No Longer Fashionable

The classic department store is fast growing extinct. One behemoth swallows another, then spews back a piece to be consumed by another giant. Federated Department Stores, itself the offspring of countless mergers, took over the Marshall Field's chain in Chicago and promptly changed the name of every store to Macy's. Didn't go over well in Chicago, either, but management has faith in their product.

It would seem that their faith has been misplaced. Since the merger, sales for Federated have slumped, down seven to eleven percent compared to last year. The chairman of the North Division, Frank Guzzetta, is on the hunt for former Field's shoppers who have yet to show themselves at Macy's. Discounts, letters, give-aways...whatever it takes to get them back. Pity that he's not aware of what is keeping the buyers away.

When Federated first announced the name change, the outcry was deafening. Marshall Field's was an institution in the city, going back before the Great Fire. To lose the name, even if someone from out of town owned the place, was just too much to tolerate. Many vowed never to shop there, some called for a boycott. Through it all, the folks who run Macy's insisted that it would all blow over once people saw what great things would come to be.

Federated's stock has been downgraded, and that's not what they had in mind when they took over Field's sixty or so shops. According to Banc of America securities analyst Dana Cohen:

""The key issue we are facing is that management miscalculated the impact of these changes and, potentially, the pace required to successfully execute them without seeing a big drop-off in the business," Cohen wrote in a report Monday."

Even though Cohen thinks that Federated will have problems through the spring, it is expected that the strategy will eventually succeed.

Mr. Guzzetta has been given free rein to fix things in the Upper Midwest, where Macy's is not a familiar name. Or so he thinks. It's actually a known commodity, in large part due to their famous parade. People in the Midwest think Macy's is a lower-end establishment, along the lines of J.C. Penney. Field's was associated with higher priced goods, designer duds and the wedding gift registry. The clients were none too pleased that May Department Stores ran the place down, but they did not change the name at least. There was hope that a new owner would restore the luxurious end, but that's not what anyone thinks of when they hear "Macy's".

An article in the Chicago Tribune details a bit of Mr. Guzzetta's strategy to lure customers back, as he seeks feedback on what is missing, to give the lady what she wants.

After the awnings were changed and the sign replaced, I walked past the windows of the local emporium. It's a small shop, a bank originally, with a limited selection of ladies apparel, men's clothes and gifts. When it was owned by Field's, the mannequins were adorned with designer wear, expensive outfits that catered to the locals. New name, and different goods for sale. The mannequins could have been lifted from Kohl's, the clothes of poor quality, fabric not draping as it should. The merchandise had gone downhill. Why would I bother to shop at Macy's when I've seen what they have, and it's not what I want?

Meanwhile, Von Maur and Nordstrom's plow ahead, taking over where Marshall Field's once stood. J.C. Penney has recently remodeled their store in the mall that shares space with Macy's. Must be expecting an increase in foot traffic.