Macy's and Bloomingdales are moving away from malls.

As the retail industry continues to struggle as in-person shopping declines during the coronavirus (COVID-19) pandemic, Macy's CEO Jeff Gennette announced that the department store will begin testing out new, smaller stores in locations outside of the traditional mall its often located in. The test stores will be located in Dallas, Atlanta, and Washington, D.C., Gennettee said during a quarterly earnings call on Wednesday.

The company will also open an additional Market by Macy's concept store, continue to grow Macy's off-price Backstage business and test a Bloomingdale's store in the fourth quarter of 2021.

“We continue to believe that the best malls in the country will thrive,” Gennette said. “However, we also know that Macy’s and Bloomingdale’s have high potential [off]-mall and in smaller formats.”

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Macy's plan to adjust its business model started in early February when the company announced it would close 125 stores in weaker malls over the next three years and open smaller-format locations in strip mall centers.

“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work,” Gennette said in a statement at the time. “The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment.”

The news comes as other iconic retailers have taken a hit during the coronavirus pandemic. Lord & Taylor recently announced it would be closing all its stores after 194 years in business, Neiman Marcus filed for bankruptcy in early May and Brooks Brothers, which considers itself "the country's oldest clothing retailer," sought Chapter 11 bankruptcy court protection while it searches for a buyer.

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