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Is the future of department stores off-price? Macy's Backstage opens in Tampa

Regular Macy's stores don't sell sporting goods or fitness equipment but Backstage does. The Macy's Backstage at Citrus Park will be the first to open in the Tampa Bay region and one of 100 to open this year. JAMES BORCHUCK | Times
Published Aug. 16, 2018

TAMPA — Kishia Gainey pushes a blue shopping cart while eyeing a wall of shoes.

The mother of four is back-to-school shopping at a Ross Dress for Less in a Citrus Park plaza. She's already nabbed a pair of D.C. brand sneakers for her teen son that are regularly $55. Ross's price? $25.

Gainey doesn't do full price.

T.J. Maxx, Marshalls, Nordstrom Rack, the Westchase mom loves them all.

"The hunting is good," she said, "but I love the moment I find the deal."

Now, she has a new place to "hunt" just across the street from Ross inside the Westfield Citrus Park Mall: Macy's Backstage, the first to open in Tampa Bay. The new discount retailer is different than its competitors. It's inside an existing Macy's department store.

Macy's says it will have 100 new "stores within a store" by the end of the year. When the Citrus Park store officially opens Saturday, there will be 132 Backstage stores inside existing Macy's.

It's one of the latest strategies deployed by a traditional retailer during the age of Amazon. The market has been tough on brick-and-mortar stores — but off-price retail has been a consistent bright spot.

So is tapping into the discount space enough to bring Macy's back to the top?

The Cincinnati-based has had some recent high points. On Wednesday morning, it beat most analysts predictions in the second quarter and raised its outlooks for earnings and sales for the year.

While sales slumped about a percent compared to the year before, the latest report shows new strategies like Backstage are paying off.

Backstage adds variety and appeals to a younger shopper than traditional department stores. It also makes use of a surplus of real estate.

"I can't stress enough that Backstage is different than your regular Macy's," said Annette Wallace, the Citrus Park store's vice president and store manager. "Items come in faster and there's surprise finds every day."

More retail news:Five Tampa Bay J.C. Penneys to add baby shops.

There are about 650 Macy's department stores across the United States, meaning about a third will soon have Backstage stores inside. Unlike the traditional department store, where orders are set months in advance, Backstage has the flexibility to quickly respond to trends, Wallace said.

The inventory is not from Macy's clearance or "last acts" section. Backstage has its own team of buyers.

"Macy's sits in the muddy middle of retail, which is the hardest place to be right now," said retail expert and Syracuse University professor Amanda Nicholson. "Luxury can sustain itself, discount is where the masses of people go because of the price, and J.C. Penney and Macy's are on the equator and have a numerous number of stores."

So inside the second level of the Macy's in Citrus Park, departments like intimate apparel were pushed back to make room for the 13,300 square feet devoted to Backstage — a decent chunk of the 130,000-square-foot store.

For weeks the new "store" sat behind black curtains as staff — all wearing gray "crew" T-shirts — installed new racks and shelving. Trucks arrive daily with merchandise.

There's a corner for furnishings — mid-century style chairs and drawer sets, furry stools and fluffy rugs. Next to that, a section of knick-knacks such as porcelain owls and elephants, which quickly bends into shelves of shoes, racks of athletic clothes, apparel and makeup.

"In some off-price stores, you just see a sea of clothes," Wallace said. "Not here."

Read more: Love Marshalls and Ross? A Macy's Backstage is coming to Tampa

Unlike the TJX company's Marshalls, Homegoods and T.J. Maxx stores, the in-store Backstage is condensed.

There's a rack of ELF makeup, a low-cost brand with prices below what the MAC and Chanel counters are selling a floor below. Steve Madden shoes are marked around $50 "compare at $89," according to the tag, as are Calvin Klein and Tommy Hilfiger items.

There are off-price designer handbags and several items regular Macy's doesn't carry — from gummy candies to luxury Dior boots, which are around $1,000 a pair. At Backstage, they're $499.

But there's overlap, too.

University of Florida professor Anuj Kumar wonders if that redundancy could cannibalize the full-price store. Kumar, who studies the impacts of e-commerce, also suspects most of the Backstage items have thin margins compared to the regular stock.

So, he posed, will the added foot traffic make it so discount shoppers are more likely to shop the regular merchandise? If not, Macy's Backstage stores will have to get a lot of new customers to make up the lower margins.

"Some of these more unconventional ideas get very different results," he said.

Nicholson said the market for off-price is competitive and ruled by existing relationships that could leave Macy's buyers at a disadvantage as they grow their inventory to outfit more locations.

It's all an attempt to adapt. Most experts agree that brick-and-mortar stores won't disappear, but need to be nimble to survive.

Macy's is standing behind its Backstage concept, growing it rapidly as the company's stock price outpaces competitors such as J.C. Penney.

"The irony I can see, depending how this plays outs, is that if department stores continue to decline and switch to off-price," Nicholson said, "who is going to build the brands we are going to know about?"

The internet and social media, probably.

For decades, being sold at Macy's was enough.

Go here for more business news

Contact Sara DiNatale at sdinatale@tampabay.com. Follow @sara_dinatale

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