Macy's has high hopes for outlet brand, digital retail

- Lower in-store sales dogged Macy's in the first quarter of 2017, but the retailer saw some success in experimenting with lower-priced offerings, self-service sales, and online sales. That is why Macy's hopes to improve its financial health by focusing on digital business, the outlet brand called Macy's Backstage, and expanding self-service in its shoe departments.

Macy's reported robust sales of women's shoes, women's apparel (especially dresses and activewear), fine jewelry, furniture, and mattresses in the first quarter.

The self-service shoe departments resemble the sales experience at low-cost retailers such as TJ Maxx and DSW. You find the shoe style in the size you want on the shelves and never deal with a salesperson.

Macy's saw double-digit sales increases in self-service shoe departments, CFO Karen Hoguet said on an earnings conference call for shareholders and analysts. That is well above the trend in shoe sales overall, she said. That success is prompting Macy's to roll out self-service shoe departments at all stores by the end of August.

Customers seem to appreciate the "deep-value opportunities" they find at the 26 Macy's Backstage outlets located inside its regular stores, Hoguet said. She said Macy's saw higher total-store sales in those locations and will open 19 more Backstage outlets by the end of the year.

"These are unusual and challenging times for retail, especially formal-based department stores," CEO Jeff Gennette said on the conference call. "We're hoping that by the end of this year, we have a scalable [discount] model to aggressively roll out in the future."

In New York City, Backstage outlets are open inside Macy's Fordham Place in the Bronx and Macy's Queens Place in East Elmhurst. A standalone Macy's Backstage is located in Sheepshead Bay, Brooklyn.

Gennette said he expects online and mobile app sales to continue to grow. The retailer will expand its buy-online, pickup-in-store option that allows shoppers to pay for stuff on the website or app and in most cases pick up the loot in the store that same day.

Hoguet said that stores will also try to bolster its furniture and mattress business, which is doing well.

The strength of online giant Amazon and discount brick-and-motor brands such as TJ Maxx has hurt Macy's and other traditional department stores. But some discount retailers, such as Kohl's, are also hurting.

With the AP

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