We went to the Macy’s flagship store in New York City and saw firsthand how the brand is transforming into a discount retailer

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The “Last Act” clearance section at the flagship Macy’s store in New York.
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Business Insider/Mary Hanbury

Macy’s is beginning to look a lot more like discount stores such as T.J. Maxx and Nordstrom Rack.

In the past two years, the struggling department store has launched an outlet store called Macy’s Backstage, added dedicated “Last Act” clearance sections to stores, and said it would add more self-service systems to its beauty and shoe sections.

These changes mark a decisive shift away from being a full-service retailer.

Off-price retail is one of the only bright spots in the industry. This year, T.J. Maxx announced plans to open 1,800 more stores globally and reported 21 consecutive years of positive same-store sales. Macy’s closed 66 stores in 2016 and plans to shutter another 34 in the next few years.

We took a trip to Macy’s to see how the shopping experience had changed:


We visited the flagship Macy’s store in New York’s busy Herald Square. The store was built over a century ago and, at the time, was the world’s largest store.

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Flickr/Mr Hicks

Our first impressions were positive. On a gray Friday afternoon, the ground-floor beauty section was pretty busy.

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Mary Hanbury

Beauty is an important area of growth for the store, especially as apparel sales weaken. The US beauty industry of premium products grew by 6% in 2016 and reached $17 billion in sales, according to the NPD market-research group.

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Business Insider/Mary Hanbury

But shopping habits in this sector are changing. A survey done by the market-research firm Mintel found that 45% of beauty customers preferred to research a product on their phone rather than ask for assistance from a sales associate.

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Business Insider/Mary Hanbury

That means beauty counters, which have been a staple of the store for decades, could one day be a thing of the past. Karen Hoguet, the CFO of the store, said in March that the company was looking to test more self-service systems in the beauty department.

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Business Insider/Mary Hanbury

Some beauty displays resembled what you’d see at a discount store. Customers can grab products and head straight to the cashier.

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Business Insider/Mary Hanbury

This was also the case in the jewelry section.

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Business Insider/Mary Hanbury

We found designer earrings hanging on boards. It felt a lot like the layout at T.J. Maxx.

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Business Insider/Mary Hanbury

In fine jewelry, there were sales assistants available to help, but the area was deserted.

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Business Insider/Mary Hanbury

Macy’s is trying to directly compete with off-price retailers on price. In the handbag section almost everything was on sale.

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Business Insider/Mary Hanbury

There was also a “Last Act” clearance section. This concept was introduced two years ago.

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Business Insider/Mary Hanbury

Piles of handbags were stacked up haphazardly with discounts of as much as 80% off.

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Business Insider/Mary Hanbury

This Calvin Klein bag, for example, was reduced to $91 from $228.

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Business Insider/Mary Hanbury

These clearance sections are also found in both the men’s and women’s shoe departments.

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Business Insider/Mary Hanbury

The racks were disorganized and messy.

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Business Insider/Mary Hanbury

It felt much more like a discount store than a traditional department store.

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Business Insider/Mary Hanbury

There were mismatched shoes, and garbage was scattered all over the floor.

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Business Insider/Mary Hanbury

In other parts of the shoe department, there were more traditional department-store displays.

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Business Insider/Mary Hanbury

Though many customers were left waiting for sales assistants to help them.

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Business Insider/Mary Hanbury

In November, Macy’s said it would be bringing its Macy’s Backstage outlets to 45 of its full-priced department stores. This was not available at its flagship store, but most of the clothing was on sale.

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Business Insider/Mary Hanbury

By offering big discounts on clothing, Macy’s is hoping to win over bargain hunters who shop at off-price stores.

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Business Insider/Mary Hanbury

Off-price retail has become popular with stylish shoppers who can buy last season’s designer clothes at discounted prices. At Macy’s, while the prices were competitive, the clothing seemed less stylish.

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Business Insider/Mary Hanbury

Especially in its clearance sections, which looked chaotic. This may be a good way to sell old inventory, but we can’t see how this will draw in new customers in the long term.

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Business Insider/Mary Hanbury