Macy's Biggest Foe Isn't Amazon... It's Other Brick & Mortar Retailers

Retail investors who think Amazon.com, Inc. (NASDAQ: AMZN) is Macy's Inc (NYSE: M)'s biggest threat are plain wrong, at least according to the fashion retailer's own chief financial officer.

According to CNBC, Macy's CFO Karen Hoguet said on Wednesday at the UBS Consumer & Retail Conference that its biggest threat comes from off-price chains like TJX Companies Inc (NYSE: TJX) and Ross Stores, Inc. (NASDAQ: ROST).

Hoguet explained consumers are attracted to the off-price chains, which consistently offer a changing inventory and lower prices versus the department stores. So in response, Macy's is planning to take a page out of their own book.

"I think you're going to see more of that enter into the Macy's logic," CNBC quoted the executive as saying.

The Game Plan

Macy's has two strategies that follow the off-price concept. First, the company's "Backstage" concept already consists of dedicated branded sections in Macy's stores for marked-down inventory. The company is also building standalone locations to offer a pure off-price shop, much like Nordstrom, Inc. (NYSE: JWN)'s Nordstrom Rack locations.

Second, Macy's "Last Act" sections of its store also offer marked-down goods of dated inventory that isn't part of the main sales floor. This allows the company to get rid of dated inventory while also giving consumers the choice to shop for items at full price.

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