Passikoff: Dropping Regional Nameplates a Wise Move for Federated Department Stores

Posted on by Chief Marketer Staff

On Feb. 1, Federated Department Stores will begin converting the stores it acquired from May Co. to the Macy’s and Bloomingdale’s nameplates. Regional brands such as Filene’s (Northeast), Robinsons-May (West Coast), and Marshall Field’s (Midwest) will become a part of a national sales landscape, which has consumers saying farewell to their local icons.

Though newspapers across the country chronicled consumers mourning the loss of their regional brands, at least one marketer thinks Federated’s move is a good idea.

“Clearly you have local heritages for the stores, like Filene’s, Foley’s, and Marshall Field’s, but Federated has to balance whether losing a small percentage of its customer base because of a name change is as important as gaining a possibly larger gain,” says Robert Passikoff, CEO of consumer loyalty research company Brand Keys.

Passikoff received a letter from a consumer in Chicago shortly after the name-change announcement. She waxed poetic about Marshall Field’s and her trips to see Santa there as a child. But when he asked her if she still shopped there, she said she hadn’t been back in a while.

“When we look at consumer loyalty toward retailers, we look at four drivers: value; breadth of merchandise; shopping experience; location,” Passikoff says. “Most of the time, consumers use only two of the drivers. So when you hear someone attaching themselves to a regional store, we know two of the drivers are usually being ignored. Consumers will pick one store over one they say they are loyal to if one of those drivers are involved.”

Besides, Macy’s is already a well-known national brand. “A brand has to represent some kind of icon and have some kind of meaning, so Macy’s is not the worst brand on the list to go with,” Passikoff says. “Everyone watches “Miracle on 34th Street” around the holidays, millions of people tune into the Macy’s Thanksgiving Day Parade, and everyone already thinks it’s the biggest department store on Earth.”

Converting stores to the Macy’s nameplate is nothing new for Federated. In 2003 it integrated the Macy’s nameplates with the regional department stores it had at the time, creating Bon-Macy’s, Burdines-Macy’s, Goldsmith’s-Macy’s, Lazarus-Macy’s, and Rich’s-Macy’s. The regional names were dropped from those stores in March.

“To better serve our customers in this highly competitive retailing environment, we must concentrate on our best national brands and reduce costs so we can deliver outstanding value to shoppers,” Federated chairman Terry J. Lundgren said in September. “We believe that continuing to build Macy’s and Bloomingdale’s aggressively across America will accelerate our comp store sales performance and increase profitability, thereby driving shareholder value.”

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