Yahoo Finance Macy's goes for bargain hunters
Macy’s (M) is targeting the outlet-shopping crowd.
The venerable retailer is testing the popularity of selling off-price merchandise at four locations in the New York City area. Called Macy’s Backstage, the stores will offer clearance merchandise and special deals on name-brand fashion items, according to the company. Macy’s chief innovation and business development officer Peter Sachse explains Macy’s Backstage is targeting those who want top-notch products at low prices.
We believe we can deliver a whole new level of value to customers who appreciate fashion and love to hunt for a bargain.
Macy’s is joining such rivals such as Nordstrom's (JWN) Nordstrom Rack and Saks' (HBC.TO) Off 5th in providing a place for budget-conscious customers. The company adds it will be hiring about 120 employees to work at the new Macy’s Backstage outlets.
But Kathryn Cicoletti, a Yahoo Finance contributor and founder of the financial information website MakinSense Babe, doesn’t understand how this model fits for the typical Macy’s customer.
“I’m a little confused by it,” she notes. “It works when you are the high-end retail chain and then you give people the opportunity to buy things at a lower cost because it still has the cachet of let’s say you buying it at Neiman Marcus.”
Cicoletti adds along with not having the cachet of the high-end retailers, Macy’s is feeling pressure from the lower-priced end.
“You have Target (TGT), which is playing up,” she explains. “They’re partnering with people like Lilly Pulitzer and other upscale type brands.”
And that leaves Macy’s in a kind of retail no-man’s land.
“I feel like Macy’s is kind of lost in the middle,” she says. “You don’t really know as a consumer where they fit.”
And Macy’s clearly isn’t going “all in” on the off-price idea just yet. According to Sachse:
As with all of Macy’s innovations, we will test and learn to see what resonates most with customers so we can adjust before rolling out additional locations.
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