Lundgren Has Merchandising in His Blood

Jan 24, 2005

By George Anderson

According to a piece in the Wall Street Journal, Terry Lundgren, Federated Department Stores’ chairman and chief executive officer, would like nothing better than to transform the entire department store industry.

If (and it’s a big if) talks between Mr. Lundgren’s Federated Department Stores and rival May concludes in a merger between the nation’s two largest department store chains, then he will certainly get his chance.

As has been widely reported in this space and elsewhere, a previous deal to join the two companies fell apart over disagreements about the management roles of certain individuals. At the time and since, speculation was the two sides couldn’t agree when May’s then CEO, Gene Kahn, sought to keep Mr. Lundgren from managing the company. At the time, Mr. Lundgren was Federated’s president and in charge of the company’s merchandising.

If (and again, it’s a big if) the two companies reach an agreement this time around, Mr. Lundgren will be able to put his merchandising chops to the test. He has a reputation for being willing to take risks and fail. Most importantly, his reputation is that he learns from mistakes and is willing to make adjustments.

Mr. Lundgren’s most important contribution, according to industry insiders and financial analysts, has been the culture change he has brought about at Federated. Since taking over as the company president and up till now, Mr. Lundgren has focused on understanding consumers better and making the company’s stores easier to shop.

In some instances, that has meant borrowing from others. Federated was one of the early adopters in the department store sector to allow shoppers to check prices of merchandise in stores using self-serve scanners. The practice was in place in alternate channel competitors such as Target prior to this.

Moderator’s Comment: If you had the ability to build the ideal retail chief executive, what qualities would they
have? Which of the current crop of retail execs (not necessarily the CEO) comes closest to your ideal?

A former boss of Mr. Lundgren’s thinks he’s what a leader of a retail organization needs to be.

Arnold Aronson, managing director of Kurt Salmon Associates, was chairman and CEO of Bullock’s when Mr. Lundgren was a manager of the department store’s
lamp department. “Terry is one of the best examples today of a CEO who has earned his spurs as a top merchant,” he said. “The key ingredient to leading a retail company is for
a person to have their DNA bred out of merchandising and product.”

George Anderson – Moderator

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