Friday, May 4, 2018

Retail: Macy's To Battle Industry Slump With Cut-Rate Subsidiary

Retail giant Macy's, which has experienced consistent sales declines amid the rise of e-commerce, is taking proactive steps to reverse its fortune by leaning harder into its discount brand, Macy's Backstage, Retail Dive reports. 

The retailer has already opened 20 Backstage locations within its stores since the start of fiscal year 2018, and plans to hit 100 by year's end. Unlike competitor Nordstrom, Macy's is using its existing real estate to house the Backstage brand, while Nordstrom uses separate stores for its off-price Nordstrom Rack concepts. While some believe the lack of differentiation could hold Backstage back from success, Macy's executives claim early stage results have been positive. 

To further facilitate the Backstage expansion, Macy's is planning a distribution center dedicated to the brand in Columbus, Ohio, to open in 2019 with 400 employees. To emphasize the difference between the standard Macy's and Backstage brands, the two will have separate staff deciding purchasing and separate distribution patterns, according to a press release. 

Off-price retailers such as the TJX umbrella and Nordstrom Rack have seen success in recent years and are expanding amid the department store crash. Macy's may be a little late to the party relative to its established competitors, but it is also hoping to get in on the cutting-edge retail movement with its purchase of the 2K SF experimental retail shop Story in the Chelsea neighborhood of New York City. 

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