Latest Deal Renews Name Game Debate

Discussion
Nov 07, 2005
George Anderson

By George Anderson


Contrary to rumors, industry analysts say, the regional department store is not dead.


The announcement that Bon-Ton Stores would acquire the Northern department store group of Saks Inc. (the deal is expected to close in April) is not exactly bringing ringing endorsements from retail industry watchers but many see opportunities for the combined company to exploit market opportunities.


Anne Brouwer, a partner at the retail consulting firm of McMillan Doolittle, told the Milwaukee Journal Sentinel, “One opportunity that the combined company offers is the significantly stronger buying power and the ability to build relationships with vendors.”


Another, said Burt Flickinger, managing director of Strategic Resource Group, is the recognition that consumers in certain markets have with local department store banners. Federated Department Stores, said Mr. Flickinger, made a mistake changing Marshall Field’s to Macy’s.


“Now that Federated is blowing up the Marshall Field’s stores, that’s going to create a big opportunity for Carson Pirie Scott and Bon-Ton,” he said.


Britt Beemer, chairman of America’s Research Group, agreed. “If I were Carson, I would relish the opportunity to keep my name. The Carson Pirie Scott name is very big in Chicago.”


Michael MacDonald, chairman and chief executive officer of Saks’ Northern Department Store Group, will be staying on with the company following the merger. He endorsed keeping the local identities of the department stores within the group.


“We are pleased that we can continue to serve our many loyal customers under our Carson Pirie Scott, Bergner’s, Boston Store, Herberger’s, and Younkers nameplates, several of which have over 100 years of equity in the markets we serve,” he said in a released statement.


Mr. Flickinger believes Bon-Ton can also benefit from Mr. MacDonald and the rest of the talent that comes with its purchase of the Northern group.


“If Bon-Ton successfully retains the top merchants, regional managers, department store managers,” he said, “transferring that Northern department store group knowledge into Bon-Ton and Elder-Beerman can be a real corporate coup.”

Moderator’s Comment: Is there room for regional and local department stores in a marketplace increasingly dominated by national or near national banners?
What will it take to survive in a market where the 280 stores to be operated by Bon-Ton will be going up against Federated and others?

George Anderson – Moderator

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10 Comments on "Latest Deal Renews Name Game Debate"


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Mark Lilien
Guest
15 years 3 months ago

It’s easy for the new owners to quickly do some market research in each locality to determine what people think of each local brand. The research results can help drive the decision about name retention. However, the name of each store is not as important as what goes inside each store and the cost structure of each division. If name retention automatically requires redundant excessive overhead, it might not be worthwhile. If different names are retained, but the assortments are boring, who cares?

Camille P. Schuster, PhD.
Guest
15 years 3 months ago

If Bon Ton takes time to get to know the customers in the region and can create a store with a distinguishing characteristic that meets their need, they have an advantage that national chains do not have. With large national chains offering more standard formats, goods, and services, stores that cater to local needs certainly have an opportunity to exist and thrive.

Joseph Peter
Guest
Joseph Peter
15 years 3 months ago
Over and over and over and over and over and over…. Chicagoans are complaining about losing their Marshall Field’s name. You hear it at the barber shop, the commuter train, in line at the grocery store, while sipping drinks at a local bar, in the break room at work, on the local news….EVERYWHERE….no one here wants to lose Marshall Field’s to Macy’s. Name retention is everything to Chicagoans….we take pride in our city and do not like losing our icons, and it shows in our sales figures. I don’t understand how Federated is not listening to its MOST IMPORTANT BASE…..THE CONSUMER. We aren’t talking about some small retail company based in a sleepy Midwest town….we are talking about Field’s….The department store name of the economic Midwest Power House….Chicago, the 3rd largest city in the USA! So as one of those sleepy Midwest department stores, Carson’s really has a good chance at salvaging Field’s exiles. Carson’s speaks to consumers as the other quiet, but fine retailer in the Chicago area. Carson’s will already attract consumers by… Read more »
George Anderson
Guest
15 years 3 months ago

Another article from the Buffalo News, suggests Bon-Ton will being able to upgrade its image through this acquisition by gaining control over its own label and building on the fashion expertise of the Northern Department Store Group (NDSG).

Bon-Ton, according to company president and CEO Bud Bergren, will now have the size to independently create and source its own private label. It currently gets its private label lines from a competitor – Federated Department Stores.

Mr. Bergren also sees the acquisition helping the overall company to become more fashionable. “They (NDSG) tend to be more updated than we are. We tend to be a little more traditional.”

Tatia Griffin
Guest
Tatia Griffin
15 years 3 months ago

Does it really matter what the name plate is? The merchandise mix will change. The buyers will be different. There will be swimsuits when they don’t need them and no outerwear when they need them. What is missing in all national chains are the regional differences. What makes regional department stores special or unique is their ability to buy merchandise for their market, not the whole country – NOT the name on the building.

Richard Layman
Guest
15 years 3 months ago
Although I don’t know how to research this exactly, as an advocate of the “Main Street Approach” to commercial district revitalization, I think that department stores can be successful in “downtowns” with an ability to be special (i.e., such as mentioned in the “blowing up” of the format changes in the State Street Marshall Field’s store). This requires great merchandising and promotion and a focus not just on the store, but the maintenance and promotion of the “downtown district” as a special destination. As bad as May Company is, the downtown DC Hecht’s store is pretty good. It’s not Macy’s Herald Square or Bloomingdales, but it is a nice, well laid out store that is managed well. Duplicate this, and not the cluttered junky looking suburban stores, and department stores can truly differentiate their offerings. I grew up in suburban Detroit, a bike ride (before I could drive) from Birmingham, where Crowley’s and Jacobson’s anchored a thriving non-mall shopping district in a car-centric region fully committed to mall-based shopping. The Birmingham commercial district thrived (and… Read more »
Joseph Peter
Guest
Joseph Peter
15 years 3 months ago

One more quick comment:

Saks was already being a good neighbor to its communities….it was positioning itself to bring all the logos together from the company together with the signature Bergner’s, now Carson’s, red asterisk symbol. It shows unity of the company as one entity, but it also shows brand loyalty to the communities it serves by preserving the name and sometimes the font of the existing company’s logo.

Don Delzell
Guest
Don Delzell
15 years 3 months ago
Separation from Federated’s private label product development is an absolute requirement for the long term success of the Bon-Ton stores. George Anderson’s bringing this to light was dead on. As to all the hoop-la over names and retention, and Chicago this and Chicago that….please. Someone already said it best. It’s what is INSIDE the store that really counts. Nameplates mean nothing if the delivery of the product inside doesn’t match the idealized expectations of the consumer. It’s about the assortment, the service, the merchandising and the atmosphere. All of that can come under Carson’s or Bon-Ton or Macy’s. Individual banners implies distinct sets of those elements noted above. In order to have unique, differentiated merchandising, display, layout, and assortment, it is almost a requirement that the people making those decisions are different – Which adds cost – Which creates long term challenges for the management, OR sets up a less than stellar shareholder equity proposition, particularly in comparison to Federated. From a professional point of view, I think Bon-Ton has no choice except to build… Read more »
Joseph Peter
Guest
Joseph Peter
15 years 3 months ago

Yeah, but shoppers relate to the stores name on the outside more than the product inside. The name means something to people of the native area…..Why can’t people understand that? Consumers feel ownership and are more likely to shop there.

George Anderson
Guest
15 years 3 months ago

Omnisuperstore may be right about Chicago. How else do you explain the Sox winning the Series but the Cubs are still the city’s most popular team?

Of course, the name on the outside of the building came to mean something only after many people had taken advantage of the unique products and service that were inside to begin with.

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