It is a department store problem. Look around. Who is doing well? Department stores NEED a new operating model.

I hate to get off topic and confuse the problem. But, assuming that someone fixed my earlier point, a single brand makes sense.

Local is not (according to research) enough of a powerful switching trigger to foster a store as a destination. The problem is that Federated does not understand BRAND as it is today.

What is the Macy’s promise? Can anyone tell me in a single sentence? Can anyone tell me how that statement it is different and better from ANY of the competitors? I rest my case.

A few short years ago, when Macy’s was doing well financially and the company was being touted for its omnichannel approach, we were singing its praises. Now, when sales are down, critics are piling on. Did Macy’s lose its way internally or did consumer tastes change? Certainly, some of the blame can be attributed to ending the local brands it acquired. But let’s remember, some of those brands were underperforming at the time of acquisition. Macy’s needs to examine consumer desires and adjust accordingly. Some of those adjustments may mean moving towards localization, others may point to national realignment.

Tom is closer to the point — new operating models for all department stores are the way. And around the world this is the change taking place. Macy’s has changed in many ways internally and the change will continue — even after Terry retires. They have committed to their need to change and they still have many many loyal shoppers — but those shoppers are changing. The benefit is that many of the kids shifting up from Generation Z grew up shopping Macy’s with their parents or friends — more of them will depend on Macy’s online and in-store for their needs.
Stop the pondering of the past and think forward. Neither we nor Macy’s can change the past but we can leverage and adapt to the future of retail.

I think this topic is well covered by several of the Brainiacs, in particular Paula’s observation that “we no longer shop ‘by brand by department.'” It recently occurred to me that we no longer live a departmentalized life. Life is more elastic and less formal. Dressing occasions have merged. Material possessions are replaced by material experiences. Marriage has evolved: bridal registries are no longer the domain of Wedgewood and Waterford because entertaining in that way is out of vogue. Recently, we inherited a china cabinet only to donate it to a local shelter fundraiser. The mover who picked it up said he gets one a week and, like entertainment centers, they gather dust in their store. Re: scale. Macy’s was a moderate offering in the Federated portfolio which had Bloomies as the high end. When the regional brands were consolidated and converted most lost their high end and therein their aspirational attraction. Then Lehman Bros. cratered, consumerism stepped upon a banana peel, Jobs launched the iPhone and the world was turned upside down. It became… Read more »

Ask yourself: were the reasons for management’s decision to make this move motivated by the customer or by their own self-interest? In the “buy local” culture of today, driven largely by the recession but also by “farm to table,” do customers really care about national return policies, singular advertising synergies and creating buying efficiencies?

And at the same time, where is the excitement for going into a big box store anymore? Where are the Marvin Traubs and the vision for making shopping a fun and exciting event?

Today’s department stores are in a sale price-driven race to the bottom.

This just in…

Macy’s is dismantling its assets ala Sears. Here the once locally proud sub-brand of Marshall Field & Co., Frango Mint, is being sold off.

Having been a member of the Federated Systems Group at its inception, I watched this go down. It all began with the consolidation of systems. We started by running 3 of Federated’s department stores to prove the concept. What we proved was the great economies of scale we could accomplish. Next we brought on all of the Federated stores. Each running their own brands still, but using the same systems. With this under our belts and common system running, consolidating buying practices was a logical next step. Now mind you, Macy’s was not a part of Federated at the time. They actually came on board as a paying customer of Federated Systems Group first in order to leverage the economies of scale we proved with consolidated systems. How many of you remember that retail was notorious for having one of the lowest IT spends of any industry? Back in the day it was less that a half cent on the dollar. If you could save IT dollars by using the same systems, it was a… Read more »

In a few cases — specifically THAT one — where there were strong plates, I think it was a mistake, just as Bloomingdale’s was never “Macy-ated” (or even contemplated, AFAIK). But for others, I’m not so sure: Lazarus, for example, had already gone from being a Columbus store to a mashup with Shillito’s, Rikes, Hornes, etc…, so much had already been lost.

I think the bigger mistake was the May acquisition. May itself was, of course, a merger of two fundamentally different companies which many would argue never really worked. And you don’t build a strong company by combining a so-so company with a flawed one. But whatever the merits, it’s clear Macy’s ended up with too many stores that didn’t really fit any consistent image.

This was many years ago, and maybe not a valid comparison, but when I worked at the now long dearly departed Borden Co., a marketing VP thought that the revered Borden name could sell anything. They bought a successful BBF (Burger Boy Foodorama) regional fast food chain competitor to McDonald’s. Then changed the name to “Borden Burger.” In a few years, that was shuttered. I suggested they convert all that real estate to “Elsie’s Premium Ice Cream” parlors but that idea fell on deaf ears.

They also bought up several thriving potato chip/snack companies. An attempt to convert to a “Borden” brand failed miserably. Here in Columbus, many still remember “Lazarus,” in Dayton it was “Rikes,” in Cincinnati “Shillitos,” in Pittsburgh, Kaufmann’s etc. Everything seems like a good idea at the time — and perhaps it was, at a time.

For Macy’s, going national and becoming first full line, truly national department store was not a mistake. When I got into the business there were 100 regional department store names. There is not one really successful regional department store left. Dillard’s is the most successful, and it is a melting ice cube. Bon-ton is a shadow of its former self, and hardly a successful regional store. Boscov’s has been bankrupt already, and is very likely heading for another round. Belk’s has been bought out by private equity, is now levered up, and unlikely to grow again. Saks, Neiman’s, Lord & Taylor, and Nordstrom are not regional department stores. They are specialty stores and always have been. If being a regional department store in the current environment is such a great idea, why are there no successful ones left? When regional department stores were still successful and viable, the off-price players were still “children.” When department stores were winning, Walmart was a “teenager.” When department stores were winning, Amazon was not even a twinkle in Jeff… Read more »

Well, I also lament the loss of the great regional nameplates and stores and the incredible local people who understood the market and ran those stores. It was a great time, without the likes of Walmart, Ross and TJMaxx Marshalls. Competition was each other, other regional department stores. It was fun and more genteel. But it is over. The landscape has moved beyond that ideology just as dinner theatre is no longer seen as a fun evening out. By the way, we now have at least one and possibly two generations who, for the most part, have NO IDEA of what that shopping experience was like. Find any 22 year old and say any of the names, e.g. Shillito’s, Halle’s, Kaufmann’s, Hudson’s, Rich’s, Foley’s, Robinson’s, Burdine’s etc., etc., etc. I guarantee that they will either NOT care or have NO idea of what you are speaking about. I believe Mr. Lundgren was correct, although he should have maintained Marshall Field’s — Field’s was different But I do believe that he was right and as noted,… Read more »