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Macy's Plans 100 New Locations, Distribution Center For Off-Price Brand

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As department stores shutter locations or disappear altogether, Macy's Inc. is fighting to avoid the same fate.

The retail giant, which has experienced consistent sales declines amid the rise of e-commerce, is taking proactive steps to reverse its fortune by leaning harder into its discount brand, Macy's BackstageRetail Dive reports.

Macy's, Macys

The retailer has already opened 20 Backstage locations within its stores since the start of fiscal year 2018, and plans to hit 100 by year's end. Unlike competitor Nordstrom, Macy's is using its existing real estate to house the Backstage brand, while Nordstrom uses separate stores for its off-price Nordstrom Rack concepts. While some believe the lack of differentiation could hold Backstage back from success, Macy's executives claim early stage results have been positive.

Macy's has not yet suffered as much as Bon-Ton, which is liquidating all of its stores, or Sears, which is in default despite closing hundreds of locations.

To further facilitate the Backstage expansion, Macy's is planning a distribution center dedicated to the brand in Columbus, Ohio, to open in 2019 with 400 employees. To emphasize the difference between the standard Macy's and Backstage brands, the two will have separate staff deciding purchasing and separate distribution patterns, according to a press release.

Off-price retailers such as the TJX umbrella and Nordstrom Rack have seen success in recent years and are expanding amid the department store crash. Macy's may be a little late to the party relative to its established competitors, but it is also hoping to get in on the cutting-edge retail movement with its purchase of the 2K SF experimental retail shop Story in the Chelsea neighborhood of New York City.

Story boasts an apparel inventory that is constantly rotating and a physical space often occupied with events such as trunk shows, yoga and cooking classes. Story founder Rachel Schechtman has joined Macy's with the title of brand experience officer. Though Macy's plans for the brand with only one physical location have not been disclosed, the acquisition is a sure sign of the 160-year-old company's interest in becoming more contemporary.