More Legacy Retail Woes

Legacy retailing (aka brick-and-mortar stores) continues to have difficulty meeting the challenges of online shopping.

The Limited--one of the original mall-based women's specialty chains--has just closed its 250 stores from coast to coast and will sell online only. Founded more than 50 years ago, the Limited at one time had hundreds of mall stores and was hugely popular, but that was before the Internet. The retailer's private equity owner said in a statement: "In an increasingly challenging environment for mall-based retail and women's apparel, we are very disappointed that the company has had to make the difficult decision to close its retail locations."

Sears also made an announcement this week: It's selling the well-known Craftsman brand to competitor Stanley Black & Decker. Sears was one of the pioneers of catalog shopping in the 19th century, and Craftsman is one of the three brand jewels in its crown (along with Kenmore and Diehard). Selling a crown jewel to raise money will likely only postpone the inevitable. Sears has been trying for years to strategize its way out of an expensive legacy retailing situation. Sears is closing yet more stores, having already agreed to rent parts of open stores to other retailers (like Primark). 

Macy's announced that it's laying off 10,000 workers and closing 100 stores after a worse-than-anticipated holiday season. The company stated that the stores being closed were "unproductive or are no longer robust shopping destinations because of changes in the local retail shopping landscape."

What is the future of legacy retailing in a world where consumer behavior is evolving along with technology? More posts on that topic soon.

Marketing Macy's Backstage

Macy's has been opening freestanding and in-store Backstage off-price discount outlets around the country. Meanwhile, it's closing some underperforming department stores and testing new freestanding specialty formats.

Yesterday I visited a Backstage unit housed inside an existing Macy's store. As some news outlets have mentioned, it features a merchandise mix from current Macy's brands and some new brands not currently sold through Macy's. The discounts are deep and the merchandise selection not so deep.

The atmospherics are entirely different than a traditional Macy's. Close your eyes, forget you're inside a Macy's, and you'd almost think you're in a TJ Maxx. Backstage has a little bit of everything on pipe racks--missy sizes, junior sizes, plus sizes, baby/kid's sizes, shoes (lots of shoes), cosmetics, toys, and home goods. Even the checkout area is configured the way you'd expect in a TJ Maxx.

IMHO, opening a Backstage unit inside an existing Macy's store is a great idea because:

1. Backstage fills space that was underutilized by existing Macy's departments, and will probably accelerate inventory turn.
2. Backstage attracts price-sensitive customers who must walk through regular-price racks to get to the separate off-price section, located well into the store's depths.
3. Backstage may attract new customers who previously believed Macy's was too expensive.
4. Backstage can draw from both the Macy's shopper population and shoppers who visit the malls where these stores are located. 
5. No mixed marketing messages here: Backstage's ambiance is differentiated from Macy's ambiance. Shoppers will easily be able to distinguish where they are, even inside a Backstage that is inside a Macy's. Especially in Macy's that have been renovated or spruced up (as was the one I visited). The difference is noticeable.
6. No mixed marketing messages: Backstage's price tags show regular prices and deeply-discounted prices, unlike the usual Macy's tags. In other words, welcome to off-price country. (Nice totebag too, free with purchase.)
7. No mixed marketing messages: Backstage has its own "star" logo (see photo) and it's definitely different from the usual Macy's logo. We're "Backstage" and not on the main stage, get it?