Macy’s just confirmed the end of department stores as we know them

  • Macy’s says it’s adding its off-price concept, Backstage, to 100 more stores this year.
  • Backstage, which has been compared to TJ Maxx and Nordstrom Rack, sells Macy’s brands at steeply discounted prices of up to 80% off.
  • Macy’s has also copied discount retailers by rolling out self-service models in its shoe departments.

Macy’s is morphing into a discount store.

The retailer said on Tuesday that it would nearly triple the number of stores that offer its off-price concept, Backstage, to 145 this year.

Backstage, which occupies a sprawling 15,000 square feet in 45 Macy’s stores, has been compared to off-price retailers like TJ Maxx and Nordstrom Rack. It sells Macy’s brands at steeply discounted prices of up to 80% off.

The new expansion of Backstage will include, for the first time, some of Macy’s highest-performing stores at premium malls, Macy’s CEO Jeff Gennette said on a call with analysts.

“We feel good about the model we have landed on for Backstage, and in 2018, we’re planning to expand by another 100 stores, including locations in some of our premium malls,” he said.

The company is doubling down on Backstage as it fights to maintain sales momentum. In the most recent quarter, the retailer’s same-store sales increased by 1.3% – the first quarterly uptick in three years.

According to Gennette, Backstage is driving up customers’ spending and visits to Macy’s stores that offer the concept.

The company started testing Backstage several years ago, first as stand-alone stores and later as sections inside existing Macy’s stores.

The concept is meant to go after the two-thirds of Macy’s customers and the more than 70% of millennials who shop at off-price stores monthly, Gennette said last year.

Backstage isn’t the only area where Macy’s is copying discount retailers.

Last year, the department-store chain rolled out self-service systems in its shoe departments nationwide, designed to let customers serve themselves instead of finding a salesperson to retrieve shoes. The model is similar to those at TJ Maxx and Nordstrom Rack.

Customer service was once what set Macy’s apart from those retailers. But now many people don’t want that level of service when they’re shopping, according to Karen Hoguet, the chief financial officer of Macy’s.

“Lots just say, ‘Leave me alone – let me get the shoe I want and move on,'” Hoguet said at an investor conference last year.