Macy's signed an agreement with Best Buy to license an electronics department in 10 Macy's stores starting in early November -- ahead of the busy Christmas shopping season, the companies announced Tuesday. On the same day, Macy's said it was closing 35 to 40 under-performing stores early next year amid sluggish sales.
Macy's operates 770 stores in the United States. Over the past five years, 52 Macy's stores have closed while a dozen new stores have opened.
The licensed Best Buy shops will measure about 300 square feet in undisclosed locations throughout the country. On staff will be Best Buy employees who will sell Samsung smartphones, smartwatches and tablets, plus audio devices and accessories, Macy's said.
“We are delighted that consumer electronics will be returning to selected Macy’s stores through this test, which will allow us to learn how we can best serve our customers’ needs in this very sophisticated category," Macy’s, Inc. president Jeff Gennette said in a statement.
Best Buy has tested boutique concepts before, including the Samsung Experience Shop in 2013. That same year, JCPenney introduced stores within stores under then-CEO Ron Johnson, who was previously head of Apple's retail operations. That idea, with shops focused on brands like Levi's and Liz Claiborune, flopped.
Best Buy still operates Apple departments within its stores.
Jeff Shelman, a spokesman for Best Buy, said the test with Macy's will give the electronics firm additional ways to offer products to customers. He said the test will last through the holidays and into 2016 "before determining any next steps."
Best Buy's most recent test with another retailer was a Geek Squad program with Target in 2012. Geek Squad agents worked in select Target stores in Minneapolis and Denver in a test that test lasted about six months.
Bridget Weishaar, Morningstar senior consumer discretionary equity analyst, said the Best Buy test isn’t large enough to have a noticeable impact on revenue, but she said, “However we do think that it is interesting in terms of strategic implications.”
Partnerships like this offer a way to put existing real estate to work and maximize returns, she said, pointing to past partnerships with Sunglass Hut and Finish Line.
“We think consumers have shifted spend away from apparel and towards other categories including technology,” Weishaar said, adding that it should aid Macy’s in customer retention as a one-stop shop for shoppers.