CINCINNATI Retailer adopts 'Macy' name

The retailer is hoping the change will increase sales.
CINCINNATI (AP) -- Federated Department Stores Inc. is fighting stagnant sales and competition from discounters with the help of a familiar and upscale name: Macy's.
The company is coupling the names of five of its other stores with Macy's, a move that analysts agree could attract shoppers and help cut costs.
Shoppers outside of Macy's traditional markets on the East and West coasts know the name from its sponsorship of the Thanksgiving Day parade in New York and from the 1947 Christmas movie "Miracle on 34th Street."
"They have a name that is very highly recognizable on a national basis, and positively," said Lois Huff, an analyst at Retail Forward in Columbus. "That's a critical thing that not too many department stores have."
Burt Flickinger, managing director of Reach Marketing Inc., a retail consulting firm based in Westport, Conn., said it helps that Macy's has a major presence in fashionable areas where shoppers often vacation, including New York and California. That makes it a trendy place to shop.
New names, new style
Macy's will have a national presence from The Bon Marche -- to become The Bon-Macy's -- in the northwest to Rich's and Burdines in the southeast. Lazarus operates in five states between Pennsylvania and Kentucky, and Goldsmith's is in Tennessee.
The change -- which began in February with Rich's-Macy's -- will affect 151 stores. The Bloomingdale's name will not be changed, since it also has wide recognition and offers more upscale merchandise than the other Federated stores.
Federated plans to add more high-end business wear and evening apparel during the next five years to appeal to the fashion-conscious shoppers who frequent Macy's, said spokeswoman Carol Sanger.
Although the company still has downtown stores in cities including Cincinnati, Columbus, Pittsburgh and Seattle, it has largely moved to upscale, suburban malls which attract well-heeled customers.
"There is a niche that Federated is uniquely positioned to serve, and that is the fashion-conscious customer that has a desire for the brand-new, for fashion newness," Sanger said. "They aren't necessarily price-driven."
Long-awaited change
Dick Outcalt, a founder of Outcalt & amp; Johnson: Retail Strategists in Seattle, wondered what took Federated so long to adopt the name of its largest department store.
"Brand names have to be recognized globally with customers traveling as much as they do, as well as using the Internet," he said.
Companies have paired names before but never with a brand as widely recognized as Macy's, Outcalt said.
The St. Louis-based May Department Stores Co.'s Robinsons-May division, based in Los Angeles, resulted from May's purchase of the Robinsons stores. The merger of the Hudson retail chain, based in Detroit, and Dayton's, of Minneapolis, created the Dayton-Hudson's store chain that served both markets and eventually bought the Chicago-based Marshall Field's stores.
"The success of the merger of those names allowed them to begin a start-up chain called Mervyns and one called Target," Outcalt said. "Target was so successful, that the whole company eventually became the Target Corp."
Cutting costs
Federated's broader use of the Macy's name will allow the company to save money by buying national television and newspaper ads instead of advertising in separate markets for regional stores, Huff said.
The public will see the name changes only in advertising this year and on credit cards, Sanger said. New signs will go up next year. She declined to provide the cost but said it would be minimal and wouldn't affect earnings.
Outcalt said it is critical for Federated to follow up with improved merchandising that is apparent to customers.
"They have to offer customers a better shopping experience than they had before," Outcalt said.
In 2000, Federated had sales of $18 billion. Since then, yearly sales have been about $3 billion less. Sales were down by 2 percent to $1.34 billion for the five weeks ended July 5, the latest figures available.
The sluggish economy is to blame, Sanger said.
Federated's stock has still outperformed shares of rival department stores recently, rising 61 percent from its lowest point during the last year. That is partially because of the name change, said Linda Kristiansen, an analyst for UBS Warburg.
Kristiansen said Federated has been wise to sell its own clothing lines, called private brands, to increase profit margins. Private labels have grown to 16 percent to 17 percent of Federated's business and are targeted to reach 20 percent.