Macy’s goes all-in on small format, while Toys R Us focuses on flagships

Macy’s is setting its sights on more small-format stores, while Toys R Us is betting big on fresh flagships, the companies announced this week.

Macy’s said it plans to expand its small-format store footprint with as many as 30 more locations, adding to the 15 small-format Macy’s and Bloomie’s stores the retailer has already opened. The expansion will begin next year and continue through fall 2025, Macy’s said, in off-mall locations in high-traffic areas, and in some cases replacing less productive stores.

The move is “one way we intend to harness the full power of the Macy’s brand to deliver sustainable, profitable sales growth for Macy’s, Inc. beginning in 2024,” Macy’s COO and CFO Adrian Mitchell said in a statement. Macy’s small-format locations are one-fifth the size of its department stores, with a curated mix of private label and branded products.

In its second quarter earnings call in August, Macy’s reported topline declines; total net sales and sales at its brick-and-mortar locations dropped 8%, though the retailer said its small-format stores posted “positive comparable owned-plus-licensed sales growth.”

It also reported a ~39% YoY increase in Toys R Us Q2 toy sales, and the toy retailer is capitalizing on this success by partnering with Go! Retail Group to open 24 new flagship stores nationwide next year, parent company WHP Global announced last week.

WHP Global acquired Toys R Us in 2021 after the toy giant filed for bankruptcy in 2017, and has grown its store count more than 50% since then, with 1,400+ stores across 31 countries, the company said. These include a 20,000-square-foot flagship store, which opened in 2021 in New Jersey’s American Dream mall, and more than 450 shop-in-shops in Macy’s that rolled out last year.

Look for new Toys R Us stores in airports and cruise ships; the first airport location will open at Dallas Fort Worth International Airport in November.

Zoom out: The retailers’ brick and mortar expansion comes as the turbulent economy has forced many retailers—including Bed Bath and Beyond, Foot Locker, and Rite Aid—to cut costs by shuttering locations.