Posted on 07/28/2005 11:17:22 PM PDT by RWR8189
Southeast Michigan malls and department stores have survived the first wave of name changes and store closures announced Thursday by Federated Department Stores Inc.
Cincinnati-based Federated (NYSE: FD) is acquiring St. Louis-based May Department Stores Co. and announced plans Thursday to convert 330 of May’s department stores into Macy’s. Federated also plans to sell or close 68 stores at malls where the combined company has two or more stores. After the acquisition, Federated plans to operate Marshall Field’s and Lord & Taylor stores at three malls in metro Detroit: Fairlane Town Center, Lakeside Mall and Twelve Oaks Mall.
Federated also said Marshall Field’s and Lord & Taylor stores are not included its name-change plans.
“A decision regarding the Marshall Field’s name has not yet been made, pending further study,” Federated said in its statement. “The Lord & Taylor name will not be converted to the Macy’s brand.”
Besides Marshall Field’s and Lord & Taylor, May operates stores under the names Famous-Barr, Filene’s, Foley’s, Hecht’s, The Jones Store, Kaufmann’s, L.S. Ayres, Meier & Frank, Robinsons-May and Strawbridge’s.
Federated and May shareholders approved the $17 billion deal July 13. Federated is expecting to receive regulatory approval during the third quarter.
After the merger, Federated will operate about 730 stores with more than $30 billion in annual sales.
Its a Chicago icon.
Seems to me a name change in Chicago would kill Marshal Field's business. IMO they'd be very short-sighted to do it.
Well, Federated has killed two Boston-based department store chains; Jordan Marsh in 1996 and Filene's now.
So don't be surprised if they do Macy-ize Marshall Field.
Pretty soon, there will only be one department store. How long before they suck up Parisians and Nordstroms as well?
Growing up in Detroit we had Hudson's. It merged with Dayton (from Minnesota) to become Dayton-Hudson (later Target, after their little experiment in discount stores ended up dominating the company). Eventually they decided to gather all their department stores under their Marshall Field brand. <sigh>
Meanwhile, here in Seattle, the Bon Marché became "Bon Macy's", and finally the inevitable has happened: Macy's. I thought it was nice of them to try to let the name fade away slowly. :-/
Fred Meyer was bought by Kroger, but aside from Kroger house brands appearing in the supermarkets, Freddie's identity hasn't disappeared - yet.
It's taken a long while, but I've come to accept that corporations' lives can ebb & flow like a living organism. Except that a corporation can sometimes avoid death per se by simply transmogrifying itself into something different, or merging with someone else.
The merger of the two largest department store chains will create the nation's fifth-largest broadlines retailer, behind Wal-Mart, the newly-combined Sears and Kmart, Target and Costco. Federated had annual sales of $15.6 billion and earned $693 million last year while May earned $434 million on sales of $14.4 billion.And this..."Federated is better regarded strategically," says Cody. "May had some positives in some operations, but all in all, Federated is doing a much better job in retailing." Federated is more fashion-oriented while May has focused more on competitive pricing, leaving it more vulnerable to competition from a range of retailers operating at discount price-points, including Kohl's, Cody adds.
Damaged Goods
Burt P. Flickinger III, managing director of New York business consulting firm Strategic Resource Group, says May acquired damaged goods with its 2004 purchase of Chicago-based Marshall Field's. "The Marshall Field's acquisition was more badly broken than anticipated and it brought The May Company to its knees," says Flickinger, noting that May has less management depth than Federated.
According to Wharton marketing professor David Bell, the Federated-May deal reflects the usual merger goals of increased scale and leveraging costs, but the larger issue is the level of demand for department stores in general. "They are making a bold bet that the department store format is going to resonate with consumers in the future," says Bell. "I think the concern is - with the May stores in particular - that they were slipping, and the younger demographic was not shopping there."I think blaming it on a shrinking middle class is rather facile. Big-box discount retailers were a disruptive technology that simply cannibalized department stores from below. They were able to take advantage of increasing commoditization of whole product lines to create category-killer stores where the salespeople didn't have to be as well-trained as before. They were able to turn over inventory much faster than the old-line stores, and this translated into consistently higher profits.Kim Picciola, who follows Federated and May for Morningstar, the Chicago mutual-fund research firm, agrees. "We think the merger may stop some of the bleeding at the traditional department stores, but it's not going to heal the wounds that specialty retailers and discounters have inflicted," she says.
Conventional chain department stores' share of all non-auto retail sales was 6.5% in 1987, but that dropped to 2.8% by last year, according to Retail Forward, a Columbus, Ohio, retail consulting and research firm. By 2010, the share will decline further to 2.1% Retail Forward predicts.
...
[Wharton marketing professor] Zhang points to a growing polarization among consumers who are gravitating to lower-priced apparel at Wal-Mart and Target, but also to high-end offerings at stores such as Neiman Marcus, Nordstrom and Saks Fifth Avenue. These kinds of stores are faring well at the expense of mid-priced department stores such as those operated by Federated and May. "Overall, you have a large number of value-conscious customers, and that is what Wal-Mart is tapping into," says Zhang. "At the same time, you also have very wealthy people. The income distribution has become more skewed in the past 10 to 20 years, so you have fewer people in the middle."
Lois Huff, senior vice president at Retail Forward, the consulting and research firm, says shoppers are saving so much on low-priced, commodity apparel at stores such as Target or Kohl's that they are able to set aside more money for some high-end luxury brands. "There is a lot of bipolar purchasing," she says. Shoppers "can go down and get some great fashions at the lower prices, but then they also go up and get something that really satisfies the ego." As a result, she says, business at top-of-the-line department stores, including Nordstrom, Neiman Marcus, Bloomingdale's and Saks Fifth Avenue, is booming.
Flickinger predicts the merger of Federated and May could generate more deals. "You will see this as the first of a similar wave of mergers and acquisitions that you saw about a decade ago in the first half of the 1990s," he says. "The retailers need much more size and scale to compete effectively, particularly since the department store has been dying for several decades."
But it is good to remember that the very concept of a mid-level department store has been in danger for years. I guess merging their way into a single national brand might be their only option if they want the department store concept to survive.
It will ALWAYS be Dayton's to me.
They can try and change the name hut it's still gonna be Kaufmann's here.
prisoner6
I want John Wanamaker back. And Gimbels.
I do all my department store gift and clothes shopping at Dillards, a truly fine store, exuding quality and mature clerks.
I don't even want to know who owns Dillards. I don't want to even think that they, too, will be taken over some day, probably by Burger King.
Leni
Dillards is the best. I moved from Texas where they're everywhere to California where there's only one. It's worth the 75 mile journey every so often to shop for clothes. I just hope that they'll move into the empty places in so many malls where there used to be both a Robinsons-May and a Macys before the merger.
Wal-Mart ;-)
I still refer to it as Dayton's when I go to Mpls. The downtown store has always been magical for me.
It happens a lot though...
In Dayton it went from Rike's to Shllito-Rike's to Lazarus to Lazarus-Macy's to Macy's.
I still remember the cookie's at the downtown Rike's bakery...
http://www.libraries.wright.edu/special/manuscripts/ms-189.html
At least Elder-Beerman is till around, for the moment...
My wife (Cincinnati born and bred) loved McAlpin's and did not like it when they all became Dillard's.
The well-trained, mature clerks know their onions and actually go out of their way to serve you and make you happy. Special orders are taken if they're out of something or don't have your size in stock.....and then the merchandise is mailed within days to your home. Their personalized service is like what Marshall Fields used to be in the old days before it started down the tubes.
Perhaps in your area, the Dillard stores are not yet up to speed from the transition.
Leni
You work for Dillards?
I remember the Ayres of my youth, which had an 8-story store downtown; it sold furniture, appliances, clothing, prescriptions, eyeglasses, books, gourmet food, and had 3 restaurants. Those days are long gone.
I work for the conservative cause. The pay is zilch, but the benefits are tremendous.
Leni
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