Macy's tests real estate venture

Macy's storefront facing a shopping mall
Macy's is piloting pop-up shops in 10 U.S. cities. (Mike Mozart/CC BY 2.0)

Macy's is testing out a new pop-up shop program on the first floor of its stores in 10 cities. The concept, known as The Market @ Macy's, allows brands to pay a one-time fee for space to advertise or sell products. In other words, Macy's is testing out a new real estate model.

Macy's will staff the pop-ups for the amount of time each brand signs up to stay, while the brands recuperate all of the sales. The combination could mean boosted customer service for pop-ups along with additional foot traffic for Macy's. 

Macy's isn't the only big retail chain testing in-store pop-ups. Last year Kohl's announced it would start hosting Amazon pop-ups in some of its retail locations. 

In fact, for many retailers, pop-ups are becoming a critical part of the store experience reinvention journey, according to Vicki Cantrell, retail transformation officer at Aptos.

"Experimenting with pop-ups enables companies like Macy’s to go on a reinvention journey without making long-term commitments or investments, while also creating new touch points and fresh customer experiences," Cantrell told FierceRetail. "They also enable retailers to measure the impact of a new physical experience within their complete, omnichannel ecosystem, before rolling them out chainwide." 

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Cantrell notes that pop-ups already account for more than $50 billion a year in retail revenue and the industry is anticipated to grow in importance as retailers try to figure out the best ways to weave technology and experiences into the shopper journey. 

Now is the perfect time for Macy's and other department stores to be testing out the in-store pop-up. The Market allows Macy's to showcase an evolving list of brands and companies, "creating a new point of discovery within their brick-and-mortar locations," Cantrell said. "This differentiator will help the department store boost foot traffic and thrill its customers with fresh and innovative experiences."

Of course, testing out a pop-up comes with its challenges. Like any experiment in retail, the pop-up must still reflect the look and feel and value of the brand, while creating a memorable experience. 

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"If Macy’s can strike this balance, then the retailer will find that its new pop-up strategy is one of the myriad ways to re-engage customers time and time again," she said. 

Like all retail, Cantrell expects pop-ups to morph in the next few years. 

"As new in-store technologies (like augmented reality) and new product lines are developed, we’ll see them put to the test in pop-ups to determine their viability and consumer response before being launched across all locations," she said.