Macy’s Exploring Outlet Stores
By Tom Ryan
Seeking to reach many
of its customers flocking to factory outlet centers in the current climate,
Macy’s is exploring opening its own outlet stores. Said Terry Lundgren,
chief executive, "There is an outlet customer who shops those outlets.
It’s an opportunity for us."
Mr. Lundgren made his
comments late last week following the firm’s annual meeting. Most of his
17-minute presentation at the meeting focused on the early successes of
the My Macy’s local-merchandising program, as well as other merchandising,
online, advertising and expense-control initiatives.
But according to Bloomberg
News, Mr. Lundgren said after the meeting that the company is looking
into opening outlets to sell leftover inventory from Macy’s and Bloomingdale’s
stores as well as to possibly have merchandise developed specifically
for the locations. He didn’t specify a time frame.
"The idea is on
paper but we have nothing to announce,’ said Mr. Lundgren.
The department store
operator’s exploration comes as price-conscious shoppers are reported to
be increasingly venturing to outlets over regional malls. Also, the top upscale
department stores – Neiman Marcus, Nordstrom and Saks – have all developed
sizeable outlet concepts, and many of are fairing better
than their full-line locations in the current climate.
At Nordstrom, comps slid
only 1.5 percent at its Rack outlet stores in the fourth quarter versus
a 16 percent drop at its full-line stores. Nordstrom ended the year with 56
Rack locations and plans to add 10 this year. It closed the year with 109
full-line sores and expects to add four more in 2009.
In the early nineties,
however, Macy’s had rolled out a few dozen Macy’s Close-Out (MCO) stores
to unload unsold merchandise. The business generated $83 million in sales
in 1994, the year it was acquired out of bankruptcy proceedings by Federated
Department Stores, Inc. By May 1995, Federated announced it was discontinuing
MCO operations by the end of that year. At the time, the company said, "The
separate clearance format initiated by Macy’s is inconsistent with Federated’s approach
to clearing merchandise within the department store format."
Should Macy’s Inc. open outlet locations for either its Macy’s or Bloomingdale’s
formats? What challenges does it face in opening outlet locations?
- Macy’s studies outlet venture – Cincinnati
- Macy’s considers outlets – Bloomberg
News/St. Louis Dispatch
- Federated to close MCO clearance
stores – Business Wire/BNET