Macy's Cuts Deal With Lids For 200 In-Store Shops

Macy's (NYSE:M) has cut a deal with Lids Sports (NYSE:GCO) to open new sports-team apparel departments in 200 stores, the retailer said on Wednesday (Aug. 7).

The in-store shops will be run by Lids under the name "Locker Room by Lids" and will open in 25 Macy's stores this fall, with another 175 planned by spring 2014. The stores selected for the shops will be in cities with major professional and collegiate sports teams. Macy's will also add a Locker Room by Lids area to its e-commerce site.

The shops, which will sell team-branded apparel for men and women, hats, glassware, throws and gnomes, will range in size between 500 and 1,000 square feet. That means they'll top out just below the size of an average Lids store, which is 1,150 square feet.

The Locker Room by Lids departments will be operated similarly to the Finish Line (NASDAQ:FINL) shop-in-the-store shoe departments that began rolling out to about 450 Macy's stores this past spring. For those licensed departments, Finish Line operates the departments, while for another 225 Macy's stores that carry footwear, Finish Line selects the merchandise but Macy's staffs the department. More than 60 of the in-store Finish Line shops were open by early July.

It's not clear whether the Lids shops will ever have that much of an opportunity for expansion beyond what Macy's is describing as "the initial phase," because the merchandise in each store will be specifically selected to match local sports teams—no sports team, no clear need for the Lids shop. However, the departments will have kiosks for ordering gear that's designed for non-local teams.

Macy's approach to shops-in-the-store is a little ironic in light of the lawsuit that just wrapped up (no verdict yet) in a New York courtroom involving Macy's, JCPenney (NYSE:JCP) and Martha Stewart (NYSE:MSO). These are exactly the kinds of licensed in-store shops that Penney's was pinning its hopes on to get around Macy's exclusive deal with Stewart.

But when there's less legal dancing going on, the concept seems sound: Smaller specialty chains get more traffic and the big chains get something to pull in customers who might otherwise not be as interested in a traditional department store.

For more:

- See this Nashville Post story
- See this news release

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