One Too Many Macy’s x 85
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?