Macy's and Best Buy are banking on small-format stores to lower costs and boost consumer convenience amid an ever-shifting retail landscape

AP Photo/Mark Lennihan, File

• Small-format stores are becoming a significant part of the evolution of US retail.
• Macy's and Best Buy are two prominent retailers who are leaning into the shift.
• Amid larger department store closures, Macy's said it would expand its Bluemercury locations.

For decades, the American shopping experience was defined by department stores and big-box retailers, with consumers poring over vast amounts of products in untold numbers of large-scale buildings.

But many retailers are scaling back their physical footprints to reduce costs and boost customer convenience as they look to open new locations, according to The Washington Post.

Macy's and Best Buy are two of the latest retailers to embrace the strategy further. Both announced last week that they would open more small-format locations. Retailers like Nordstrom and Target have also opened more compact locations recently as consumers have increasingly embraced online shopping.

For Macy's, the announcement comes as the company announced last week that it would close 150 underperforming stores — including 50 locations in 2024 alone — over the next three years.

During an analyst call last Tuesday, Macy's CEO Tony Spring said the company would need to "focus on having the best stores, not the largest number of stores," according to The New York Times.

In recent years, Macy's opened eight small-format stores called Market by Macy's, the company's foray into off-mall boutique-sized locations, along with a small-format Bloomingdale's concept called Bloomie's. Last October, the company announced it was expanding its small-format stores, aiming to add 30 locations by the end of 2025.

And Macy's will lean further into its luxury offerings, announcing last week that it would add 15 Bloomingdale's locations and 30 new locations of its beauty chain, Bluemercury.

Meanwhile, Best Buy is set to overhaul its in-store experience for customers as it also eyes a retail landscape where small-format stores are becoming more prevalent.

"We are planning to open a few additional outlet centers and new formats to continue to test two important concepts," Best Buy CEO Corie Barry said during an earnings call last week.

"First, we will open small locations in a couple outstate markets where we have no prior physical presence," she continued. "Second, we will test our ability to close a large-format store and open a small-format store nearby, thereby maximizing physical store retention through convenience."

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