Martha Goes Upscale at Macy’s
By George Anderson
Martha Stewart and Edward Lampert may be having some difficulty coming to terms on a new deal on the Martha Stewart Everyday line at Kmart but the domestic diva has no such difficulty with Macy’s.
According to a report in The Wall Street Journal, Federated Department Stores is expected to formally announce today that it has signed an exclusive deal with Martha Stewart Living Omnimedia Inc. to sell an upscale line of home furnishings under the Martha Stewart Collection brand.
The line, set to be rolled out in the fall of 2007, will include bed and bath fashions, cookware, furniture and holiday decorations. It is not expected to affect Ms. Stewart’s deal with Kmart, which runs through 2009.
Janet Grove, a Federated vice chairwoman and head of Macy’s Merchandising Group, told the Journal, “This line not only covers the fundamental parts of our home-furnishings business, it also allows us to expand our seasonal and holiday offerings.”
The department store chain is looking for the Stewart line to help it compete with the likes of Target on one end and Bed Bath & Beyond on the other.
Federated’s CEO Terry Lundgren said the deal with Ms. Stewart is a benefit of Macy’s national branding strategy. “In our former self, we’d never be large enough to satisfy the demand potential of the Martha Stewart product offering,” he said. “This is an advantage of the May acquisition.”
Moderator’s Comment: What will Macy’s deal with Martha Stewart mean for the department store chain? How will Macy’s handle promoting and merchandising
the Stewart line differently than Kmart has?
According to Martha Stewart Living’s own research, 30 million women go to a store specifically to buy Martha Stewart branded products. –
George Anderson – Moderator
“…After Field’s is renamed Macy’s this fall, women no longer will be able to buy shoes from Jimmy Choo, Dolce & Gabbana, Miu Miu and Prada….” Sun-Times 033006
…but they will have Martha; Ms. Stewart does not, of course, offer a line of branded shoes – YET (cue ominous music here) – but she nevertheless will enter the Pantheon of Macy’s designers….which, of course, brings up a question: Macy’s may be good for Martha, but will Martha be good for Macy’s (a.k.a The-Store-Formerly-Known-As-[insert local nameplate here])? Most of the respondents here praise Stewart’s business savvy for having two pots over the fire; and I don’t disagree. But I do wonder about the benefits to Federated of adding to their ranks someone who is (retail wise) integrally associated with Kmart. Cross promotion with Sears seemed to make sense because (presumably) the demographics were similar….. but Macy’s ???
Exactly what kind of customer are they planning to cater to?
Ask not what Martha can do for Macy’s. Ask what Macy’s can do for Martha.
Martha still has a large following and I believe her brand will only continue to get stronger. I think it is a good move for Macy’s to compete with Target and Bed Bath & Beyond. As Macy’s has gone more and more to private label products on the clothing side, having a brand like Martha on the hardlines makes sense.
I’m sure that Sears will tell us that Martha doing something with Macy’s is good for them. Personally, I think it is another spiral turn down for the Sears/Kmart venture.
The Martha-Macy’s deal will add some new appeal to Federated’s assortments as well as rankle Mr. Lampert. Martha is smart to leverage her brand into two large chains. Botton line: Shrewd move by a smart businesswoman; a good move for Macy’s. But, on balance, Martha wins this one.
Martha Stewart would be stupid not to move beyond Kmart where it seems no real effort is being made to increase the sales of her products and no effort made to extend her product line into the Sears stores in spite of Lampert’s claims in regard to the “joining” of two retailers and Aylwin Lewis’ references to the “power of one.”
SHC is simply not making any effort to promote her lines or to increase sales, preferring to set its own goals based on “margin” and enhancing shareholder value. As I said, she would be stupid not to break out of what is rapidly becoming a drag on her own bottom line as well as her reputation and Martha Stewart is simply NOT stupid.
Quick additional posting – Martha made the announcement on her show this morning complete with an in-person champagne toast with Mr. Lundgren and $100 Macy’s gift certificates for everyone in the audience. He mentioned the KB association and limitless potential in multiple home furnishings categories. Talk about a cross-promotion bonanza for Macy’s.
Great move for Macy’s and unfortunate lapse from Kmart. Lampert has not seen fit to help Martha spread her brand wings post-merger so this is no surprise. Martha’s Macy’s deal combined with her recently-announced (and I think completely innovative and brilliant) alliance with KB Homes that has KB designing Martha-inspired homes in dedicated communities (of course with the option of buying the full dream by filling them with Martha furnishings and accessories) will make this rock for Macy’s and Martha.
Another toe stub by Kmart/Sears and a big win for Macy’s. Would have loved to see Martha-branded Kenmore appliances….
Martha has a big following and is viewed as a very strong female – her personal issues actually raised her respect level among more upscale, professional women.
I expect this to be a big winner.
A decade ago, when Martha transformed Kmart’s domestics area, she took what was a disorganized collection of outdated merchandise that often failed to coordinate across product categories and created a cohesive, original brand story. In general, this provided upgraded quality at a great value and received a good response from the customer. It was groundbreaking at the time.
While Macy’s is not ripe for such a dramatic transformation, I believe that this was a smart move for them, and that the Martha Stewart Collection will be a success.
Since the Macy’s launch will take place in 2007 and Martha’s agreement with Sears Holdings will be maintained until 2009, she will be covering most levels of the market, at least for a while.
Smart woman!
Making profitable licensing deals isn’t easy. Even if the brand is treasured; even if the merchandise is truly special (not just “badge engineering”), the license fees and terms have to be reasonable. I’ve worked with two companies that licensed various Disney and other TV/movie tie-ins over several years, and both companies generally lost money on the deals. Both firms loved the sales results, but the license terms were excessively rich, so the margins ended up negative. Entertainment companies often auction the license rights, and the top bidder is often the loser, since they pay too much. Reading many of the comments, it’s clear that the brand has value. But how does the price compare? I guarantee that Martha will make money on this deal. Will Terry?
She’s back! And even better than in the past. Stock is climbing!
This serves as a testament of a Brand’s staying power and strength to absorb negative situations; and then, move ahead!
Hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm