Today marks the official passing of Chicago's Marshall Field's, Portland's Meier & Frank and nine other regional department stores as...
Today marks the official passing of Chicago’s Marshall Field’s, Portland’s Meier & Frank and nine other regional department stores as the Macy’s nameplate goes national.
The creation of the Macy’s mega-brand comes when consumers shop less at department stores. Department stores snared nearly 4 percent of total retail sales last year, down from more than 7 percent a decade ago, according to the National Retail Federation.
So what makes Macy’s, which will have more than 800 stores in 45 states, think it can turn the tide of consumer sentiment toward it and away from fast-growing retailers like Target, Costco, Kohl’s, Wal-Mart, Amazon.com, TJ Maxx and others?
“Federated understands that department stores were running into some problems and they had to differentiate, and that’s where the private brands come in,” said Frank Guzzetta, chief executive officer of Macy’s North, the eight-state division with 62 stores.
Federated Department Stores of Cincinnati owns Macy’s and Bloomingdale’s.
Macy’s will be a national department store but will be run locally in its seven divisions so it will continue to feel like a local department store, Guzzetta said.
It launched a national advertising campaign this week and sponsors the reality design show “Project Runway” on Bravo. But it also will continue to give to local charities and sponsor local events.
Founded: 1858 as a dry-goods store in New York City.
Firsts: Female executive, tea bag, colored bath towels.
Flagship: Macy’s Herald Square in Manhattan opened in 1902.
Parade: Macy’s Thanksgiving Day Parade celebrates its 80th parade this year.
Federated enters: R.H. Macy & Co. merged with Federated Department Stores in 1994, creating more than 400 department stores and 157 specialty stores in 37 states.
Source: The Associated Press
Retail analysts give Macy’s a better than fighting chance to succeed.
Fred Marx, who had executive positions at Federated, Macy’s and Hudson’s during the 1970s and now is a retail consultant in Farmington Hills, Mich., said he sees Macy’s bringing back some of the polish that distinguished premier department stores from cookie-cutter ones.
“I think they will see a company proud to be a department store instead of a poor stepchild of another company,” Marx said. “I think people in this market will just be elated that someone who is a first-class operator is putting forth the energy and will restore the luster and polish that Hudson’s had many, many years ago. It won’t be long before people are very happy that Federated was the survivor.
“Today when we think of department stores, it’s coupon-itis. That is not the way Macy’s is running the business,” Marx said. “Macy’s is bringing back some of the refinement and polish that distinguished department stores.”
And unlike middle-market department stores like Sears and JC Penney that do not operate grand flagship stores or focus on building relationships with customers, Macy’s will not have a cookie-cutter feel, he said. Shoppers will see variances among Macy’s stores in every market.
Cheryl Holland Bridges, a former Federated executive and now director of Texas A&M’s Center for Retailing Studies, said the merger will make Macy’s more competitive. It will have more leverage with vendors and can develop more exclusive product.
“For years, analysts questioned the long-term viability of department stores as consumers spent more of their dollars off-mall,” Bridges said. “With the launch of Macy’s as a national brand, we may see consumers more enthusiastic about traditional department stores.”
Federated executives say a combination of better fashion and affordable luxury should help change minds about what a department store should be.
Over the summer, Macy’s stocked the Marshall Field’s stores with its private apparel and home goods brands, including INC International Concepts, Style & Co., the Cellar, Alfani, American Rag and others. Last year, 18 percent of Macy’s sales came from its private label business.
Other regional department stores changing today are Robinson-May of Los Angeles, Foley’s of Houston, Filene’s of Boston, Hecht’s of Baltimore, Kaufmann’s of Pittsburgh, L.S. Ayres of Indianapolis, Strawbridge’s of Philadelphia, Famous-Barr of St. Louis and The Jones Store of Kansas City.
In Seattle and the Pacific Northwest, Federated changed the name of the Bon Marché department store chain into Bon-Macy’s in 2003 and removed the “Bon” last March. Federated had acquired the Bon chain through a complicated series of mergers starting in 1929. Federated acquired the R.H. Macy Co. in 1994, and then placed the Bon under its Macy’s West division in 2003. Federated had also bought Hawaii’s Liberty House department store in 2001 and promptly changed its name to Macy’s.
Many shoppers are still loyal to the department-store format, including Shirley Varney of Warren, Mich., who shopped recently at the Oakland Mall store in Troy. She’s impressed by store upgrades such as remodeled fitting rooms, the new employee dress code and the star power of the Macy’s name.
“I like INC because it’s quality and not that expensive,” she said. “Macy’s … I like that. It’s just like we are in New York.”