One Too Many Macy’s x 85

Discussion
Sep 06, 2006
George Anderson

By George Anderson


Macy’s is about to begin its national rollout as it replaces department store banners across the country with its own, and one thing appears clear: The retail chain has too many stores, or at least too many in the same neighborhood.


According to a report in The Wall Street Journal, consumers will be seeing double Macy’s in 85 more malls starting this weekend as the chain reopens locations previously operated as Marshall Field’s, Filene’s, Robinsons-May, Hecht’s, etc.


Many of the stores will carry similar merchandise, while others, according to the retailer, will focus on adding items that do not receive much space in the average Macy’s, such as plus-size apparel, kids clothing and home furnishings.


Consumers and retail industry watchers alike are unsure about two Macy’s in a single mall.


Lisa Chlebek, a mother of two and a nurse, said, “It seems to be such a waste. The only other department stores we have here are J.C. Penney and Sears. We really need a Nordstrom, or something else. Not another Macy’s.”


Carol Parish, managing director for brand strategy, Enterprise IG, said, “It’s a terrible situation to have two Macy’s in the same mall, unless it’s a giant mall like Mall of America. I would think that, at midsized malls, Macy’s will work aggressively to see if they can find a different tenant.”


The mastermind of the Macy’s national branding strategy, Federated Department Stores’ Chairman and CEO Terry Lundgren, sees it differently.


Mr. Lundgren called the double store situation “a positive outcome” because it gives Macy’s more space in malls where existing space (a single store) was not enough. “This is a way to expand our square footage,” without “tearing down your existing store and building a bigger one.”


Macy’s has a history that supports Mr. Lundgren’s “positive outcome” prediction. In Costa Mesa, Calif., Macy’s has operated three stores (Macy’s, a Macy’s for men and a home and furniture store) under one roof. All were originally operated under banners other than Macy’s.


“All three of those individual buildings are highly productive on a square-foot basis,” said Mr. Lundgren. “We don’t do anything unique with marketing or advertising to the separate buildings. Customers have figured out what products are where.”


Dan Hess, chief executive of Merchant Forecast LLC, who served as an executive at Federated’s Macy’s East division in the 1990s, said the company struggled back then with finding a means to differentiate between its own stores and avoid cannibalizing sales.


Mr. Hess estimated that the Macy’s, no matter the focus, typically share 85 percent of the same merchandise. “When they’re able to differentiate assortments effectively, they can minimize the cannibalization, but it’s always going to be a real challenge,” he said. 


Discussion Questions: What are your thoughts on what having two stores in the same mall will mean for Macy’s? How big an issue will cannibalization become
for the department store chain in these locations?

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22 Comments on "One Too Many Macy’s x 85"


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Robert Craycraft
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Robert Craycraft
14 years 6 months ago

Duplicate Macy locations will generate more traffic if the stores are differentiated, such as a Home Store/Furniture Gallery at one end, Fashion Store at the other. This is far more selection for the consumer than a full-line Macy’s and Mayco store at opposite ends of the mall, both trying for the muddy middle.

Federated is going to have a bitter fight in Chicago over the Marshall Field’s name change; it’s a pity they couldn’t have tried a transitional dual-branding for a few years to ease the Chicago customer into the change. Now it’s a grudge match and the media loves a conflict. “Macy’s at Marshall Field’s” and some tweaking of the logo and use of the trademark green would have gone a long way with folks slavishly devoted to this brand.

In a press release on Macy’s Web site this morning I saw the Marshall Field’s Chicago flagship store on State Street referred to as “a former Marshall Field’s location” like it was a strip mall in Oshkosh. Wow.

Kai Clarke
Guest
14 years 6 months ago

This is too much of a good thing. Retail is about location, location, location. Competing with yourself in the same Mall is simply absurd. Save the money! Macy’s could sublet, or even try unique store tests in their duplicate stores with furniture sales, or car sales, or something different in duplicate locations. This will avoid customer confusion and ensure success of their stores rather than excess cost and duplication.

John Detwiler
Guest
John Detwiler
14 years 6 months ago
‘Historymystery’ has a good point. Federated still has Bloomingdale’s, yet it’s not actively making known any plans on using acquired stores to convert them to Bloomie’s. Two malls, Beverly Center and Mall of America, have a Macy’s and Bloomingdale’s each, so it would not be unprecedented to convert a second Macy’s mall location to a Bloomingdale’s, all things (including local demographics) considered. Another example of proximity is in north Dallas, with an existing Macy’s in the Galleria, and a mile away in Valley View is a converting Macy’s (ex-Foley’s, ex-Sanger Harris). One of these could easily become a Bloomingdale’s; this area has already had previous experience with Bloomie’s, as there was one at Valley View from 1983 to 1990. I’m not sure why Federated is so huge on the Macy’s expansion when they seem to be forgetting that they do still have a second store chain, one with a much longer legacy at Federated than Macy’s. Oh, and add me to the uphill-battle-in-Chicago column. Dallas losing Sanger Harris to a Federated combination in 1987, while… Read more »
Mark Lilien
Guest
14 years 6 months ago

Macy’s now has 800 locations with a single brand name. The 10% “doubles” (2 Macy’s in one mall) problem won’t outweigh the ad savings. If the duplicate square footage results in dominant assortments, Macy’s has a great opportunity to enlarge its market share. It may seem wasteful to have 2 Macy’s in a single mall, but it pays to put it in perspective: the May brand previously there had almost the same assortment as Macy’s anyway. So the duplication started twenty or thirty years ago. Macy’s can use the extra space for larger assortments. Other retailers sometimes have similar problems when one location’s lease will soon expire, yet a better location or rent deal opens up early nearby. So the retailer might have 2 locations right near each other until the first lease expires.

Ryan Mathews
Guest
14 years 6 months ago

It’s not necessarily as crazy as it seems. Here in Detroit, Hudson’s (one of the Macy’s predecessors) already had two units in one mall — one devoted primarily to men’s wear and the other a more traditional department store. It didn’t seem to hurt them. So, if the two stores really are different on a level that matters to consumers , maybe they can pull it off. That said, I think they will be actively recruiting other tenants in most of their trading areas where they have two stores.

Bill Robinson
Guest
Bill Robinson
14 years 6 months ago
If Lundgren can reverse the long, steady decline of middle market department stores, he belongs in the retail hall of fame. The issue is not how many Macy’s are there in a mall. Federated must overcome three huge barriers to claim its place in retail history as the first real national department store chain. First, it must defend the Macy’s brand. There are millions of shoppers out there who really resent Federated trampling over the trusted local department stores. This is more than nostalgia. Macy’s will experience backlash from loyal Marshall Field’s shoppers. But also Hecht’s, Kaufman, Burdines, Robinsons, etc, etc. Second, Macy’s has downplayed many of the great national brands in housewares and apparel in favor of their house brand. This is a huge gamble that is likely to result in backlash number two. Third, younger Generation Y shoppers now entering their twenties associate the shopping experience with exciting places like Aeropostale, American Eagle, Banana Republic and PacSun. Many have never set foot in a department store…where their grandparents shop. How can Macy’s become… Read more »
Joseph Peter
Guest
Joseph Peter
14 years 6 months ago

In my opinion, what really drives people to a new store is visual excitement and unique product assortment. If Macy’s can surpass stores such as Marshall Field’s and Filenes, etc. in giving consumers house brands that are better than Kenneth Cole, DKNY, Hugo Boss, Dolce & Gabanna, Armani and Prada, they should be able to pull this merger off with success.

If the lack of cars in parking lots at Macy’s end of malls in the Chicago area and the lack of shoppers at the State Street flagship are indication of things to come, I think Macy’s has a real task at hand.

What makes it worse for Macy’s in the Midwest, is that news stations all over the Midwest are reporting how Chicagoans are planning a protest September 9th on State Street.

Federated really needs to focus on Public Relations and retaining brand names that consumers love.

Charlie Moro
Guest
Charlie Moro
14 years 6 months ago

This, again, is not as novel an idea as suggested. I remember Daytons in Minneapolis having formats focused on men and furniture in conjunction with their full format stores. The segmentation of the department store/clothing experience will give them the space to test and create new formats to address the niche retailers. The key for them will be to see how experimental are they willing to go with the existing space to create something different of just more of the same.

Kenneth A. Grady
Guest
Kenneth A. Grady
14 years 6 months ago

Whether there are or are not too many Macy’s stores per mall will be easy to determine without too much time passing. Assume that the merchants will differentiate the stores as much as possible without destroying the basic branding concept. There will be some locations where the idea will work, some where it will bomb. There probably won’t be very many in the middle. However, having run the real-time test Federated can then unload the stores that don’t work without having to guess at the outset. Given the advertising savings, Federated has some time to figure out which stores to keep.

Michael Tesler
Guest
Michael Tesler
14 years 6 months ago

There are two converging major issues; The steady decline of the mid range department stores and the increasing irrelevance and loss of energy in suburban malls. The two are connected and are like the Siamese twins that need major, innovative and unpredictably dangerous surgery just to survive. It is looking like creative mixed-use that opens up the malls and combines elements of villages and lifestyle centers will be the first major wave of mall makeovers. How to keep malls and dept. stores relevant are the bigger and more important issues….. yes, they are tied to more space than they need but they also own the space very, very cheaply.

James Avilez
Guest
James Avilez
14 years 6 months ago

The Macy’s by my house has operated two stores in one mall for over 10 years. Macy’s took over the old Emporium Capwell store after it closed. This location now houses the Men’s, Housewares/China and Furniture departments. The original store houses Women’s clothing, Cosmetics and Shoes. It seems to be working. The only problem I have is the three stores by me are so rundown. The stores are depressing. My community has another Macy’s in the next town ten minutes away, but you still have to go to the former Emporium locale for furniture.

Aaron Spann
Guest
Aaron Spann
14 years 6 months ago
I think this brings up the question… “If Macy’s has the power to luxe out one store in a mall that will now have two Macy’s, what has kept them from doing so in the past when they had competition?” I do not see dual-anchor settings as a plus because the shopper now has to trek outside of the one store to potentially find the product that is carried in the other store. This just goes to show that the Department Store Industry killed itself by overbuilding small stores that really catered to no one when they should have kept their focus on a smaller number of bigger stores that would have attracted more consumers. Kudos to stores like Von Maur and Nordstrom who have become sought after anchors. They exude class and ooze with service and genuine well-being for the customer and employee. By not being in every mall in every city they now have an exclusiveness that Macy’s could only dream about. Does this Macy-ization of the US look and feel similar to… Read more »
Karen McNeely
Guest
14 years 6 months ago
In the locations where the Macy’s was currently underspaced, this is, as Mr. Lundgren says, a great opportunity. And no, you don’t run two similar stores in the same location, but as others have mentioned you move a category or two (home and/or men’s are pretty typical) to one building the remainder in the other. This gives the buyers the opportunity to offer the assortment they would like to the customer and will help them maximize their business. In the malls that have stores that are already marginal, one of them will have to go. I will also go on record saying that I believe the reports of the death of the suburban mall have been over-hyped. While there are certainly malls that are dead or dying, there are many more that are packed to the gills and expanding. The one nearest my home just built a parking garage and you still have a difficult time getting a spot, and not just on the weekends. The ones that I have seen die off are typically… Read more »
Mark Barnhouse
Guest
Mark Barnhouse
14 years 6 months ago
Federated has a real problem in Chicago, to be sure, and they should bring back the Marshall Field’s name for Illinois stores permanently. However, I don’t think a lot of the other local brands that are disappearing will be any great loss. Americans are a nomadic people, and have little loyalty to the old line names, except in cities where a lot of locally-raised people haven’t moved elsewhere, like Chicago. In Denver where I live, the native born (I’m one) are an exotic species, and few now remember the 1986 merger between May and Associated that resulted in the shuttering of our native Denver Dry Goods chain (“the Denver”) and its replacement with May’s “May-D&F” nameplate (May, and Daniels & Fisher, which May bought in 1957, were rivals of the Denver for years, and May actually started in Colorado before moving its HQ to St. Louis). And there are a fair number of new Coloradoans who probably don’t even remember the May-D&F nameplate on stores, as the company quite foolishly re-branded our local stores as… Read more »
Mark Hunter
Guest
Mark Hunter
14 years 6 months ago

They’ll work through the dual sites as leases expire etc. The bigger news is how this will enable them to reshape their advertising mix and the impact it will have on newspapers and the amount of ROP advertising they have traditionally received from the department store channel. With Macy’s now national, they can leverage a number of advertising vehicles not previously available to them and more importantly at more attractive rates. The move by Macy’s is going to send significant reverberations through the newspaper industry with the potential loss of a major portion of their week-day ROP ads.

Rochelle Newman-Carrasco
Guest
Rochelle Newman-Carrasco
14 years 6 months ago

As many have said…it’s viable. It’s going to be about differentiation and in-store experience. Give shoppers a reason to explore the two Macy’s and they will. Assume that the legacy of the brand is enough and you’re looking for trouble. Macy’s needs to continue to redefine who they are for today’s shoppers and engage them in one store or two.

Bernie Slome
Guest
Bernie Slome
14 years 6 months ago

This is not such a novel idea. Retailers in other verticals have been doing it for years WITH SUCCESS. Drug store chains can have, within a city, a store on literally every block. QSRs can have units very close together, as well as banks. So, if it works for them, why not for Macy’s?

Craig Sundstrom
Guest
14 years 6 months ago

As noted above, Macy’s (along with Dillard’s) has operated two unit stores in a number of site for years; the normal configuration was some mix of home/men’s/women’s/children’s with two of each per store (whether it was home+men’s or children’s+mens, etc. differed between locations). This idea makes a lot of sense (at least to me).

However, according to the WSJ article, now Federated plans to operate two (essentially) full line store next to each other (with only minor variations between each store): THAT idea – if it is in fact what they plan to do – makes little – if any – sense.

Stephan Kouzomis
Guest
Stephan Kouzomis
14 years 5 months ago
Have we not seen: a) two Walgreens within a mile or two of each other; or b) same brand gasoline stations across the street from each other on major corner locations in order to gain traffic going both ways? Dillards, in Louisville, has two stores in one mall – one all women and 3 levels, and one for everything else – that are doing very well. Macy’s aggressive purchasing of regional and local chain department has been strategically brilliant, and caused this two stores in the same shopping area, or mall, scenario. One could suggest, given some malls are a football field long, that two stores anchoring the mall at opposite ends makes sense, if the mall is a major traffic arena. Secondly, Ryan mentioned stores could sell and focus on different goods and services. His point on one store being under Macy’s name, and keeping the other store under the local name is a consideration. Macy’s, however, bought all of these regional and local chains to become the ONLY national department store chain, on… Read more »
Justin Time
Guest
14 years 5 months ago

The duplicate department store in malls has been going on for quite some time. Hecht’s and Kaufmann’s both had operated dual stores in the same mall, with either separate men’s stores or home stores.

Sure the Thanksgiving parade is a big incentive to capitalize on the wider presence of the Macy’s brand. During this year’s parade, they can now feature After Thanksgiving Sales in over 800 Macy’s across America. Except for the Chicago market, this should help them have a banner Christmas season on Black Friday, provided their stores have every item they advertise in stock.

The verdict is still out on whether or not Macy’s can preserve and grow the American department store segment. How different today’s department store retail landscape would have been if BATUS had not drained Gimbels 30 years ago.

Li McClelland
Guest
Li McClelland
14 years 5 months ago

Just wanted to ditto and add on to Weo’s point. Batus Industries was also the first outside buyer of Marshall Field’s in the 1970’s.

steve ferris
Guest
steve ferris
14 years 5 months ago
In California, Macy’s has operated two stores in the same mall for years- as the gobbled up former Liberty House and Carter Hawley Hale stores. And it has been noted that many department stores operate two formats in the same mall. I don’t think two mainline stores in one mall is a good idea, but hey- Starbucks is on its way to have a store on every corner and it seems to be doing fine. I think they need to avoid the problem of only using half a store- I’ve seen that a lot around the country. The Men’s format will use one floor of a former competitor’s location, and the rest is empty. That looks bad. I’ve seen it more with Dillard’s than Federated or May. Here is my question. I understand why someone in the Midwest (not Chicago) may be “excited” by getting a Macy’s as the nameplate is new. But, what does the re-branding of May stores in places like AZ, SoCal, New England, TX, Washington and the DC metro area really… Read more »
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