Macy's Backstage bargain stores coming this fall

Macy's entering off-price market
Macy's entering off-price market

Macy's has lifted the lid off its new off-price business.

Just three months after telling investors it was exploring a strategy in the increasingly crowded space, the department store on Tuesday said it will open four "Macy's Backstage" locations in the metropolitan New York area this fall. (Tweet This)

The stores, which will average about 30,000 square feet, will be in Brooklyn, Queens, New Hyde Park and Huntington.

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"We believe we can deliver a whole new level of value to customers who appreciate fashion and love to hunt for a bargain," Peter Sachse, Macy's chief innovation and business development officer, said in a news release.

Sachse emphasized that the stores will be viewed as "test and learn" locations, so that the retailer can tweak its strategy before further rolling out the concept.

Macy's will face stiff competition in the off-price and outlet space. Saks, Nordstrom and Neiman Marcus already operate outlet stores, while traditional off-pricers TJX, Ross and Burlington Stores are also growing share.

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According to an analysis from Retail Metrics, Macy's same-store sales growth has lagged behind each of the latter three names in five of the last eight quarters.

Macy's also plans to expand the outlet presence for its higher-priced Bloomingdale's unit, with plans to open a new location on Manhattan's Upper West Side this fall. Though it's the 14th location for the concept, it will be its first new store in two years.

But Macy's Backstage and Bloomingdale's Outlet aren't the only bargain-based name coming to town. In late 2016, New York City's first outlet center—Empire Outlets—will open on Staten Island and will include such stores as Nordstrom Rack and Gap Outlet.

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According to Customer Growth Partners, sales in the off-price category are growing at greater than twice the speed of the overall apparel market, accounting for about $38 billion annually.

Macy's shares were down about 1 percent, near $65, on Tuesday. The company will report first-quarter earnings next week.

Macy's recently acquired beauty firm Bluemercury for $210 million in cash.