Macy’s & Best Buy: A Mini-Mall Within A Store

October 16, 2015 | B2C Retail

A recent Macy's announcement states that the department store plans to add Best Buy mini-mall type shops in its stores, suggesting more changes could be coming in the physical appearance of its stores.

One day after Macy’s said it plans to jettison 35 to 40 underperforming stores early next year, it inked a deal with Best Buy to open in-store electronics shops in 10 stores starting in November. The shop-in-shops will sell Samsung smartphones, tablets and smartwatches, along with audio devices and other items. Macy’s president Jeff Gennette said this reinforces Macy’s as a “destination” through the year for products most in demand. The move also marks the chain's return to a category it has been absent in for years.

The mini-mall tech departments will be staffed by Best Buy employees and will comprise approximately 300 square feet of space. This isn’t Best Buy’s first partnership – it had Geek Squad teams in Target a few years ago. But some experts see the deal with Macy’s as a better fit since the department store retailer is currently not selling any electronics.

Although the apparel industry is showing signs of resurgence, there’s no denying consumers are shifting dollars into technology. With Radio Shack’s closure, Macy’s could become a go-to to store in malls for gadgets needs.

Mini-Mall Concept and Partnership Not New to Macy's

Macy’s has grown increasingly partial to partnerships with name brands. In June, the retailer teamed up with Men’s Wearhouse to open tuxedo rental shops in some 300 Macy's locations, with the first 17 pilot shops opening this fall. Many Macy’s also have Sunglass Hut shops within the store. The company also operates departments in tandem with athletic footwear brand Finish Line, and Kenneth Mink, a fine rug dealer. And last Christmas, Macy's added in-store Build-a-Bear Workshops in select stores in a deal with the toy brand. “If you can’t sell your own stuff, sell someone else’s,” said industry retail consultant Allan Mottus.

Macy's also plans to open in-store shops to spotlight its recently acquired Bluemercury specialty beauty brand. Some industry experts see the influx of renowned brand names as efforts to supplant the celebrity merchandise Macy’s had relied on over the past few years. Some of those names – Donald Trump, Martha Stewart—come with their own challenges and the public appears to be tiring of celebrities.

From a design standpoint, the nameplates require special space within the mini-mall store layout. That will mean more signage, different fixturing and new displays. Electronics, for example, typically need display bars for consumers to play with the items. “If you have a name like Best Buy you want that to pop out in the store,” said Mottus.

Macy’s isn’t the first department store to partner with other retailers. Nordstrom has large and busy Topshop departments. Bloomingdale’s (a Macy’s company) licenses footage to other brands such as its deals with Free People and Sweaty Betty athletic wear in select locales. As it becomes harder to secure new locations for companies such as Best Buy and department stores search for ways to shore up sales, the concept of department stores as mini-malls could gain traction.

Macy's is also opening lower-priced format stores that require a different ambiance. Called Backstage, Macy's plans to open six of these units this year with more in the blueprints for 2016.

Posted by Angel Carra | Request as a Speaker

On the go, mother of two, who believes things happen for a reason. SVP of Sparks Retail focused on driving the best client and customer experience.