We've been talking about it, shaking our heads, wondering how can it be so. How can Federated be 'macy-izing' the country? Why would they want to replace the grandes dames of retail -- like Marshall Field's -- with Macy's? Why contribute to the sea of sameness already plaguing the retail world?
Could it be that they want to recapture the cultural and educational legacy of department stores? The 9/7/06 issue of The Boston Globe in an article titled Culture at the counter by Jan Whitaker describes how department stores offered free concerts and art shows [that museums envied and tried to emulate]. How they demonstrated the latest in technology [e.g., store lighting], how products worked and how they generally showcased aspirational concepts, products and fashions [i.e., culture].
Think where consumers go today for culture: Barnes & Noble or Borders, iTunes or Amazon, Target and Wal-Mart, TiVo, cable, yes - traditional movie theaters [although much less so!], museums and art galleries, flickr, YouTube, as well as travel experiences [purchased online] and experiential boutiques and stores... Education happens online and -especially for women- through fellow consumer word-of-mouth recommendations. You don't hear department stores mentioned.
This 8/27/06 Chicago Tribune article by Sandra Jones titled Grand old stores too old, grand. Carsons' flagship no longer destination reinforces how retail has changed simply from a square footage perspective:
- The Carsons building [in Chicago] is 1 million square feet. That's big enough to fit four Wal-Mart Supercenter stores inside.Carsons sold the building years ago and is leasing back a slimmer 600,000 square feet inside. But still, that's big enough to fit nearly two Ikea stores.
- Wal-Mart's biggest Supercenters are 230,000 square feet, not nearly as big as Carsons.
- Cabela's, the warehouse-size sports store from Nebraska, operates some of the biggest stores in the country, big enough to hold an indoor mountain. Its largest stores are also only 230,000 square feet.
- Indeed, entire malls could take up the space Carsons is leaving behind, including the Westfield North Bridge mall on North Michigan Avenue that is home to Nordstrom.
So what is Federated doing? The Marshall Field's flagship store in Chicago [soon-t0-be Macy's] comes in at 1.8 million square feet [Macy's Herald Square in NYC is 2.2 million square feet]. According to the article:
Federated Chairman and CEO Terry Lundgren has taken great pains to assure Chicago that the State Street flagship, even as its name changes to Macy's, will remain intact. Lundgren is on a mission to revive the department store and looks to the flagships at Macy's Herald Square in New York, Macy's Union Square in San Francisco and the soon-to-be Macy's State Street in Chicago as key to his plan."Our philosophy is the flagships are the hubs of activity that draw the largest customer audiences and can offer the best of everything," said Jim Sluzewski, vice president of corporate communications at Federated in Cincinnati. "It takes a significant amount of money to make a flagship function. For us the concept of the flagship is very much alive."
Ok. So, they want to resurrect the grandeur of the department store experience? What's the plan for all that space? More stuff? Mind you, I haven't set foot in the Macy's Herald Square store in years: It's just too big; it's overwhelming and I don't have the time to navigate through it. I can find the stuff I need more efficiently elsewhere. And, the experience? Well, how is it special?
This 9/7/06 article from the San Diego Union-Tribune by Jennifer Davies titled Macy's celebrates its 400 new stores. Federated plans aggressive ads, community programs gives you a taste for the sheer size of the undertaking. The goal: "consumers will soon see Macy's as a fashion leader on a national stage, yet accessible locally" across 45 states and DC in 800+ stores. To reinforce the local angle, Macy's is "trying to establish ties to each community it is in." That's cool. But, Macy's as national fashion leader? I don't think so!
George Whalin from Retailer Blog brings up the point that Federated will be competing against itself in some markets. "It's called cannibalization. They've just got too many stores here" [here being 1 county in San Diego with 13 stores]. Suggests to me that they will need to close some stores.
This last Macy's related article from the 9/8/06 Chicago Tribune titled FIELD'S FINAL DAYS. House brands heavy at Macy's. Federated uses a legion of designers to help set its clothes, other products apart, increase profitability discusses Macy's strategy of designing and selling its own merchandise. The author writes "the strategy is key to winning over shoppers who have complained for years that all department stores look the same." Hmmm. National chain developing its own brands to showcase cutting edge fashion? Not. National chain developing safe, same-looking products that will appeal to all, thereby reducing SKUs? More likely
The article makes note of the following improvements:
- Field's shoppers will also notice changes in the stores' layout--wider aisles, less clutter, sitting areas near the fitting rooms and wheeled shopping carts. [ed.: Kohl's offers carts]
- Sales clerks are required to dress in black in order to be more easily recognizable.
- And computerized price scanners allow shoppers to check prices themselves. [ed.: Target and Wal-Mart have price scanners]
Now, that's good news. Macy's stores feel claustrophic they are so jammed packed with stuff. I wonder how enthusiastic the sales clerks will be? Will they be excited about helping me and creating the most memorable shopping experience ever?
Time will tell whether Macy's is hugely successful, but this goes against everything I see happening in the retail marketplace. Michael Silverstein's Trading Up and Treasure Hunt [see recommended reading MARKETPLACE TRENDS in Flooring The Consumer describe how the marketplace has shifted from the traditional pyramid [few rarified offerings at the top, lots in the middle, and tons at the bottom] to an hourglass where consumers choose to trade up [think experiential, aspirational new luxury goods] or treasure hunt for bargains [think Wal-Mart]. The middle - the realm of the department store - is squeezed. So, you see Kohl's shifting downward, Bloomingdale's upward, and everything in between disappears. Where does that leave the 800+ Macy's stores?