Macy’s department store has been expanding its omnichannel platform and investment in small store concepts—but it is not eschewing the big box format quite yet. Quite the contrary, actually. The major retailer sees opportunity in malls and large department stores, and plans to build a robust platform with a wide variety of store footprints.
“There is always customer feedback and internal discussion that 200,000 SF large department stores can be intimidating and hard to navigate when you just need a simple item,” Joe Hodge, senior director of real estate at Macy’s, tells GlobeSt.com. “We will invest appropriately in our stores to give our customers the best shopping experience both within our best malls and our new off-mall properties.”
Hodge acknowledges that malls are struggling at the moment, and some are finding a higher and better use as another asset class. “There is no doubt that mall sites will continue to evolve,” says Hodge. “We are seeing a lot of multifamily developers and industrial users finding value in these parcels today. That trend will continue.”
However, not all malls are created equal, and some still consistently capture strong consumer attention. “We track retail foot traffic very closely and have noted that A- and most B-graded malls still consistently dominate the top 10 retail destinations by market in foot traffic,” says Hodge.
The retailer is reformatting its strategy to better serve new consumer needs, which includes small store footprints, like Market by Macy’s; however, the strategy will include exposure to malls and large-format stores as well. “Macy’s will continue to maintain a presence in the country’s top malls while growing the Market by Macy’s concept,” says Hodge. “As of January 29, 2022, of our 446 Macy’s full-line locations approximately 86% of those locations are in A and B grade malls. We believe these malls are still the dominant retail drivers in their communities and will continue to thrive.”
The company is, however, shrinking its presence in class-C malls, but still finding opportunity to extract value. “The fallout will be in the C-graded and below malls,” says Hodge. “We actively monitor those properties, evaluate redevelopment opportunities, value creation opportunities, and actively plan for possible disruption. We will continue to monitor post-pandemic shopping habits and remain nimble and ready to react to market forces.”