Macy's is in the process of working out a deal to bring a 20,000 square-foot grocery store to the basement of its State Street flagship location in Chicago sometime early next year.
Macy's, which has faced a shopper revolt over its decision to drop the Marshall Field's banner, has come to the publicly-stated conclusion that it has done all it can to address the issues of the disaffected and has to move on to bringing in a new group of customers. Bringing in an upscale grocery store to the location would be one way to attract shoppers.
Frank Guzzetta, the former president of Marshall Field's and current chairman and CEO of Macy's North, would not discuss potential candidates but did tell the Chicago Tribune, "I would like it to be organic."
According to the Trib report, Macy's had discussions with Supervalu's Sunflower Market division but nothing developed from those conversations. Grocers considered possible State Street tenants include Whole Foods, Trader Joe's and Fox & Obel.
Macy's is not the only Chicago department store looking at possibly bringing in an upscale grocery operator to the Loop. Carson Pirie Scott has also been rumored to be looking at a grocery partner.
Bill Bishop, chairman of Willard Bishop LLC and member of the RetailWire BrainTrust, said he thought it unlikely that the area could support two grocery stores.
"That could be a problem," Mr. Bishop told the Trib. "It will be interesting to see who gets the first one."
While the speculation about a grocery partner continues, Macy's is taking other steps to attract shoppers that don't hold the Marshall Field's grudge. The store has opened a wine bar in the Walnut Room and added an FAO Schwarz toy store-within-the-store as well as putting greater emphasis on exclusive brands with celebrities and designers including Martha Stewart, Tommy Hilfiger and others.
"There are a lot of people who just can't get over the Marshall Field's name change," Mr. Guzzetta told The Associated Press. "Those people, no matter how hard we worked at it, have continued to be detractors."
Discussion Questions: What are your thoughts on the potential benefits/drawbacks to grocery stores in department stores? Does it make more sense to lease space to an existing grocer or for a department store to operate its own branded grocery? Will adding a grocer such as Trader Joe's or Whole Foods to the State Street location be effective in helping Macy's regain lost sales by bringing in new customers?
What do you see as the sales potential, positive or negative, for department stores that also house supermarkets?