Macy’s to open smaller stores, bigger fulfillment centers

Who ever said bigger is better?

Macy’s has unveiled a plan to open smaller, off-mall stores and fulfillment centers, while consolidating its current locations.

“Everything on the digital agenda has been accelerated,” CEO Jeff Gennette said on the retailer’s second quarter earnings call Wednesday.

The department store’s flagships have been hit hard by the pandemic as tourism diminished and employees in downtown areas shifted to working from home. However neighborhood locations saw some action from digital sales being fulfilled in stores.

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Macy’s did not reveal how many off-mall stores or fulfillment centers it will be opening. But in all, the company has 771 locations between Macy’s, Bloomingdale’s and Bluemercury. The number of Macy’s stores have decreased to 546 from 551 in the first quarter of 2019, while Bloomingdale added one location during the quarter.

But the retailer’s plans to shutter locations predates the pandemic. In February, Macy’s announced it planned to shut 125 stores over the next three years. The company said that those plans have not changed

In all, Macy’s had a rough quarter as it suffered a net loss of $431 million. Net income was $86 million during the same time last year.

To capitalize on digital sales — which grew 53 percent from a year ago — the department store plans to redesign its supply chain, with centralized fulfillment centers.

“The store remains a very, very important component of our brands,” Gennette reassured. “We want to have all the right access points for our customers however they want to shop, whenever they want to shop.”

Still, moving forward, Gennette said that the company expects digital to make up 40 percent of business. That’s supported by the 4 million new digital customers that Macy’s recruited in the second quarter, 3.8 million of whom are new to the brand.

Macy’s did receive some rent relief from its landlords in recent months, but it did not indicate from whom nor for how much.

“We’ve had some really amazing conversations with our retail partners, with our landlords” CFO Felicia Williams said. “We’ve been really respectful of each other’s positions”

That has not been the case across the board, however. Bloomingdale’s was recently sued by the Stahl Organization for $2.5 million of missed rent at its 2085 Broadway location in New York.

Contact Sasha Jones at sasha.jones@therealdeal.com