Dive Brief:

• Macy's-owned Bloomingdale's is experimenting with a 22,000 square-foot store format dubbed "Bloomie's," a Bloomingdale's spokesperson said in an email.

• The store will open at the Mosaic District in Fairfax, Virginia, this coming fall, the spokesperson said.

• The move, first reported by Women's Wear Daily, follows Macy's experiments with Market by Macy's, a small format similarly situated away from enclosed malls.

Dive Insight:

The introduction of this new Bloomie's concept, which borrows a nickname bestowed on the retailer by New Yorkers years ago, follows the strategy first articulated by parent company Macy's early last year, before the pandemic interrupted its plans.

Executives said then that more than a hundred stores would close, most anchoring malls, with smaller formats heading to open-air centers instead. Strip centers, family centers and "power centers" all deviate from the indoor mall format, which is anchored by huge department stores and filled inside with smaller specialty tenants. A Macy's spokesperson said that strategy is ongoing and that the company "will continue testing several smaller-format, off-mall stores, including Bloomie's."

Throughout the years, as department stores have given up selling various categories, most have filled the vacant space with apparel. The smaller stores minimize that.

"'Bloomie's' is Bloomingdale's new store concept which brings the energy, discovery, and fun of Bloomingdale's to a smaller, highly edited and service-driven location," the Bloomingdale's spokesperson said, calling the Mosaic District in Fairfax County "a unique central gathering place." The development includes dining, fitness, beauty, retail and entertainment offerings.  

Several other retailers have sought out open-air options before, including department stores like Belk and Kohl's and specialty retailers like GNC and Gap Inc., but the trend has been accelerated by the pandemic.

The shift continues the decline of the traditional mall. The retail vacancy rate rose to 10.5% in the fourth quarter last year, the highest since 2013 (as was the third quarter's 10.4%), with rents down, according to Moody's commercial real estate arm Reis. The mall vacancy rate rose another 0.4% to 10.5%, the highest in more than two decades.

There's "trouble brewing" even for upper-tier malls once considered mostly immune to the challenges at lower-tier ones, according to a recent report from S&P Global Market Intelligence.