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Macy’s converts 1M sf to fulfillment space

Retailer’s plans distribution centers across 35 of its stores

Macy’s CEO Jeff Gennette (Getty)
Macy’s CEO Jeff Gennette (Getty)

Macy’s is converting 1 million square feet into fulfillment space as it gears up for holiday orders.

The retailer is planning semi-automated distribution centers across 35 of its stores, Bisnow reported. Chief financial officer Adrian Mitchell announced the plan in the company’s fourth-quarter earnings call this month, referring to the mini-distribution centers as “low-cost complements to our existing fulfillment network.”

The conversion plans are the latest move by the department store to reevaluate its inventory and retail footprint to target boostings its supply chain and reducing shipping costs.

In the spring, the retailer reportedly planned to accelerate the rollout of smaller locations, which carry fewer products than its traditional department stores in favor of quickly updating inventory to keep trendy items and household essentials on hand.

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E-commerce surged in the wake of the pandemic and has held on to its popularity after lockdown orders receded. Black Friday retail sales increased 12 percent year-over-year, according to Mastercard SpendingPulse, which included online retail sales in its data. Foot traffic surged from last year’s holiday, but in-store sales didn’t actually change significantly from the previous year.

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Macy’s is also ramping up its bet on in-store concepts with outposts from other retailers. Last year, the brand joined forces with Toys ‘R’ Us to revive the dormant toy retailer within 400 department stores beginning in 2022. The Wall Street Journal reported this week that Macy’s was set to add Claire’s, a fashion and accessories chain popular with young girls, to 21 of its locations.

The company announced in 2020 a goal to close about 125 department stores by early next year, but it has slowed down those plans. The retailer is looking to close fewer than 10 stores in January, along with weighing whether it will close an additional 50 stores it planned to shutter by next year.

— Holden Walter-Warner

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E-commerceIndustrial Real EstateMacy’sRetail