Business Insider/Mary Hanbury Macy's plans to add its off-price concept, Backstage, to 100 stores in 2018.
- Macy's is doubling down on its off-price concept, Backstage, which sells many of the same brands as a typical Macy's store but at a steep discount.
- In February, Macy's CEO Jeff Gennette said the retailer would be rolling out 100 more of these outlets to Macy's stores.
- We compared the shopping experience at Macy's Backstage and TJ Maxx to find out which off-price store is better.
Macy's wants in on the off-price boom.
America's biggest department-store chain is doubling down on its off-price concept, Macy's Backstage. In February, the retailer announced that it would be adding its Backstage outlet to 100 of its stores this year, bringing the total to 145. Backstage sells Macy's brands at steep discounts of as much as 80%.
Macy's isn't alone here. Nordstrom has a similar concept, called Nordstrom Rack, that similarly takes inspiration from off-price stores like TJ Maxx and Ross Stores.
It makes sense that department stores would want to emulate an off-price model. Same-store sales numbers have been strong at off-price stores while many department stores have suffered in recent years.
But department stores have one major disadvantage while operating in this space. Their off-price stores have to co-exist with their full-price stores, which also offer discounted products, potentially leading to brand confusion for customers and vendors.
"The deck looks stacked against them," a group of Morgan Stanley analysts wrote in a note in May 2017.
The analysts wrote that off-price stores such as TJ Maxx have a structural advantage over department stores since they have a large vendor base that has been built up over decades. Some of the products sold at TJ Maxx are made specifically for the store by certain brands.
Macy's Backstage has a separate buying team and sells a mix of products from new and existing vendors, both from the current and the last season. A spokesperson for Macy's confirmed that Backstage also sells overstock from its full-price stores.
We decided to put the two stores to the test to see how the shopping experience differs and who does it better overall. Here's the verdict: