Customers cool to ‘new’ Macy’s stores

0

CINCINNATI (AP) – Federated Department Stores Inc. still hasn’t sold shoppers at former May stores on their new Macy’s replacement.

Local loyalists to regional chains such as Filene’s, Marshall Field’s and Kaufmann’s remain cool to the rebranded Macy’s stores that replaced them, some analysts say. Cincinnati-based Federated changed the nameplates of 400 former May Department Stores Co. locations to Macy’s in September, along with product selection.

The retailer’s decision to switch the Macy’s moniker for the 155-year-old Marshall Field’s name still draws angry reactions in Chicago, and some shoppers in other cities say they miss their familiar stores. Some analysts estimate sales at the converted stores have declined over the past few months.

Federated acknowledges its strategy of building Macy’s as a national brand will take time. The company has not been releasing sales figures on the former May locations, but said on Thursday that those stores improved in December from the October-November trend. Federated reported same-store sales rose 4.4 percent in December, below company expectations of 5 to 8 percent, hurt by unseasonably warm weather.

C. Britt Beemer, chairman and founder of America’s Research Group, said his research indicates that former May locations may have lost 10 percent to 20 percent of the shopper base from a year ago.

“Clearly, Macy’s stores have not won over the May customers to the degree that I thought they would,” Beemer said. “They need to rethink how they can attract customers.”

A Dec. 19 report to investors from Dana Cohen, a retail analyst with Bank of America, estimated that sales at newly converted Macy’s stores dropped 11.3 percent in November.

The report said some possible contributing factors included the sudden conversion of all May nameplates and changes in product assortments emphasizing Macy’s private brands and downsizing some national ones.

Cohen stressed that Federated’s long-term strategies aren’t wrong, but said management underestimated the effect of the changes.

Some analysts say J.C. Penney Co. and Kohl’s have benefited from the May conversion problems, though Beemer doesn’t think any one store has managed to “gobble up” May customers.

“They’re scattering like the wind,” he said.

Store environment and pricing also may be creating more challenges than expected.

“Some of the May stores were struggling for years, so just slapping on another nameplate doesn’t solve all the problems,” Beemer said.

Wendy Liebmann, president of WSL Strategic Retail, said Macy’s still faces emotional challenges.

“They are asking shoppers around the country to give up a brand that a lot of them have had for a long time and have been emotionally attached to, whether it’s a store or product brand,” she said.

Jim McKay, who runs a Web site opposing the change from Marshall Field’s in Chicago, said he believes his group’s boycott of Macy’s is working.

“Field’s is synonymous with Chicago and people are annoyed at the arrogance of Federated making this change,” McKay said.

James Walton, 51, of Pittsburgh, shopping in a bookstore housed in the former Kaufmann’s flagship store in Pittsburgh Wednesday, thinks Macy’s has lost Kaufmann’s appeal.

“It just doesn’t have the Kaufmann’s feel or touch to it,” said Walton, who says he’s more likely now to shop at Penney.

However, Kirk Rice, 47, disagreed with Walton.

“Most people are stubborn to change, but they will, eventually,” he said in Pittsburgh.

A national marketing campaign that heralded the nameplate changes and launched Macy’s as a national brand seemed “a little mundane” and not as bold as she would have expected, Liebmann said.

“To succeed nationally, Macy’s must be consistent in its message and in bringing the excitement that people familiar with Macy’s have come to expect. It’s not enough to have the Macy’s parade,” she said.

Macy’s has undertaken some merchandising initiatives, including a deal with Martha Stewart to sell a new home furnishing collection this year.

Terry Lundgren, Federated’s chairman, president and CEO, said in the sales statement Thursday that Federated’s results in December indicate that consumers are responding favorably to the nationwide strategy and “we remain confident that our future direction is sound.”

Marshal Cohen, chief analyst at NPD Group Inc., a market research company, said Federated appears on track with its scheduled plans.

“The good news is that they’ve done a very good job of maintaining the integrity of the brand and have closed some weaker stores,” he said. “The bad news is that the challenges to retail as a whole are much greater.”

Megan Fugate, 25, of Cambridge, Mass., who left Macy’s downtown Boston store empty-handed Wednesday, thinks department stores may have too much for shoppers pressed for time.

“People are getting more specific over what they are looking for and a lot of the brands that Macy’s is carrying even have stand-alone stores now,” Fugate said. “So, you don’t necessarily have to have a department store.”



Associated Press Business Writer Ashley M. Heher in Chicago and Associated Press writers Daniel Nephin in Pittsburgh and Rodrique Ngowi in Boston contributed to this report.



On the Net:

Macy’s: www.macys.com

Federated Department Stores: www.fds.com

AP-ES-01-04-07 1712EST

Advertisement
SHARE