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Some Famous Store Names to Disappear

Posted on: Friday, 29 July 2005, 06:00 CDT

Department store chain Macy's will become a national brand -- and many longstanding regional store names will disappear -- after this holiday season, its parent, Federated Department Stores, announced Thursday.

Federated, which also owns Bloomingdale's, is paying about $11 billion in cash and stock for May Department Stores in a deal expected to close in the third quarter pending regulatory approval.

Federated said it will convert about 330 May locations to Macy's, dropping such names as Famous-Barr, Robinsons-May, Foley's, Hecht's and Kaufmann's.

The additions will give Macy's 726 stores reaching nearly every major market. It will be the biggest department-store chain, but absorbing the May brands poses risks.

"They have to minimize vulnerability to losing the loyal May customer," says Kenneth Bernhardt, marketing department chairman of the Robinson College of Business at Georgia State University.

A few stores are being considered to become Bloomingdale's, and Federated will close 68 overlapping stores in 66 malls. Undetermined is the fate of May's Marshall Field's and Lord&Taylor chains.

Federated CEO Terry Lundgren said in a telephone interview that he needs to learn more about those brands, and some of that data is unavailable under federal rules until the deal closes.

Lundgren noted Lord & Taylor stores are about half the size of a typical Macy's and said, "I want to know more about their vision for that brand: Can it stand alone?" He likened Marshall Field's to high-end Macy's on the West Coast. "I'm trying to be very respectful to the Marshall Field's brand name."

Federated already has converted its regional store brands -- Burdines, The Bon Marche, Rich's -- to Macy's, but first put both names on them as a transition. He might not do that with the May stores: "I'm not prepared to say whether there would be a hyphen strategy in the name or it stands on its own."

But one brand expert say hyphenating for the conversion would be sensitive to the emotional attachments of loyal customers to the brand names and to their expectations of service and value.

"In the desire to have economies of scale and efficiencies, the retailer forgets that so much of brand value fits in the name and the experience tied to the name," says Joseph LePla, principal of branding and marketing consulting firm Parker LePla.

Similar care might be needed with the private merchandise labels. "Federated should bring in some of the Macy's private brands but keep some of the May equity where shoppers have made a bond," says Robert Lepre of the New England Consulting Group.

Source: USA TODAY

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