We went shopping at Macy's Backstage and saw why the department-store chain is banking on its off-price model to turn things around

Macy's backstage wide

Priscilla Zhu/Business Insider

We visited a Macy's Backstage store.

  • Macy's is expanding its off-price stores Macy's Backstage and Bloomingdale's The Outlet as part of a three-year revitalization plan announced on February 4.
  • According to the plan, the department store will roll out 50 Backstage locations within existing Macy's stores and open seven new standalone locations in 2020.
  • Macy's Backstage has a separate buying team, but it also sells overstock from the full-price stores.
  • We went to a New York City Macy's Backstage store and found that the majority of items on sale were from lesser-known labels, but in large quantities and with steep discounts.
  • Though it's not the ideal place to hunt for deals from big-name and designer brands, it certainly targets a large group of shoppers by offering a storeful of quality goods with super-affordable pricing.
  • Visit Business Insider's homepage for more stories.

Struggling against the retail apocalypse, America's biggest department-store chain is banking on its off-price sister store to save it.

On February 4, Macy's announced a three-year revitalization plan in hopes of turning the tide against slumping sales. While the retailer seeks to close 125 of its underperforming stores over the next three years, it also plans to roll out 50 Backstage stores within existing Macy's locations and open seven standalone venues in 2020.

Off-price stores including Macy's Backstage and Bloomingdale's The Outlet have been bright spots in the company's earnings in recent years. Macy's CEO Jeff Gennette said in a 2018 earnings call that Backstage is driving up customers' spending and that visits to Macy's stores offering the model have increased.

Macy's Backstage has a separate buying team and different vendors, but it also sells its full-price stores' overstock, which accounts for a limited portion of its inventory.

We went to a Macy's Backstage store in Elmhurst, New York, to see why the department store is prioritizing its off-price model. We found the majority of items were from lesser-known labels, but with ample stock and great discounts. While we didn't spot many steals from big-name and designer brands, it's clear that the store is looking to target a larger group of customers who want a reliable and affordable shopping destination for some general, good-quality items.

Here's what we saw.

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We went to a standalone Macy's Backstage store in Elmhurst, New York. On our way there, we saw a big Macy's two blocks away from the off-price store.

We went to a standalone Macy's Backstage store in Elmhurst, New York. On our way there, we saw a big Macy's two blocks away from the off-price store.

Like other Backstage locations, this store occupies a huge amount of space. From the outside, it looked organized, clean, and fully stocked. There are some other off-price retailers, like DSW, in the same building.

Like other Backstage locations, this store occupies a huge amount of space. From the outside, it looked organized, clean, and fully stocked. There are some other off-price retailers, like DSW, in the same building.

Once we stepped inside, we were greeted by an enormous women's clothing section that occupied almost half of the store.

Once we stepped inside, we were greeted by an enormous women's clothing section that occupied almost half of the store.

We decided to start by browsing through the racks of single pieces, as that's where we usually find amazing steals from big-name and designer brands at other off-price retailers like Nordstrom Rack. But we soon realized that the game was different here.

We decided to start by browsing through the racks of single pieces, as that's where we usually find amazing steals from big-name and designer brands at other off-price retailers like Nordstrom Rack. But we soon realized that the game was different here.

The vast majority of products we saw were not from well-known or designer brands, but they were about 50% off their original prices. It was a bit confusing that so many prices were listed on the tag.

The vast majority of products we saw were not from well-known or designer brands, but they were about 50% off their original prices. It was a bit confusing that so many prices were listed on the tag.

Some pieces even came with a discount of nearly 90%.

Some pieces even came with a discount of nearly 90%.

Though the brands offered were not necessarily recognizable ones, customers generally seemed to trust the quality because of the Macy's name.

Though the brands offered were not necessarily recognizable ones, customers generally seemed to trust the quality because of the Macy's name.

"What are these brands? Why are they so cheap? Is it bad or fake?" we heard people asking their shopping companions. "No! Macy's runs this," was the general answer.

Rarely did we spot any big name brands, let alone designer ones. This Calvin Klein t-shirt was one of only two well-known brand items on this rack.

Rarely did we spot any big name brands, let alone designer ones. This Calvin Klein t-shirt was one of only two well-known brand items on this rack.

In general, the lesser-known brands came with a much steeper discount than recognizable ones. Here, for example, the Guess top was about 25% off while the Cable & Gauge one was more than 55% off.

In general, the lesser-known brands came with a much steeper discount than recognizable ones. Here, for example, the Guess top was about 25% off while the Cable & Gauge one was more than 55% off.

But there was one exception: Calvin Klein. This Backstage store carried a lot of Calvin Klein items and offered huge discounts on them. This blazer, for example, was 65% off and available in multiple sizes.

But there was one exception: Calvin Klein. This Backstage store carried a lot of Calvin Klein items and offered huge discounts on them. This blazer, for example, was 65% off and available in multiple sizes.

We saw that the vast majority of single pieces were large and extra-large. We only found one extra-small option on the single piece racks.

We saw that the vast majority of single pieces were large and extra-large. We only found one extra-small option on the single piece racks.

A great deal of styles in the women's section have more than one piece and size available. Backstage put out signs stating a section's price range, brands, and themes ...

A great deal of styles in the women's section have more than one piece and size available. Backstage put out signs stating a section's price range, brands, and themes ...

... but they were not always so helpful. For example, we saw some short-sleeve tops on the "sweater weather" racks.

... but they were not always so helpful. For example, we saw some short-sleeve tops on the "sweater weather" racks.

On the Catherine Malandrino racks, we didn't find a single product from the brand.

On the Catherine Malandrino racks, we didn't find a single product from the brand.

And not every piece in the "29.99 & under" section was within that range.

And not every piece in the "29.99 & under" section was within that range.

The store also had a small activewear section for women, where we found items from popular brands like Reebok, Puma, and Champion.

The store also had a small activewear section for women, where we found items from popular brands like Reebok, Puma, and Champion.

It was a similar situation in the women's winter outerwear section, where customers could easily find famous brands like Michael Kors and Vince Camuto with a more than 70% discount. But, again, the sizes available here were mostly large and above.

It was a similar situation in the women's winter outerwear section, where customers could easily find famous brands like Michael Kors and Vince Camuto with a more than 70% discount. But, again, the sizes available here were mostly large and above.

The marked price range for regular items was actually similar to that for clearance. It seemed that Backstage didn't put these signs out to split up the products, but to tell shoppers, "Hey, everything is affordable!"

The marked price range for regular items was actually similar to that for clearance. It seemed that Backstage didn't put these signs out to split up the products, but to tell shoppers, "Hey, everything is affordable!"

There were three clearance areas for women's apparel: a large plus-size section, plus two smaller ones for regular-size items.

There were three clearance areas for women's apparel: a large plus-size section, plus two smaller ones for regular-size items.

We found that almost all items on the clearance racks were under $10 after their additional price cuts.

We found that almost all items on the clearance racks were under $10 after their additional price cuts.

But besides the clearance areas, reduced-price items with yellow tags could be spotted everywhere in the store.

But besides the clearance areas, reduced-price items with yellow tags could be spotted everywhere in the store.

Next to the women's clothing section was a smaller but crowded beauty and accessories division.

Next to the women's clothing section was a smaller but crowded beauty and accessories division.

On the makeup product shelf, we didn't find any recognizable brand names, which could usually be spotted at other off-price stores like TJ Maxx. But all items here were super cheap, and many were under $5.

On the makeup product shelf, we didn't find any recognizable brand names, which could usually be spotted at other off-price stores like TJ Maxx. But all items here were super cheap, and many were under $5.

The same thing was true on the skincare product shelf ...

The same thing was true on the skincare product shelf ...

... and in the bag section.

... and in the bag section.

So this is where Backstage keeps its their expensive products — in a small glass display counter inside the bag section. We spotted a few Versace, Chloé, Tory Burch and Givenchy products.

So this is where Backstage keeps its their expensive products — in a small glass display counter inside the bag section. We spotted a few Versace, Chloé, Tory Burch and Givenchy products.

We were surprised to see so many people in the shoe section. There is a DSW upstairs that is much bigger and offers many more options.

We were surprised to see so many people in the shoe section. There is a DSW upstairs that is much bigger and offers many more options.

But one advantage that Backstage has its smaller selection, allowing it to offer a style in almost every size, like these CK loafers.

But one advantage that Backstage has its smaller selection, allowing it to offer a style in almost every size, like these CK loafers.

Though Macy's CEO once said that menswear was one of the best-performing categories for Backstage, it occupied a much smaller area than women's apparel in this store.

Though Macy's CEO once said that menswear was one of the best-performing categories for Backstage, it occupied a much smaller area than women's apparel in this store.

It did appear to us that the menswear section offered a better selection of items in terms of style, size, and brand.

It did appear to us that the menswear section offered a better selection of items in terms of style, size, and brand.

The menswear section also sold some smaller items like wallets and grooming kits, though these products usually came with a smaller discount than the apparel did.

The menswear section also sold some smaller items like wallets and grooming kits, though these products usually came with a smaller discount than the apparel did.

Here, we confirmed again that shoppers could get fantastic discounts on Calvin Klein products at Backstage.

Here, we confirmed again that shoppers could get fantastic discounts on Calvin Klein products at Backstage.

The men's section included a larger activewear selection than the women's. But the same size problem was also seen here –– most of the available items were in large or plus sizes.

The men's section included a larger activewear selection than the women's. But the same size problem was also seen here –– most of the available items were in large or plus sizes.

Stepping out of the men's area, we entered the second largest section in the store: kids' clothing.

Stepping out of the men's area, we entered the second largest section in the store: kids' clothing.

The kids' division was fully stocked with a bunch of toys ...

The kids' division was fully stocked with a bunch of toys ...

... and kids' clothes. Girls' and boys' apparel each took up half of the space.

... and kids' clothes. Girls' and boys' apparel each took up half of the space.

The kids' clothing section offered diverse size options. We saw a lot of small and medium sizes here.

The kids' clothing section offered diverse size options. We saw a lot of small and medium sizes here.

And there were a lot more well-known brand-name items, like these 67% off Juicy Couture sets.

And there were a lot more well-known brand-name items, like these 67% off Juicy Couture sets.

Finally, we reached the home department at the back of the store. There were some chaotic parts of this section ...

Finally, we reached the home department at the back of the store. There were some chaotic parts of this section ...

... but in general, this section was pretty well-organized. The diversity of products made us feel like we were at a home decor store.

... but in general, this section was pretty well-organized. The diversity of products made us feel like we were at a home decor store.

They also have great discounts here. It's interesting that Macy's also has a furniture gallery right next door that showcases high-end furniture.

They also have great discounts here. It's interesting that Macy's also has a furniture gallery right next door that showcases high-end furniture.

Some products here were slightly damaged, but with unbelievable markdowns. This $60 lamp was discounted to $4.96.

Some products here were slightly damaged, but with unbelievable markdowns. This $60 lamp was discounted to $4.96.

They also had a corner full of kitchen supplies, from pans to bowls.

They also had a corner full of kitchen supplies, from pans to bowls.

There was a small and messy clearance rack as well. Almost all of the items here were under $5.

There was a small and messy clearance rack as well. Almost all of the items here were under $5.

And finally, we came to the bedding section. The style, stock, and condition here were again impressive.

And finally, we came to the bedding section. The style, stock, and condition here were again impressive.

Unlike other off-price retailers that offer amazing but limited steals from famous or designer brands, it is clear that Macy's Backstage is geared towards a larger group of shoppers who don't care too much about brand names, but do care about good quality and affordable pricing.

Unlike other off-price retailers that offer amazing but limited steals from famous or designer brands, it is clear that Macy's Backstage is geared towards a larger group of shoppers who don't care too much about brand names, but do care about good quality and affordable pricing.

Though the organization and signs in the store were not super helpful, and some were even confusing, it wasn't a big problem because there's no need to hunt and search. Everything here is a bargain and super affordable. And that's probably why Backstage is attracting customers for Macy's.

Though the organization and signs in the store were not super helpful, and some were even confusing, it wasn't a big problem because there's no need to hunt and search. Everything here is a bargain and super affordable. And that's probably why Backstage is attracting customers for Macy's.
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