Macy's has begun opening new Backstage locations, with plans for 45 shops within Macy's stores in 10 states this year, on the way to its target of 270 nationwide.
That's 10 more than the department store had originally planned, according to a note emailed to Retail Dive. The company is also planning more stand-alone Backstage locations, Macy's CEO Jeff Gennette said Wednesday during J.P. Morgan's 7th Annual Retail Round-Up conference.
Macy's launched the off-price banner in 2015, as retailers in the segment consistently took market share from department stores.
Rather than just stand by and watch off-price retailers steal its sales and customers, Macy's decided a few years ago to partake of the segment's success. Unveiling its Polaris turnaround plan last year, and reiterating it again in February after the pandemic's disruption, Macy's executives presented a Backstage expansion as key to their growth goals.
Speaking Wednesday to J.P. Morgan's audience, Gennette argued that was the right move, with sales through Backstage spaces outperforming the balance of the store by about 20 points.
"It was one of the major successes for us all the way — before the pandemic, through the pandemic and now post-pandemic," he said. "So when you look at Backstage, it's performing exceptionally well. ... Based on that we're adding more than we initially anticipated. We're adding 45 new store within stores in 2021. We're also now going back to adding freestanding Backstage stores that we started back in 2015."
Still, the iconic department store is new to off price, and it's unclear how much the effort is taking away from full-line sales. The company is also somewhat behind the curve, facing competition from the more mature operations at Nordstrom Rack, TJX Cos., Ross and Burlington.