Federated Takes Local Approach in Chicago
By George Anderson
It’s true that many, if not most, Chicagoans are upset over Federated Department Stores’ decision to rename Marshall Field’s Macy’s. The retailer, however, wants long-time shoppers of the flagship on State Street to know that the store will have more local flavor than it has had in years.
Federated’s CEO Terry Lundgren announced at a news conference yesterday that the renamed State Street location will be the first Macy’s in the nation to dedicate a special shop within the store to local designers.
Chicago Mayor Richard Daley, who had dinner with Mr. Lundgren on Wednesday evening, was enthused about the Chicago Design Shop as it will be known.
“It gives them (local designers) a huge entre into the marketing field, which many of them don’t [have],” Mr. Daley was quoted as saying in the Chicago Sun-Times. “These are young designers. They start out. How do they break in? How do they sell their products?
“This way, it gives them an edge up in regards to the opportunity at Macy’s. Macy’s has quite a number of subsidiaries and stores across America, across the world. So, it gives the fashion industry right here a whole new concept of relocating, locating and staying right here in Chicago.”
Mr. Lundgren also announced plans to restore the Frango mint display kitchen on the seventh floor of the store. Mr. Lundgren said he was looking to move production of the candy back to Chicago. Former Marshall Field’s owner Dayton-Hudson, later Target Corp., moved production to Pennsylvania in 1999.
“It’s on my list of things to get done,” said Federated’s CEO.
Macy’s also said it was looking to partner with a food store such as Whole Foods to provide local area residents with an upscale grocery market that is within walking distance to their homes.
Mr. Lundgren had a message for all those who remember Marshall Field’s the way it used to be. “We’re going to make this a great store, a store you’ll be proud of.”
Moderator’s Comment: Will the renewed commitment to keeping and building on the local flavor of the State Street
store (sans the Marshall Field’s name) win Chicagoans over to the change to the Macy’s banner? What most (or least) impresses you about Federated’s announced initiatives for the
State Street flagship as reported in the Sun-Times, Crain’s Chicago Business and elsewhere? –
George Anderson – Moderator
The people in Chicago are upset at Marshall Field’s leaving; they are not upset because they want new designers or Chicago souvenirs. Keeping the essence of Marshall Field’s and adding new dimensions that the Chicago consumers want would make sense. Eliminating the Marshall Field’s that people love and bringing in new ideas for them to love doesn’t resolve the issue. Giving new local designers an opportunity to display their creations is a great idea that could have been added to Marshall Field’s; using that concept to keep Marshall Field’s shoppers doesn’t work. Bringing back the Frango Mints production is a good idea; having it as a plan that will happen sometime in the future doesn’t keep local consumers and many of them may not know it’s there because they won’t be shopping at the store. Whole Foods may be something consumers in the area want – adding that to Marshall Fields may have worked. Substituting it for Marshall Field’s isn’t the same.
Winning back the Marshall Field’s consumers will not be an easy task.
Terry Lundgren gave a talk here in Tucson about three weeks ago at the University of Arizona Global Retailing Conference in which he briefly addressed the Marshall Field’s decision. The following is from my notes:
“I had to ask myself, What am I protecting? The emotional ties? We have to do something and not be attached to doing something for historical purposes. If you saw the numbers…”
This is a calculated trade off. Mr. Lundgren is building a national brand around Macy’s. Apparently, by his reckoning, Chicagoans’ have not supported Marshall Field’s strongly enough to justify continuing to operate it under a separate brand strategy.
A tougher question for Federated is whether the old MF location in Chicago can possibly perform any better under the Macy’s banner.
The proposed moves are the right ones for maintaining, or in some cases bringing back the feel that Chicagoan’s remember. Any name change is risky, so there needs to be a collaborative push to keep the essence of Marshall Field’s.
But how do you retain or bring back customers? The number 1 loyalty factors are community involvement (including charity causes) and the other being motor sports. In particular, the local community focus will help significantly and should be a priority. With that said, this instance happens everywhere, but in the end, consumers get over it.
I would have preferred Federated to have settled with the moniker, “Macy’s At Marshall Field’s.” This would have preserved the integrity of the Marshall Field’s nameplate.
We are witnessing the mass exodus of old family department store names, names that meant a lot to the local shoppers. In one fell swoop on September 9, 2006, all of these proud names will be swept aside.
I think these department store shoppers finally realize that the values May Department Stores have given them over the years will no longer be. The recent consolidation sales and clearances of stock at these stores, such as the various buy one get one sales, are seeing customers flock to these events and stock up on items now drastically reduced.
The customer is winning in the short run. But in the long run, s/he will have yet even fewer shopping alternatives.
Federated is playing defense; too bad. They botched the name announcement and have been running back up the plank ever since!
Why couldn’t they have announced something like “Marshall Field’s at Macys”? If they had, they could have been playing offensive ball for the past 6 months.
Macy’s faced a key problem: Chicago is a very expensive ad market that can’t profitably support a single-location department store. The most cost-effective advertising is national, supported by as many locations as possible. So they’re labeling all the acquired stores with one name: Macy’s. Years ago, most of the acquired stores’ assortments became very similar to each other and Macy’s. GM has a similar problem with its cars. Does the additional overhead of multiple brands create any value when the multiple brands are only “badge engineered”? Macy’s management wants to have a single focus. That’s why they’re getting rid of David’s Bridal, a specialty chain with great value. Macy’s management doesn’t want Marshall Field’s at Macy’s or any other focus-blurring branding. It seems wasteful to dump hundred year-old brands, but there is some business logic.
“No!” (was going to be my answer when I thought the question was going to be “will these ideas win over Field’s shoppers?”) With all respects to Mr. Lundgren, et al. I find it inconsistent – at best – to claim that (keeping) the Field’s moniker is nothing more than sentimentalism and “history,” but the Macy’s nameplate has value: this really seems to be part of the disturbing trend of viewing the United States as either being West of the Hudson, or North of the Bronx, i.e. as suburbs of NYC. 2006 marks the centenary of Marshall Field’s death: what a fitting tribute – NOT.
I continue to be amazed at the blind determination with which Federated is moving forward in Chicago, along with the wildly conflicting promotional strategy it’s been using for the past 6 months. The incessant mailings “to Marshall Field’s preferred customers,” the “13-hour sales” (the name of which is so closely identified with Field’s), the non-stop TV ads, the branding of the MF name and logo on cheap merchandise–all of this puts the Marshall Field’s name continuously in front of enraged Chicagoans; and, as all these antics continue, the plan remains the same: no matter how Chicagoans feel about it, Macy’s will rule!! What can Mr. Lundgren be thinking?
Just a crumb would have done it for most Chicagoans…keeping the Marshall Field’s name on the flagship location and changing the rest, or perhaps combining the two names, Macy’s and Field’s, in some way, but NO! NO! NO! Federated will have its way! Surely this is not the method by which a business generates positive relationships.
The answer is really and quite completely NO. What is required is creating a place that is so exciting and so unexpectedly great that Chicagoans can’t but help shop there. The approach that’s being taken sounds to me like giving a great dane a small size milk bone and expecting it to be satisfied.
Of course, you could introduce a loyalty card. Yeah, why not? Couldn’t hurt – could it? Then again, you could hire some high priced consultants to come up with a gimmick. Might help – wouldn’t it? It couldn’t be any more blunderous than what Federated has done so far.
The future of the ‘department store’ continues to look bleak. But then again, there’s still room for Martha Stewart to come in and save the day! That also might be what they’ve been asking for… a few more downtown outlets for MSO products?
I agree that Federated will get what it wants, another Macy’s store in another city. It will not get the loyal following of Marshall Field’s, because, based on their decisions, that is not what they want. It would seem like their investment would have more value if they retained the majority of the former customers, but maybe having all stores and labels alike is more important to them. It will make management and merchandising decisions easier to make from New York, but maybe not explaining profit variances?
I will give them credit for trying to put the best spin on this that they can. The results will be better than if they didn’t, but not as good as they could have been, in my opinion.
Kudos to Federated. Instead of simply ignoring the consumer message, they are trying, within their strategy, to address the concerns and potential loyalty disaffection. Federated knows that local market assortments, however manifested, are a vital part of optimizing sales volume at the department store level. Most analysts agree that some method of tailoring store presentations and assortments to local market needs is best practices. Why isn’t this seen as a step in that direction, and therefore, worth at least acknowledging?
Symbols are what we operate the majority of our cognitive processes around. Psychologists call them “templates”…generalizations, symbols, images which link to a much more complex set of thoughts, feelings, memories and beliefs. Frango is symbolic of Marshall Field’s. Moving production to Pennsylvania was one of Dayton Hudson’s wrong moves. Moving it back is a very good idea. Reinstating the 7th floor kitchen is a great idea. These are symbolic to the Chicagoan of all that they associate the grand old days with.
Think about it this way. When I moved my family from one state to another, I tried to keep as many of the highly symbolic “things” from the old home as possible in the new home. Not all, just some. And the exterior was absolutely, undeniably different. Yet those touches, my son’s race car beds, the exact placement of a cool picture in the kitchen…these created a sense of continuity. This is what Federated is doing. It is brilliant, it is appropriate, and it makes sound business and customer relationship management sense.
This is not unique to Chicago…every major city has lost their local/regional department store…even New York has lost Gimbel’s. A&S, etc. It is unique that Chicago has fought so much harder and actually won some concessions that would have been nice in Boston, Washington DC, Philadelphia, Miami…we are all jealous and maybe have learned a lesson, that instead of saying “what can we do?” we should have done some organizing and lobbying for maintaining local flavor and traditions. “You go, Chicago!!” but please follow thru and make them hold to their commitments to you because if you don’t you will end up like all the rest of us with our generic, vanilla Macy’s.
Right out of the gate Federated appears to have their ears on backward. Their communication arrow is pointing in the wrong direction.
Federated, not shoppers, want the Macy’s name to replace Marshall Field’s in Chicago. So Federated, not shoppers, will have its way. Everything they are doing is “window dressing” to get shoppers to go along with what Federated wants. To a lot of shoppers the name change won’t matter. Federated is betting on ambivalence winning out over loyalty.
In the end, Chicago loses the rich history and connection to the city of the Marshall Field’s name and gains “just another retail store.” That store becomes even more “just another retail store” as it imports a new name, pastes that name on a landmark, tramples on legacy and tradition, and subjugates customer wants with corporate wants.
While we’re discussing store renaming, has anyone shared the Albertsons Lucky banner situation with the Federated folks?
As I have said many times in the past, Federated is going to have an awful time convincing Chicago shoppers to switch to Macy’s. Chicago consumers are very loyal to local Chicago products.
There is the Dominick’s/Jewel Osco approach:
-Dominick’s Safeway eliminated local Chicago flavor in their stores after their buyout in 1998 and Dominick’s stores market share plunged.
-Albertsons Jewel Osco kept merchandising and buying in Melrose Park, IL in 2000 and the merger was transparent to Chicago consumers and thusly their market share increased.
Unfortunately, I do not think Federated has taken enough time to study the Chicago area market. They basically have ticked off everyone in the city, well except Mayor Daley!
Good luck Federated, you are going to need it!
In many respects, it appears as though Macy’s will be more like Marshall Field’s than Marshall Field’s has been for some time. Chicagoans are smart. They’ll realize that they’re getting their beloved department store back even if it has the Macy’s name on the awning.
As a native and resident of Chicago, I have mixed emotions about historical changes like the Marshall Field’s name change to Macy’s. It’s also a sad commentary when a major retailer uses local politicians, like Chicago Mayor Daley, to divert attention from real issues.
Although the argument by consumers for maintaining the Marshall Field’s name is mostly emotional, consumer perceptions and feelings drive loyalty and profits for retailers. In addition, unhappy consumers often yield more power than those who are satisfied. Granted, it’s likely that Macy’s management has factored these considerations into their decision, but the decision to kill the Marshall Field’s name is clearly not the best choice, rather finance trumping brand management.
I think a better decision and approach is to co-brand: Macy’s Marshall Field’s. This would be communicated in print and POS, but Macy’s really needs to maintain the Marshall Field’s name as-is on the flagship State Street building. Over time, Macy’s could evaluate dropping the Marshall Field’s name, but it would be wise to maintain the Marshall Field’s name and State Street store architecture. This approach could provide Macy’s with significant positive PR while the enhancing Macy’s corporate brand image.
For the apologetic anaylysts and business-first types who seem to support and understand the ‘business’ strategy of the ‘Macy’s only’ national brand dream, let me see if I can clarify some of the emotional and business reasons behind this frustration, and why this continues to cause such a reaction.
Federated wins a tepid bidding war for the spoils of the May chain, which, we grant, wasn’t the most inspired collection of department stores. May’s numbers were weak because of stagnant sales and from the extremely expensive (and very recent) purchase of Marshall Field’s, which they had hoped would provide May with some new blood and vigor after Target gussied it up and polished it (for what appears to have been a quick sale).
Because of Target’s efforts, we see a glimmer of the old Field’s and many of its devotees start taking notice, maybe not enough for immediate fabulous profits, but it was heading in the right direction. May had hoped that by allowing Field’s to run somewhat autonomously with its new energy, they could incubate or garner some better ideas for the entire chain. We never see the potential of this, with shareholders endless clamoring for quarterly profits, the execs of May see the handwriting on the wall, and merger with Federated becomes a done deal.
With Federated having just killed off its earlier regional brands with the Macy’s name, it becomes a forgone conclusion that this would hold true for most of the May names as well, with little fanfare since many of their brands had become watered down over the years, the belief that maybe a Macy’s makeover might be an improvement.
However, even the most hardened of analysts kept mentioning that Marshall Field’s was different. It had world-renowned fame and an upscale style which May hadn’t owned long enough to ‘May-onnaise’. Also, considering that in Chicago the perception of most any company with a New York base is not well regarded, changing the name seemed suicidal. Throughout last summer we were led to believe Federated was seriously looking at retaining the name when they drop the bombshell that all of the Field’s stores would become Macy’s. Suddenly, web sites are started, the media (mostly) blasts the decision and shoppers in droves start making it known that this is a bad move. At Christmas, shoppers flock to State Street for ‘one last look’ as thought the place is about to go out of business. Federated points to its internal ‘survey’ that concludes almost no one will care, and shoppers will actually welcome the Macy’s name.
In this day of hard won consumer loyalties with a plethora of specialty chains and designer brands to choose from, why take one of the most emotionally resonating and storied names in American retailing and retire it for the sake of an advertising strategy and brand blandness? Why alienate the core loyalty of its home market who have supported this chain in good and bad years, maybe not as robustly as some cash flow experts would like, but have done so for the most part, and absolutely insult them by flouting this ‘survey’, and then never airing its results publicly? I think the answer lies in that no matter what the results actually were, the bean counters and analysts at Federated were hell-bent on the national Macy’s brand idea, and no amount of reason, intelligence and history (and yes, emotional attachment) would make a damn bit of difference. Acquiring May and, in particular, Field’s was just a means to an end. That is the frustration of so many people who keep writing in on this subject. Corporate strategy over shopper loyalty.
I find it very telling that this topic is still #1 in RetailWire’s most-discussed topics, and will always remember an earlier submittal along the lines of, “How ironic that Todd Lungren (Federated CEO) is apparently the only person in America who wants to see Marshall Field’s become Macy’s, and is also the only man in America who has the power to make it happen.”
The core problem was epitomized by Mr. Lungren’s remark a few weeks ago to university students where he puzzled, “Should I be making an emotional decision about this?” Mr. Lungren, if you don’t think that emotion is what is behind a purchase at a luxury fashion retailer, you are in the wrong business. But he doesn’t.
To look at what has gone wrong with department store retailing, look at Macy’s decision to replace Marshall Field’s lower level food halls with a Whole Foods Market. They will take away something that is completely unique, with foods and packaging that cannot be purchased anywhere else, at any price. Great tie-ins to the Walnut Room and Field’s Culinary Council, and even Marshall Field’s cookbooks. Uniformed staff in the smart Target-designed Marshall Field’s stripe and upscale packaging complete the purchase.
Now, replace it with a Whole Foods Market, one of their 183 stores. You are now selling on convenience and price. The cross-selling and marketing synergies with the larger enterprise developed over 100 years, gone in a day.
Upstairs, change one of the world’s most prestigious and highly-regarded retail names to Macy’s, one of 800+. You are now selling on convenience and price.
The amazing thing to me is that it would take so very little to cross the gap and keep this “Macy’s at Marshall Field’s” or something similar, but there is a bull-headed animosity aimed at this brand, and Lord & Taylor, that I think harkens back to a previous generation of Federated and May Company executives who had a grudge match against the carriage trade (perceived WASP owned/managed) ADG and Marshall Fields chains (Halle’s, Ivy’s, Fredrick & Nelson, etc.) pre-BATUS. To wipe out these two names (Lord & Taylor and Marshall Field’s) may seem some sort of victory.
A few comments on the other changes:
– Federated will wreck the restaurant service, just look at the dispirited collection of fast-food and sports bar logos that they call the “Macy’s Family of Fine Restaurants” at the Herald Square store. Or the San Francisco store’s Cheesecake Factory replacing the Sky Room. As per Whole Foods above, one of many chain locations that now sells only on convenience and price. One less special and unique aspect of the store.
– Putting resources into reviving the 28 Shop seems madness, especially for someone who claims to disdain emotion in this transaction. Anyone who thinks a top-end female fashion shopper is willingly coming to the corner of Wabach and Washington to buy couture fashion doesn’t know Chicago.
– What exactly is cleaning the outside of the building and putting new windows in supposed to accomplish? Except perhaps to get it ready for a sale or leasing out the upper floors when Federated shrinks it down to three floors for “our shipping convenience?”
– A Frango Mint is not special because it is made in Chicago. It is special because it is a memento of your shopping expedition to Marshall Field’s. That’s why sales have stayed strong despite the kitchen moving to Pennsylvania. Without the Marshall Field’s tie-in, it will just be a candy mint.
I wish I could say, “good luck” to the Macy’s North team, but it would be hypocrisy. Sad end to a great name in retailing that had just found itself again.
I’m not from Chicago. I’m not from new York. I have, however, been to both many times over. Been to Macy’s Herald Square and Union Square. I think they are getting a bit worse looking every year. Been to Marshall Field’s State Street, Kaufmann’s “Big Store,” Burdine’s Downtown Miami, Filene’s Downtown Crossing and Neiman Marcus in Downtown Dallas. What do all of these stores/locations have in common??? They were all a bit unique. That word, UNIQUE, is what consumers want in a department store.
Macy’s in Memphis is the same as Macy’s in Tucson. Macy’s in Chicago (State Street) has no hope of becoming much better – its just bigger than most. This is truly a big loss for the consumer.
I think Federated is making a profitable decision in renaming Marshall Field’s stores. I think they will be able to compete on a national level with the Macy’s name. Mr. Lundgren will be able to advertise Macy’s with regard to its merchandise rather than its prices. The May Company had so many nameplates and none of them stood for anything. The May Company’s advertising concentrated on coupons and sales. I saw the recent ads for Macy’s with the “way to shop” tagline and these will get the consumer to focus on the quality of the merchandise rather than waiting for the next sale.
I do however sympathize with those who will miss the Marshall Field’s name. Living in the Northeast I am still awaiting the fate of Lord & Taylor, which for many years was the only luxury department store around here. I’m glad Lord & Taylor has a chance of surviving.