue of making good on these plans, which send it smack into some stiff competition from mass merchants like Target and off-price masters like TJX and Ross.

Embedded in Polaris are several disparate moves: expanding its off-price Backstage business within its stores and in more stand-alone locations, with the goal of ending the year with 270 total; establishing smaller full-line stores at strip centres; retooling its website; expanding in-demand categories like home; and getting into in-demand categories like pet supplies, toys, wine, and health and fitness.

Macy's deeper venture into off-price and its merchandising expansion in particular make sense, but invite a host of questions. Macy's is expanding its Backstage operations not only within stores but also, increasingly, as stand-alone locations, opening 33 new ones in the first quarter and adding to its final goal.

"Off-price is a sensible pivot, and where Backstage stores have been opened in existing Macy's stores, the concept seems to do well," GlobalData Managing Director Neil Saunders said. "However, it does not drive much trade into the full-price part of the business. As such, it is only a partial solution and does not address all of Macy's underlying issues."

Going off-price has very short-term gains and long-term losses to whatever their identity is. It's a tactic to attempt to push some of their own stuff that would normally end up at T.J. Maxx. In fact, Macy's is eyeing Nordstrom, which says that customers who shop at both its full-line and off-price Rack stores are their best customers.

Macy's has to sell other merchandise, analysts also say. In fact, Macy's expansion into new categories pits it against mass merchants like Walmart, Amazon and Target, the latter in particular conquering new categories with private labels and partnerships, to the point where observers see Target as a fresh alternative to the department store. As a place of discovery, just like department stores of old were.

Where is Macy's going