Macy's to ramp up expansion of its small-format stores to more locations

Macy's is accelerating the expansion of its small-format stores as it looks to cater to shoppers seeking more convenient locations.

The department store said Tuesday that it aims to add up to 30 new small-format locations through the fall of 2025, bringing the total number of such stores to roughly 42. The next round of expansion starts in fall 2024.

The strategy builds on Macy's plans, announced in August, to add four small stores in the West and Northeast in the coming weeks. The original eight small-format stores are called Market by Macy's, but the company said in August that new, smaller stores would just be called Macy's.

Nordstrom, Kohl's, and Macy's upscale chain, Bloomingdale's, as well as big box stores like Target, have been adding small-format locations for several years. Macy's has three Bloomingdale's small-format stores. The trend gained momentum during the pandemic as more shopping shifted to the suburbs and away from cities.

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Struggling industry

The retail industry continues to struggle with consumers' snubbing of malls in favor of online shopping, leading to the collapse of stores such as Payless and Toys R Us and tens of thousands of layoffs.

The past year and a half has seen 2,000 retail store closures, with the likes of Foot Locker and Walmart shuttering locations as they look to save money. That trickle is set to turn into a flood over the next five years, according to Wall Street analysts. 

Macy's smaller stores range in size from 30,000 to 50,000 square feet, roughly one-fifth the size of its traditional stores. Macy's operates just over 500 stores in all.

Macy's smaller department stores are not found in big malls but rather in strip centers anchored by discount stores. They offer a slimmed-down assortment of trendy and basic fashions, as well as cosmetics. Customers can also pick up online orders at the stores.

The small-scale stores, according to Macy's Inc., have booked positive comparable store-store sales, or sales from stores open at least a year, a key indicator of a store's health.