Macy’s pursues bargain shoppers
Retailer opens an off-price Backstage, its first in Houston area
Macy’s opened its first Backstage store in the Houston area this week as part of the retailer’s strategy to expand in the still-flourishing offprice segment of the retail market.
The Cincinnati-based department store giant will hold a grand opening Saturday for Macy’s Backstage, a low-price brand launched in 2015 to win back young bargain hunters who have been increasingly flocking to e-commerce sites.
Macy’s carved out a 14,000-square-foot section in its store at Pearland Town Center, knocking down a back storage area in the former children’s section to offer brand-name apparel, accessories, cosmetics and other goods at up to an 80 percent discount.
Off-price stores represent the fastest-growing segment of brick-and-mortar retail, rivaling online shopping. While traditional department stores such as Macy’s, J.C. Penney and Sears are closing locations as more customers move to e-competitors, off-price retailers such as Marshalls, T.J. Maxx and Ross are expanding.
In recent years, traditional department stores have gotten into the game, launching brands like Nordstrom Rack and Macy’s Backstage that offer a weekly assortment of brand-
name goods at steep discounts to lure customers who are both fashion savvy and cost-conscious.
“Customers are flocking to off-price,” said Brendan Halford, Macy’s Pearland store manager. “We want to have a piece of that market.”
Macy’s Backstage is designed to encourage bargain shoppers to return weekly in search of deals.
The Pearland store features racks of clothes sorted by size and color, instead of brands. The showroom floor has open sightlines punctuated by large hanging signs showcasing trendy apparel and seasonal goods. Backstage has about a dozen workers wearing “Backstage Crew”-branded T-shirts to help customers find what they’re looking for.
“Part of the reason why offprice has done so well, there’s no telling what deals you might find every day,” said Jason Baker of Baker Katz, a Houstonbased retail brokerage and developer. “It’s a treasure hunt.”
The average Backstage shopper tends to be a woman under 40, younger than the typical Macy’s customer. The retailer decided to open the region’s first Backstage location in Pearland because of the south Houston suburb’s fast-growing population of young families, Halford said.
“Our customers are budgetconscious and are looking for a great deal,” said Halford, a 25year Macy’s employee. “We’re listening to what our customers want.”
Macy’s Backstage employs a separate team of buyers who scour the country in search of cheap overstocks from other department stores to supply its offprice stores. While Backstage has many brand-name goods in stock, it doesn’t offer any of Macy’s private labels, such as INC, Charter Club and Alfani.
However, the off-price store offers an expanded selection of products, including children’s toys and shoes, small electronics, gourmet foods, home decor and pet goods that aren’t found in a typical Macy’s.
Macy’s operates 55 Backstage stores across the country, and it has aggressive plans to expand its off-price footprint. The company aims to launch 100 new Backstage locations this year, including one in College Station scheduled to open in September.
Many of these locations will be a store-within-a-store concept, officials said.
At the same time, Macy’s continues to close its traditional department stores. The company announced in January plans to close 11 locations this year. In 2016, the company announced plans to shutter 100 stores nationwide.
Macy’s and its Backstage stores work not in competition, but hand-in-hand to attract a broader set of customers. The company has seen an uptick in sales and foot traffic in its flagship stores that feature a Backstage section, Halford said.
However, there’s growing competition in the off-price space. Houston-based Stage Stores recently re-entered the fray by opening a Gordmans store that offers brand-name goods at lower prices. Marshalls, T.J. Maxx and Ross have a lock on the market, retail expert Baker said.
“Unless Macy’s Backstage is offering something completely unique, it’s hard to see how they can capture market share here,” Baker said. “I think there’s too much competition. Macy’s got an uphill battle in Houston.”
Margo Curette, a 30-year-old Pearland resident, stumbled upon the Backstage section on Friday while shopping for a party dress at Macy’s. As she wandered the red-trimmed aisles of clothes and home decor, she said she was impressed with Macy’s prices and product selection.
“It’s cute,” Curette said. “I hope I find lots of good deals.”
“Our customers are budget-conscious and are looking for a great deal.” Brendan Halford, store manager at the Pearland Macy’s