Macy’s should have stayed local
Photo: Getty Images/stevegeer

Macy’s should have stayed local

Through a special arrangement, what follows is a summary of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.

When the Federated Department Stores’ merger with May Department Stores was announced on February 28, 2005, the deal’s promise was pitched to Wall Street with one word: Big.

Terry Lundgren, CEO of Federated Department Stores who would lead Macy’s Inc. for 14 years, wanted scale — economies of scale, efficiencies and synergies. Get big enough and the competition couldn’t touch you

For the first time, Federated would command a “truly national retail footprint” with one singular go-to-market strategy, Mr. Lundgren told analysts that day. Soon 64 of the nation’s top 65 markets would be represented by a single banner: Macy’s. “This is truly an exciting day in American retailing,” Mr. Lundgren said in a press release.

Heralded as a new beginning for the department store category, this merger, in retrospect, might have been the beginning of the end: The fateful day the department store category obliterated its greatest strengths.

From that day forward, the strength of the corporate machine at Federated worked to consolidate regional brands under one banner, shedding brands from Marshall Field’s in Chicago to Lazarus in the Midwest. Loyal local shoppers rebelled. The dismantling of local institutions left shoppers feeling betrayed.

Decades of distinct market knowledge ended up devalued and then simply disappeared, rolled up into a singular corporate branding and buying approach. By becoming big generalists in a category that had personalization and specialization right decades ago, department stores dismantled the differentiation that might have saved them from obsolescence in an era of online algorithm-driven commerce.

The consequence of losing intimate local knowledge offers insights on where retailers should focus today. For retailers with physical stores, there’s one choice that stands out: Go back to the principles of local-market retailing, shop-floor buying decisions, and hyper-personalization.

The presumption that nationalizing a local buying approach can save money isn’t wrong. It can. But a national brand like Macy’s also ended up being less meaningful to many shoppers in specific markets.

The ultimate model of survival for physical retailers today is to go local and stay there. This is not a new idea. It’s the founding principle of department stores.

BrainTrust

"Macy’s was smart to keep many of the things Field’s shoppers cherished at that location, but it has never been the same."

Georganne Bender

Principal, KIZER & BENDER Speaking


"...mergers and acquisitions are almost always pitched to investors and the feds this way: We’ll be stronger by eliminating inefficiency."

Doug Garnett

President, Protonik


"From my perspective, the consolidations of buying operations at Macy’s and other department stores was a result of declining sales, not the cause of it."

Gary Sankary

Retail Industry Strategy, Esri


Discussion Questions

DISCUSSION QUESTIONS: To what degree can Macy’s struggles be linked back to the decision to consolidate regional nameplates under one national banner and shift away from local buying? What should Macy’s do now to fix what appears to have broken many years ago?

Poll

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John Orr
2 years ago

Macy’s has struggled for years in customer service and dimensions of. When it launched its celebrity ads years ago, I questioned whether it was prepared for the recoil traffic in store — which it wasn’t and hasn’t been for many years. Increased local intimacy and service patterns would only improve its operation, engagement, and profitability. Macy’s has suffered step-wise degradation that no one noticed until you try and tender out — no one is there.

Ben Ball
Member
2 years ago

Day after day the retailing industry lectures itself about the critical nature of customer engagement and customer experience if brick & mortar is to successfully combat commoditized online shopping. Then we destroy it with moves like this. Macy’s experience may have been better in different markets, but Chicago was devastated by the loss of Marshall Field’s. Macy’s did everything they could, at least in the beginning, by maintaining much of the Field’s look and feel and an outstanding customer service ethic. But it wasn’t “Field’s” — especially Christmas on Michigan Avenue.

Jenn McMillen
Active Member
2 years ago

In an era where everyone seems to want personalization, Macy’s should do a backward look to what made them successful years ago. The local shopkeeper mentality is not antiquated — it’s a good thing!

Dave Bruno
Active Member
2 years ago

While I agree that Macy’s shift to a national branding and buying strategy, in hindsight, was an issue for Macy’s, I am not yet ready to say that move led to the downfall of the department store category. My sense is that department stores suffered from misguided assortment strategies on several fronts: little differentiation, a migration to the middle, minimal brand vision, and yes, a lack of localization. While certainly an important factor, I’m not sure I’m ready to go so far as to say that the lack of localization in itself was a death knell. That’s my two cents, anyway, Lee — thanks for the thought-provoking article!

David Naumann
Active Member
Reply to  Dave Bruno
2 years ago

I agree, a national branding and buying strategy is not the main issue with department stores’ challenges. From a branding and cost management perspective, scale is a powerful strength. Macy’s and other retailers realize the key is differentiation and that is why they are currently focusing on private label brands to offer merchandise that isn’t available at multiple retail chains. Grocery stores have been a good example of localization and department stores could improve their brand loyalty by creating, or expanding, their localized merchandise assortments.

Suresh Chaganti
Suresh Chaganti
Member
2 years ago

It makes a compelling argument, but it is an argument to fit the narrative, in my opinion. Since the early 2000s, physical retail suffered across the board — not just Macy’s. Convenience through e-commerce, prices and Amazon were the contributors, that the article doesn’t mention. Unwieldy store sizes are another operational liabilities. In case of Macy’s unions as well.

The fact is the downturn of Macy’s fortunes coincided with go-Global strategy. But it is correlation and not a causation. Localized merchandizing is important but having local brands with duplicated systems, processes, and lack of economies of scale would not hurt more, in my opinion.

Mohamed Amer
Mohamed Amer
Active Member
Reply to  Suresh Chaganti
2 years ago

Yes, multiple trends combined to hit Macy’s strategy and investment decisions. Macy’s aggravated the outcome by forgetting that as Tip O’Neill advised, all politics is local, so is retailing. By all means, capture all the back-office efficiencies via M&A, but the customer-facing best be local.

levineweinberg
levineweinberg
Reply to  Suresh Chaganti
2 years ago

I absolutely agree. People seem to forget two things. 1) Macy’s did quite well in the first few years after the Great Recession: solid sales recovery and strong margins. Things went south beginning in 2015, and it’s not very convincing to attribute that to eliminating regional brands. 2) Bon-Ton operated with seven localized, regional brands. How did that work out for them?

Karen McNeely
Karen McNeely
Reply to  levineweinberg
2 years ago

levineweinberg, I don’t think the demise of Bon-Ton had much if anything to do with their branding strategy, but rather was done in by yet another over-leveraged buyout.

levineweinberg
levineweinberg
Reply to  Karen McNeely
2 years ago

I disagree on that. The problem was that adjusted EBITDA fell from ~$244 million in 2010 to less than $100 million by fiscal 2017, at the end of which Bon-Ton filed for bankruptcy. The debt would have been very manageable but for its eroding EBITDA margin.

Taking on too much leverage often leads to bankruptcy — but only when the underlying business struggles.

Neil Saunders
Famed Member
2 years ago

I think there is some merit in this argument but, for me, the bigger failure has been Macy’s inability to keep track of what the customer wants, innovate accordingly, and invest in new solutions and propositions. Sure, some of that is a consequence of consolidation — I am sure local chains would have remained more in touch with what shoppers wanted — but most of it comes down to having the wrong focus and poor management. After all, Target isn’t exactly a localized retailer, but it has done well by adapting to the times and allowing some local nuance where required.

DeAnn Campbell
Active Member
2 years ago

Homogenization spells doom in retail today. We are well into a transition away from corporate-run chains to personalized experiences tailored to the local community. Macy’s lost their place as a beloved member of the community when they ceded leadership to a corporation focused so strongly on growth rather than connection. It’s clear this corporate mindset is not working. It’s equally clear they are looking at ways to get back to their community roots with their Story acquisition and Market by Macy’s strategies. But these attempts have largely failed because they are still screened through the filter of a disconnected head office. They will need to learn how to reconnect with their customers, develop smaller and more locally curated stores and reach to regain their place as a trusted neighbor.

Carol Spieckerman
Active Member
2 years ago

I love a good deep dive into retail history, so thanks for that, Lee! The Federated/May merger was part of a larger consolidated movement in retail at the time. Department stores in particular began to realize just how convoluted and inefficient their models were thanks to Walmart. Federated caught a lot of flack at the time for crowning Macy’s as its master brand, yet the current wisdom was to merge and purge.

These days, maintaining local banners post-acquisition is the rule because retailers (and developers) have the tools to manage multiple banners without compromising efficiency. Many of the local banners that Federated/May shuttered were already struggling. I doubt that most would have succeeded as separate banners.

Macy’s biggest post-merger mistake was to dive down into the meh middle of retail. The Macy’s brand has had to do a lot of heavy lifting over the years and competing with multiple mid-tier department stores made it a real slog.

Gary Sankary
Trusted Member
Reply to  Carol Spieckerman
2 years ago

You are exactly right, Carol. A localized assortment of blah, is still blah.

Scott Norris
Active Member
Reply to  Carol Spieckerman
2 years ago

The Bon Marche agglomeration used the same back-office and private label consolidation logic, but retained its local marks such as Herberger’s and Carson Pirie Scott — keeping a veneer of regionalization but in the end, as Gary says, blah. There is some organizational and geographic threshold (40 stores? 125 stores? 4 states? 7 states?) beyond which the corporate hive mind crushes any effective regionalization. Firing six more cost accountants, or buying another 20,000 sweaters in a lot, as a result of “centralization” just doesn’t make a lot of difference to a national retailer. But it could lose the loyalty of a metro area. As we Gen Xers say here in the Twin Cities, “I want my Dayton’s back!”

Karen McNeely
Karen McNeely
Reply to  Scott Norris
2 years ago

Scott, I think you mean Bon Ton versus Bon Marche, but that consolidation while maintaining separate branding started much earlier, first with Bergner’s buying Carson Pirie Scott and later when Proffitt’s (aka Saks) bought them out. I worked for Carson’s when Dayton’s changed all of their stores to Field’s. I can’t tell you how much market share we gained in the Minneapolis market at that time. I often labeled it as the worst mistake in retail and thought that Macy’s should have learned a lesson from them.

jjmckay
jjmckay
Reply to  Karen McNeely
2 years ago

Carson’s flopped during the 1980s in Minneapolis. Herberger’s was a sister store of Carson’s around the time that parent store Dayton’s assumed the Marshall Field’s name on their stores. That said, I’ve seen numbers, but I’ve never seen where Herberger’s picked up all the business you claim. What is your source? Thank you in advance.

marty.whitmore
2 years ago

Nostalgia is hot! Macy’s decision to eliminate the tried and true brands that appealed to regional customers is an example of overplaying your hand. Although, maybe effective in some areas, the blanket decision to eliminate brands such as Marshall Field’s was short-sighted. These were brands that had a generational connection to the regions and maintained social significance.

The bigger problem for Macy’s right now is understanding who they are and who they want to be. Their foray of a few years back into “everyday low prices” and lack of commitment to that has hurt them. The incessant promotional environment that they have created now leads the Macy’s customer to only buy items that are being promoted and never pay the price on the ticket. It’s really about this: Who do you want to be?

Richard Hernandez
Active Member
Reply to  marty.whitmore
2 years ago

This is exactly been my issue with Macy’s — what do they want to be? We had Foleys Marshall Field’s, and Lord & Taylor in this area and the chains were unique, different and were run well — really great assortment and customer service. Once Macy’s took it over, it was the same lot of plain assortment and nothing to grab customers to come in, except for sales. Stores like Target, Kohl’s and of course Walmart and Target, caught up, sharpened their assortments and priced competitively. While Macy’s has tried different strategies and formats in the past, nothing has really clicked with the customer base. Unfortunately, you can’t undo what’s done, so they are still trying to find the secret sauce to make them successful.

Bob Amster
Trusted Member
2 years ago

Understanding the importance of a brand name that has been around (and loved) for decades was the failure of that decision. I don’t think a company (Macy’s) can take an iconic store like Marshall Field’s and make it history without major percussions. Of course, hindsight is 20/20, but the question posed by Lee Peterson is a valid one.

Venky Ramesh
2 years ago

There is probably something to learn here from Albertson’s here whose vision is to “Become locally great and nationally strong retailer.” They are executing on that vision through the following.

1. Know your customer: Using the power of data to understand shopper intent to deliver customized offer, create new services and drive loyalty, as people move across different channels.

2. Don’t let go of their hand while they cross the road: Shoppable maps with dynamic hyperlocal features, conversational commerce, and predictive shopping list building.

3. Byte your tongue but speak their language: Using Natural Language Processing to interact better with customers digitally and to empower store associates to save time and make better decisions.

4. Don’t just be a self-fulfilling professor: Implement time sensitive and cost efficient BOPIS (using Micro fulfillment centers).

5. Last mile but not the least: Efficient last mile delivery experimenting with remote-controlled delivery robots.

Camille P. Schuster, PhD.
Member
2 years ago

Scale is desirable. A national footprint is desirable. Finding successful local stores to roll into a national footprint is desirable. What was a huge mistake was imposing a national operating strategy without taking advantage of the strengths that made local stores successful. The local stores were successful for a reason. The local stores had created a loyal, local customer base. By not evaluating successful local strategies and adapting the national strategy the local, loyal customers were ignored and offended. As a result Macy’s was left with a national strategy that no longer fit the local, loyal customers.

Dick Seesel
Trusted Member
2 years ago

I still agree that consolidating nameplates under the Macy’s umbrella was the right initial decision, considering the brand’s name recognition and equity. But the company moved too fast to shut down regional buying — and along with it, sensitivity to local tastes as it rolled out an abundance of overlapping private brands.

Macy’s has never completely recovered from this decision, but more importantly the physical neglect of its stores (outside of Herald Square and a few other flagships) made for an unappealing shopping experience. These were unforced errors, whether the name on the door said Macy’s or Marshall Field’s.

jjmckay
jjmckay
Reply to  Dick Seesel
2 years ago

At the time of the merger in 2005, their own SEC 10 K filings shows at the Marshall Field’s trade names were valued at $419 million versus $377 million for the Macy’s/Bloomingdale’s trade names. All the other May Department trade names including Lord & Taylor had a combined value of under $190 million. Macy’s did not break out sales numbers afterwards, but Illinois Department of revenue saw at least a 30% client in sales tax after the switch as reported in Crains Chicago business. This triggered a special audit. (Reported February 27, 2007)

Maybe they could been successful with the suburban store’s becoming Macy’s, but State Street should have stayed Marshall Field’s. And really, Macy’s on Michigan Avenue was not necessary. Tourists used to come from all over including New York City to visit Marshall Field and Company. It was enough to support both locations with great success. Now tourists want to visit the big Macy’s in New York City, not the secondary stores in Chicago, etc. They basically devalued their stores when they made the switch. No reason to schlep things home from Macy’s in Chicago when they have Macy’s back home.

I oversaw a study of over 2300 shoppers about 10 years ago. 78% preferred Marshall Field’s over Macy’s, although 12% did prefer Macy’s over Marshall Field’s. These days, the State Street store keeps getting smaller and smaller. They recently removed the giant, wonderful atrium created in 1992. There constantly becomes less and less reason to come down to State Street. I believe it will close in a couple years if they don’t do something radically different. What a loss.

Jeff Sward
Noble Member
2 years ago

Yep, Macy’s should have stayed local. I started my journey in retail with Federated (Bullock’s) in Los Angeles, and then became part of Macy’s in 1988 when the ill-fated Campeau deal was done. There’s no question that Macy’s was a better merchandising and marketing organization than Federated. And there’s also no question that Federated was a far more disciplined organization than Macy’s. That’s the reason the Federated corporation survived and the reason the Macy’s brand survived.

When the Macy’s South deal was done, Macy’s left an entire regional buying team in place in LA. Perfect. Macy’s strategies but with localized insight, implementation and support. I was part of the team that went to Atlanta, but even though my heart was totally invested in my 14 years with Bullock’s in LA, I have to admit that in the maelstrom of that whole event, I personally didn’t give Bullock’s the attention it deserved.

Turns out it’s damned difficult to regionalize and localize. A regional team has to be truly empowered to do their job. That’s how Macy’s South started, but over time “efficiencies” won the day. And let’s remember that they tried “My Macy’s” for a while. I suspect that “My Macy’s” suffered a similar fate of not enough true local empowerment — and OTB!!! In today’s data driven world, it would theoretically be easier than before to regionalize assortments. But it’s about way more than data. It’s about a commitment and the patience to let it bear fruit.

Rich Kizer
Member
2 years ago

I spent twelve years in the department store industry and, as I visited our stores across the country, I was always impressed on the localization the professional managers of those stores were so intent to possess. This led us to give much more authority to the management staff to buy at markets and be responsible for the results. It wasn’t all localized control, but it certainly pleased the local customers and yielded the stores to have tremendous square footage productivity.

Georganne Bender
Noble Member
2 years ago

Marshall Field’s became Macy’s in Chicago in 2006 but locals still refer to the stores, particularly the State Street flagship, as Field’s. Macy’s was smart to keep many of the things Field’s shoppers cherished at that location, but it has never been the same. Lee is one hundred percent correct: Local, loyal shoppers rebelled and felt betrayed. They still do.

Is a local connection important? Absolutely. But so is maintaining the existing stores. Even before the pandemic, Macy’s branch stores were messy, poorly maintained and merchandised, vanilla boxes. All of the ambiance shoppers love about a good department store is gone. Macy’s attention the past few years seems to be everywhere except on its existing stores. Who wants to shop where the fitting room carpeting is torn and the sales floor looks like a garage sale? Keep that up and the remaining loyal customers won’t stick around either.

Ben Ball
Member
Reply to  Georganne Bender
2 years ago

Aaarrgghh! It was State Street, not Michigan Avenue. One of my many foibles. I can find my truck in the dark in the middle of a national forest — but I can’t remember city streets worth a darn.

Georganne Bender
Noble Member
Reply to  Ben Ball
2 years ago

Ha! The Michigan Avenue location at Water Tower Place is now gone, but State Street is still a beautiful store.

Steve Montgomery
Steve Montgomery
Member
2 years ago

Cannot speak to the other banners rolled into Macy’s but here in Chicago, the Marshall Field’s location were never the same. Could I specifically point out the differences? No, but no one I spoke to about the impact felt the stores were the same. I went from being a great place to shop to being just another department store.

Ryan Mathews
Trusted Member
2 years ago

Seeing J.L. Hudson’s falter under Macy’s leadership, it’s hard not to blame everything on a loss of localization. But inept management sure helped. There’s been so much damage done there’s no way to go back, and very little road to left to move forward on.

Gary Sankary
Trusted Member
2 years ago

I disagree with the premise of this piece. From my perspective, the consolidations of buying operations at Macy’s and other department stores was a result of declining sales, not the cause of it.

When Macy’s consolidated May Company, and took away my local name plate Daytons/Marshall Field’s, the department store business was already facing headwinds. Macy’s eliminating nameplates is just one example of many regional department stores consolidating and eliminating local offices and names. When this happened, impact to the business was pretty minor. Sure there was nostalgia for the for the old names, but overall customers were attracted by the brands and offers inside the store. At the time department stores were losing ground to big box mass stores and their low price fashion offers. More critically, they weren’t winning with younger demographics, or better said — “future customers.”

I would argue that it’s simply not true to say that closing local buying offices and changing the name of the store means Macy’s, or any other fashion retailer, has decided personalization and localization is no longer important. Or, that they can’t deliver localized assortments. In fact, the algorithms that the author disparages provide unique insights to buyers that weren’t available 20 years ago. Back then we went with “gut,” which I would argue led to, on average, poorer buying decisions and higher markdowns that we see today. Local buyers in my experience are able to spot local trends, however, they struggle with bigger and trend-forward concepts, which is critical in fashion.

I would also remind readers that when enterprise data management and MDM tools came online and companies had access to their vendor data, it was one of the big “AH HAHs” for some department stores with regional buying offices. And I remember very well when my company discovered that our cost on more than few items varied as much as 20% for the same dress shirt, depending on the market. The reason? Some buyers are better negotiators than others and vendors were better negotiators and could cost average to protect their margins better than we could.

Localization is a key to successful retail today. The key here is the ability to analyze local market conditions and make decisions based on local demand. The tools available today make this easier and more accurate than every before. Consolidated buying operations were a result of declining sales and the need for more efficiencies in operations to drive margin. It was a reaction to declining sales, not the cause of it.
Not to mention, since todays consumer engages with their retail favorites across a number of platforms, it’s not realistic or practical to suggest that a local buyer can do a better job with personalization.

Brandon Rael
Active Member
2 years ago

Mass merchandising was a failed imperative, as customers clearly had bonds and relationships with their local department stores that spanned decades and generations. Economies of scale, efficiencies, and economic ordering models are the right thing to do for most businesses. However, customer-facing department store experiences are all about the relationships and bonds you develop over time.

While Macy’s is a well-known commodity with its annual fireworks and Thanksgiving Day parade, as well as being one of the few remaining department stores from the last century, once Federated flipped the switch to remove the Marshall Field’s, Lazarus, and the other department store names, the location lost its connection with the local community and the brand equity that was built over decades.

A centralized buying and planning merchandising model could work as long as the personalization and localization needs are met. This all starts with the value proposition that the store offers. Macy’s now has the opportunity to curate, personalize and localize the product and services experiences across their entire network of stores.

Gene
Gene
Member
2 years ago

Absolutely agree — in addition, a major mistake was allowing the brands which all the Federated divisions promoted and dramatically presented to sell to stores like TJX, and Ross and Burlington. A small fashion specialty store in South Beach, or Los Angeles or the meatpacking district or any shopping street in the US would not allow a line they carried to be carried by another small specialty store in a nearby location. This is the difference between an entrepreneur and a functionary. Unfortunately, when Federated took the decision making further and further away from the buyers, functionaries were in a position to let this happen. Traditional Federated buyers never would have let this happen.

Doug Garnett
Active Member
2 years ago

The department store struggle (not just at Macy’s) comes primarily because competitors have ravaged their departments over the years. They have not found a way to retain enough strength after losing so much business to off-mall speciality stores — whether electronics, vacuums, luggage, housewares, sporting goods, or any others.

That said, it was unwise to believe that consolidated brand and buying would reap major rewards. However, mergers and acquisitions are almost always pitched to investors and the feds this way: We’ll be stronger by eliminating inefficiency.

Except long term success is not achieved by efficiency, but by demand for product. Had all those years been spent focused on stocking meaningful products, they would be far stronger today. Yet they would also still be a part of a threatened category of stores.

Craig Sundstrom
Craig Sundstrom
Noble Member
2 years ago

Ah yes, the Field’s renaming … the third rail of retail consolidation.

Emotionally, I think all of us are probably on the same page: terrible, terrible mistake.

Intellectually though, the picture is more complicated, as there were several possibilities. It could have done as May — and Federated itself — had done, keeping the names as a facade while standardizing and consolidating everything else; it could have had several semi-autonomous divisions, just as Bloomingdales is run. Or it could do what it did.

No one — me included — can say definitively which of these would have been the best approach, and many of the problems Macy’s is facing can be traced to clumsy execution, rather than inherently bad ideas. Indeed many would argue the problem is the department store model itself.

The real question now is: try to rewrite history or stay the course? … whatever that is.

RandyDandy
RandyDandy
2 years ago

There is simply no easy way for Macy’s to walk this back, regain its own uniqueness, or the singularity of the localized department stores it (Federated) absorbed. Except for Herald Square, and to a degree, State Street, all Macy’s are, more or less, the same shopping experience: of a bit more personality (and softer lighting?)—but not much more than, say, a Target.

Meanwhile even if you say and do (try) the more localized route, it will take years for that to be felt by the local buying public. Not without excessive amounts of (add lots of money here) stringent and consistent PR outreach. But even that cant really cut it. Not with the look of all Macy’s (logo included) as exquisitely and awfully generic. Remember all, perception is reality. True or not. Until found otherwise.

So, will it take something as grotesquely unoriginal and yet still costly as presenting each (area specific) store as a kind of hyphenate hybrid? (Wasn’t Jordan Marsh that way?) Does just calling it Macy’s-Atlanta or Macy’s-Columbus, et al, work? Even with fancy-and-special fonts for each? Hardly!

Nope, the only way for Macy’s to do this—is by selling off entire locations. Thus, resetting their own business as what they decide will remain of their own chain. And let these other stores restart anew. But no business willingly deflates. So, let’s not count on this happening. (Unless a continual hemorrhaging of sales takes the decision out of corporate hands.)

David Slavick
Member
2 years ago

As a native Chicagoan, yes there is such a thing as in born and raised in the city. I spent many days at my mom’s side while she shopped the downtown Field’s store or the one in Old Orchard. My treat … frango mints!

Honestly, it is so easy to say corporate should have kept the banners post acquisition. There was a reason the old got acquired — they were weak. Consolidating brands under one entity and one credit card + co-brand strategy was smart. What was LOST was personal clientelling and service. What was missed is compensating your employees on the floor of the store and giving them the training to be the best.

Every store is local. It is the job ONE of the GM, Assistant GM plus department leads to inspire and deliver on customer expectations. Sure there was “upset” at the loss of the MF name in many circles and talk of boycott even. Pure silliness. Macy’s is our national department store brand and their “struggles” are not rooted in acquisition. It is the changing shopping dynamic and other factors we all know so well.

jjmckay
jjmckay
Reply to  David Slavick
2 years ago

Macy’s was the wrong owner to continue Marshall Field’s. As reported in the May 6, 2004 edition of Chicago Tribune, Selfridge’s attempted to buy it. Due to some wheeling and dealing and the crazy bid by May to make it more attractive to Macy’s/Federated, the deal with Selfridge’s did not come to pass. If Selfridge’s would’ve stayed it would’ve been a big success. Of course, right now Selfridge’s UK stores might be for sale because of issues with Brexit.

Ricardo Belmar
Active Member
2 years ago

There is some merit to the argument that losing the local flavor to those acquired brands in the conversion to Macy’s cost them loyal customers. However, the decline in Macy’s isn’t limited to just that point. Department stores suffered from a loss of unique products as the brands themselves realized they could go directly to their customers and opened their own stores in the very same malls Macy’s called home. The response? Sales! Discounts! More sales! Coupons! More discounts! It turned into a race to the bottom on price rather than on the areas department stores could leverage to create a better shopping and buying experience.

Selling multiple brands gives more opportunity to deliver on your customer’s style across brands and products. Knowing what’s in your customers’ closets to help associates sell better. The data is there if you know how to use it, and department stores just didn’t come to the realization they could do this quickly enough to defend their turf. Macy’s has suffered from this more than most.

Ultimately, Macy’s and every department store needs to offer something beyond the apparel brands they carry and the private labels they create to give shoppers a reason to come through the door (or shop online). Sure, you could execute this on a local level (it’s not easy), but even if you don’t, you need to offer the right service level to make your brand mean something to the customer. Nordstrom seems to be the only one that understands this!

klcolocho
klcolocho
2 years ago

Regardless of how you look at the circumstances and results of the Federated merger, it took a bunch of moderate department stores and lumped them under one banner — Macy’s. Despite each regional brand having success, that wasn’t Terry’s vision. It was about scale and the benefits reaped off that model. Unfortunately, it did more harm than intended.

Can retailers benefit from a laser focus on their customers, obviously? Yes. Does economy in scale benefit the bottom-line, obviously? Yes. But you can’t have everything.

Macy’s is and always will be just what it is, a moderate department store with bland merchandise that appeals to the middle. Bloomingdale’s, also under Macy’s umbrella, merchandise is no more interesting than its parent (Macy’s), only it has wider aisles and better lighting. However, all department stores are humdrum at this point.

Creating enticing experiences for the shopper will compel them to return to brick-and-mortar, coupled with an assortment of merchandise that is new and fresh — would guarantee success. But, unfortunately, few people are designing or marketing merch that differentiates itself from all the other mass-market brands out there.

Patricia Vekich Waldron
Active Member
2 years ago

Instead of keeping what made regional department stores like Dayton’s or Marshall Field’s unique and popular (or sharing and scaling that throughout the chain), Macy’s brought the merchandising to the lowest common denominator throughout.

Mary Pietsch
Mary Pietsch
2 years ago

Certainly dropping the local names had an impact. I recall the front page headline of Chicago newspaper “Nightmare on State Street” when the name change was announced and that sentiment was widely shared. The much bigger problem though, is the degradation of products and service. May gave up the attributes that distinguished Marshall Field’s and the comparable stores elsewhere, replacing them with offerings closer to other mid-grade department stores.

jjmckay
jjmckay
Reply to  Mary Pietsch
2 years ago

Go check out the Chicago Tribune dated May 6, 2004. Look in the archives for it. Selfridge’s had big plans for State Street.

Rachelle King
Rachelle King
Active Member
2 years ago

How can you fix relevance? The decision to remove Marshall Field’s from downtown Chicago was the undoing of local market success for Macy’s. Big does not mean one banner. Big can be success in multiple markets under different banners. Major grocery leaders like Kroger and Ahold understand this. Department stores have delusions about being grandiose and fantastic instead of just being relatable, reasonable and relevant to their local shoppers.

There is no value in back stepping the decision to unite under one Macy’s banner. However, local stores can be given full authority to be local stores and connect in meaningful ways with their shoppers. There is some magic to walking into Herald Square and finding the energy/look/feel different from State Street while still being under one banner. Macy’s needs to find it’s magic and they need to tap into their local achieves and heritage to find it.

jjmckay
jjmckay
2 years ago

At the time of the merger in 2005, their own SEC 10 K filings shows at the Marshall Field’s trade names were valued at $419 million versus $377 million for the Macy’s/Bloomingdale’s trade names. All the other May Department trade names including Lord & Taylor had a combined value of under $190 million. Macy’s did not break out sales numbers afterwards, but Illinois Department of revenue saw at least a 30% client in sales tax after the switch as reported in Crains Chicago business. This triggered a special audit. (Reported February 27, 2007.)

Maybe they could have been successful with the suburban stores becoming Macy’s, but State Street should have stayed Marshall Field’s. And really, Macy’s on Michigan Avenue was not necessary. Tourists used to come from all over including New York City to visit Marshall Field and Company. It was enough to support both locations with great success. Now tourists want to visit the big Macy’s in New York City, not the secondary stores in Chicago, etc. They basically devalued their stores when they made the switch. No reason to schlep things home from Macy’s in Chicago when they have Macy’s back home.

I oversaw a study of over 2300 shoppers about 10 years ago. 78% preferred Marshall Field’s over Macy’s, although 12% did prefer Macy’s over Marshall Field’s. These days, the State Street store keeps getting smaller and smaller. They recently removed the giant, wonderful atrium created in 1992. There constantly becomes less and less reason to come down to State Street. I believe it will close in a couple years if they don’t do something radically different. What a loss.

Finally, what’s really sad is that Selfridge’s was reportedly in the mix to buy Marshall Field’s (Chicago Tribune, May 6, 2004) but supposedly, May Department Stores gave a crazily high bid so they could be a more attractive takeover target for Federated/Macy’s because they also wanted Marshall Field’s. Selfridge’s running the store as Marshall Field’s could have been wildly successful; Selfridge’s has been, at least until the pandemic. (Of course, right now Selfridge’s group, which covers stores in Europe, the UK, and Canada is looking at possibly selling the UK stores because of Brexit issues.)

Pamela Garcia
2 years ago

I agree Macy’s made a big mistake by moving the buying team away from their local market. When I owned my own stores, we knew who we were buying for, we actually had our customers in mind. I knew who she was, where she vacationed, where she lived, and what she needed for, and when we needed to have those goods in the store for her to buy. How is someone from Minnesota going to know what my Miami girl needs? Never! I am afraid that it may be too late for Macy’s as they have tainted their name in the customer’s eyes. They need a new team of buyers, merchandisers, and visionaries that will bring back what a department store is truly supposed to be. It will take time.

Liza Amlani
Active Member
2 years ago

Macy’s needs to focus on who their customer is today and what they actually want from a product mix. They need to review ALL their brands, including their private label assortment and fill in what’s missing with relevant products, innovative and newness, and delight their customer so they keep shopping.

William Passodelis
Member
2 years ago

Traditional department stores now are in such a precarious position. Think about how different the industry is today versus, say, 1968. Today you have Target — who are expert merchandisers and merchants. Back then, Kohl’s didn’t exist in its current form. Also you have the rise of TJMaxx/Marshalls, Ross, and Burlington in the 1990s and they rule right now. One can say they “need” the department store as a supplier, but there is nothing to stop them from going to suppliers directly. It is a different world, one that has moved on from the traditional department store — thus the loss of them and the continuing struggles of the remaining survivors.