June 14, 2007
Critics: Macy’s Needs to Go to Centralized Buying
Macy’s operates seven regional buying offices and some believe that is at least five too many, according to a New York Post report.
While Macy’s has operated its regional offices to stay closer to consumers in those markets, there are many who point to others such as J.C. Penney, Kohl’s and Nordstrom that have stayed true to their shoppers while centralizing buying at one location.
Many believe it is simply inefficient for Macy’s to operate so many buying offices.
“Macy’s cost structure is too high, and, as a result, their prices are too high,” Robert Buchanan of A. G. Edwards told the Post. “That is a key reason why they are likely to lose market share.”
According to the analyst, Macy’s expense to sales ratio is 32 percent compared to 27 percent for Nordstrom and 25 percent for Kohl’s and Penney. Mr. Buchanan estimates that Macy’s could save up to $100 million a year if it were to shut five of its buying offices. He does favor moving regional buyers to the remaining purchasing offices to respond to the needs of more localized markets.
Discussion Questions: Do you agree with the logic that would see Macy’s close most of its regional buying offices? Generally speaking, do you see centralized buying as being preferable to regional purchasing structures?
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While centralized buying has some cost savings that are easy to see and understand, the other issue–especially when you consider the velocity of change in fashion trends–is the synergy of having people close together sharing best practices, new concepts and implementation logistics. This makes for a more nimble company with more input into the decision process and the benefits shared by all regions.
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I think that’s a very good point. Macy’s, Field’s or whichever nameplate you choose, always had kind of an allure as a distant purveyor of fashion. However, when these nameplates became accessible in other cities much of the allure was gone…kind of like Cuban Cigars or Coor’s Beer. Macy’s means nothing right now because they stripped away localism, and their focus on private labels over brands really makes them another Sears or Penney’s (think Craftsman, Kenmore, Toughskins, etc.)
Furthermore, if you walk into a Macy’s store, you don’t get the same ambiance, or message that you are in Macy’s. When you walk into a Target, you know exactly where you are…Macy’s has such a hodgepodge of buildings and interior decor packages, I don’t think they will ever be able to send out the same message Target does.
I am amazed at how retail analysts continue to miss the fact that in large metro areas such as here in Minneapolis, St. Louis, Chicago, Detroit, Milwaukee, etc., where Macy’s destroyed our local department stores that were superior in every sense to Macy’s, there will be no time when “the customers return to Macy’s.” There is no reason to return. It’s gone. Where the buying is done has nothing to do with the success of Macy’s in the Midwest. Macy’s is failing here for entirely different reasons and there are now shareholder lawsuits taking place because of it. It matters not where the buying is done and really, we simply cannot keep ignoring that fact.
The excellent service of our beloved Minneapolis corporate citizen, Dayton’s, which later became Field’s is a thing of the past. Most days in the dreary Macy’s stores it is difficult to even find a sales person; finding one who knows much about the merchandise is most rare, although I am often treated to a discussion of when they will be taking their next break.
Merchandise quality took a real nosedive shortly after converting to the Macy’s nameplate last September. In Menswear, unique brands such as Alex Canon and Gene Meyer that Field’s stocked were pushed out in order to make room for in-house brands of poor quality with high price points such as Alfani, INC, and Tasso Elba. Additionally, many designers fled Macy’s. That further reduced the choice to just a few national brands that every store carries that none of us really want to wear since everybody else will be wearing the same thing, plus all the in-house, poor quality, high-priced Macy’s brands.
The problems faced by Macy’s are much more serious than deciding from which locations they will do their buying. Their whole business model is flawed as they have made grave mis-judgments when they eliminated some of the best brands in American retailing.
Why the comment about closing half the stores in Chicago? You must know what most of us do as well. That Marshall Field’s was not the wild success in Chicago and elsewhere that many would like us to believe. In fact, per Target Corp. archived annual reports, in the last 5 years of their ownership, Marshall Field’s sales and profits were falling like a rock and they couldn’t get rid of it fast enough. It was the worst preforming division of the May Company stores and yes, some Chicago stores need to close. More like 4 of them though, not half (or nine). I have no doubt you have never purchased any of Macy’s private label merchandise and are not in the position to comment on it’s quality. As far as Christmas windows, those are planned years in advance and last years windows were planned before the Federated purchase! Field’s hadn’t been a stand alone company for decades. That’s because it could never have survived. It’s many failures over the course of it’s history are well documented. Get a clue!
There is a basic and underlying disconnect going on that Macy’s management is ignoring. They decided they want to create and be “Americas’s Department Store.” Macy’s never fully defined that term in a way the public understands or that differentiated their “new” idea from Penney’s or Sears who have had a national, if bland, presence for years. Additionally, it seems Macy’s did not stop to consider whether America actually WANTS another national department store, or whether there would be lost prestige to their brand in becoming ubiquitous. I suspect that at this point whether Macy’s has a fully centralized or a regional buying structure is almost irrelevant.
Centralization of Macy’s would be great if they want to be Target or Kohl’s or JCPenney.
Macy’s should retain regionalized buying because what sells in SF isn’t going to sell in Boston. Styles are different, tastes are different.
My impression of Macy’s is that it generally attracts a slightly upscale consumer who likes slightly upscale brand names.
Like gravity dragging down a rocket, Macy’s once again draws us in. Macy’s current approach is clearly a compromise between having one buying office and 83–or however many companies it has swallowed up over the years–of them: is it a “good” compromise (one where the best features are combined) or a “bad” one (the worst features)? At this point, I’m not sure anyone can say for sure: most of the comments will be dictated by what one thinks of the macysization process as a whole, rather than a studied response to individual issues. And, of course, this issue highlights one of the downsides of scale: bad decisions now affect not just 1 or 5 or 126 stores, but 800+ of them.
I’m in the centralized buying camp yet for a different reason: Retail has moved away from demographics in favor of pyschographics (which begets lifestyle brands and lifestyle marketing). Localized assortments have a role, of course, yet technology now enables retailers to react to local dynamics and plan assortments for those stores accordingly from the central buying office. Remember that Wal-Mart’s much-discussed Plano prototype represented only a 3% change in product offerings from a traditional Wal-Mart (albeit, a visually-impactful 3%; which was the idea). On the branding side; however, retailers are moving away from automatically rolling out brands that test successfully in limited stores and instead are placing those brands in locations that support the lifestyles those brands represent. That isn’t regional buying, it is corporate strategy and brand deployment; an area in which Federated has long excelled.
It makes no difference whether buying is centralized or not. If psychographics (I had to look up the word) are key, then Macy’s situation is hopeless. Behavioral marketing…well let’s see. As a Chicagoan, I eat pizza stuffed with spinach (yum!), I don’t put ketchup on hot dogs (yuck!) and I shop at Marshall Field’s, NOT Macy’s. I do not like my salespeople dressed in black (it’s morbid or pretentious, take your pick), I do not like my Christmas windows based on a Broadway show and if I have to buy the same poor quality private labels that are for sale in 800 stores across the country, I’m going to save money and buy them from Kohl’s or Target. Macy’s problems have little to do with its buying offices and everything to do with this misconceived notion that all America wants to shop at Macy’s. If Macy’s wants to cut costs, I suggest closing half its stores in Chicagoland, including State Street. I would rather see the building turned into a hotel than further run into the ground.
Obviously, there are advantages and disadvantages to either centralized buying or regional buying offices. Either will only be as effective as they are operated. Macy’s has already alienated many local consumers in markets such as Chicago by dropping the name Marshall Field’s. Why not finish the job and gain the cost advantages of centralized buying?
Local consumers believe that everything is already centralized with the name Macy’s everywhere. A hybrid system with local buyers/merchandisers/category managers forwarding recommendations to a central buying office seems like the best approach to me. The central buyer’s job would be to find the best price and arrange the best logistics for the items that the local people request. Seems easy to me but anybody can be an expert when they have a forum and no responsibility.
I do not support Macy’s closing the Regional Buying Offices. I feel the offices are a point of differentiation for Macy’s. These offices represent a great opportunity to tailor local assortments for specific market needs.
Macy’s could approach the use of these offices more efficiently and achieve replicable results.
1. Focus on true local needs of the stores and consumers.
2. Focus and create opportunities for local events with products that resonate with a specific community.
3. Macy’s is trying to position itself as America’s Department Store. Show America that they can meet the needs of every community with specific products and promotions.
4. Show results–cost savings due to a reduction of offices is one thing–but to show sales increases due to local merchandising efforts would be a beautiful thing.
Anyone who doesn’t believe that the seven regional buying offices are a temporary, transitional, phase for Macy’s isn’t paying attention, nor are they students of history.
I’m going to agree with the comment above about the bulk of the merchandise is coming from corporate but “floor buyers” tweaking the assortment for local preferences. Mercantile stores worked that system beautifully and outlasted nearly all their regional competitors (ADG, Allied, Macy’s Inc, for example) who had far more centralizing buying.
I just visited my first Boscov’s store last week and I predict it is one to keep an eye on. Packed with shoppers of all ages and demographics, the first retailer that felt like a successful, traditional department store to me since the demise of Marshall Field’s.
How many critics have actually run retail stores? If Macy’s had centralized buying and comp sales were lousy, critics would say that local needs aren’t being satisfied, that central buying is suboptimal, etc. Almost certainly the reason for Macy’s poor sales figures: the May Company merger. The merger probably stretched the management, and there’s no doubt that certain shoppers resent the changes. Given the merger disruption, would critics suggest that Macy’s add more disruption by changing its buying structure simultaneously? Maybe one major disruption at a time is the prudent way to go.
If Target, Kohl’s and Penney can make centralized buying work, so can Macy’s. Penney made the transition from localized to centralized buying in the past ten years, and the move left them a stronger and more competitive company despite some of the cultural upheaval that it caused. If Macy’s is making noises about being more promotional (again), the savings need to come from somewhere and this is a logical place to start.
Macy’s needs to be careful, however, to ensure that it has great planning and allocation systems in place to be responsive to regional preferences. It’s all about the mindset: its centralized home store buying function hasn’t done a thing to correct content and promotional weaknesses in this area. So centralized buying won’t be a cure-all unless the product is right.
The regional offices should not necessarily be closed. Instead, the role of the regional office should be altered to accomplish the following objectives:
1) Continue a smooth transition of the past to the present–in other words, Famous-Barr shoppers in St. Louis need a “Famous-Barr” presence for a while until they transform to Macy’s shoppers.
2) Keep an active hand in regional events and practice regional norms to compete better with local entities.
3) More so than Kohl’s or Target, Macy’s needs to be the local department store chain where ever it has stores. New York, Cincinnati, Omaha, and Orange County, are all very different types of markets with different needs, norms, and events.
3) Be locally responsive to competition.
Without the right regional presence, Macy’s will not accomplish its full potential.
The department store industry was built by merchant princes. They owned a cluster of stores in their trading area, visited them regularly, listened to the staff and customers and built a local landmark. The strategy for Macy’s is to structure their clusters, place buyers for fashions, unique goods and services and promotions at each of them, then set up a national merchandising office for the basics–70-80% of the dept store assortment. The local buyers will be “on the floor” making sure their goods sell (and listening to staff & customers) while the central merchants will run the plan and the inventory system for all basics in all stores.
The Macy’s argument is about regionalization of merchandise. They feel that they can better serve the needs of their customer by offering “customized selections” by region. However, if you shopped their stores in various parts of the country, you’d likely find that 99% of the merchandise is the same.
They can cut overhead and increase buying power by centralizing their efforts. There is a lot of duplication now. Maybe a compromise is to keep regional planners, but centralize buying.
Quite honestly, I expected Macy’s to centralize everything awhile ago…it’s kind of a no-brainer.
I worked for Macy’s in the 80s in the Macy’s South region. We picked up New York and Texas stores that had fur-lined boots in them. We had to markdown so many items because they didn’t sell in that climate. Then we had to eat most of those markdowns in our bottom line at the end of the season. It was all done to cover their advertisements that ran each weekend. When they consolidated back to New York again, I saw inappropriate merchandise for the southern market. Sure it can be done, but it loses the flavor of the region and I don’t think they will improve their “National Brand” by missing the local needs of the markets. Let the critics complain, they’ve already pushed out a great Marketing Director. Retail isn’t just about the bottom line, it’s about creating an appeal that can’t be satisfied anywhere else.
I understand the need to centralize and the cost savings associated with centralization. But it seems that more often than not, when a merger in retail takes place and operations are centralized, market share is lost. There are countless botched mergers where local management is taken out in favor of centralization leading to a loss in market share.
It seems that with every nameplate change, market share dribbles away. Lazarus in Columbus was dominant to the point where the only place to go was down. Three or so consolidations later, I don’t see Macy’s as a force anymore even though this market was the birthplace of Federated. Likewise, with the Big Bear grocery chain, neck and neck with Kroger for number one market share. They saved a lot of money consolidating buying offices in New York, but they were clueless about their competition in Ohio … and where is Big Bear today?
Kroger does a good job juggling consolidation with maintaining a local flavor. Since one of Federated’s board members was also the retired CEO of Kroger, I would hope he is a strong voice in keeping Macy’s as local as financially practical.
One final note, if Macy’s doesn’t watch it and they centralize too much, they run the risk of being just another JCPenney or Sears.
I’m not sure if seven offices are overkill or not. It’s very important to know how each office is managed. If Macy’s has a different strategy for each one and give them real empowerment to decide, it can be a very profitable differentiation. But, to have seven nominal offices nowadays is a totally crazy condition. So, there is no way out. Macy’s must close them as fast as possible.
Field’s was not the May Company’s worst performing division. Does Lord & Taylor ring a bell?
Field’s average sales per store were much higher than most other retail chains, and their sales robust and increasing in 2004 and 2005.
The Field’s concept was doing quite well in the upper Midwest. The store’s focus on selling a broad range of upscale and moderate priced merchandise was doing much better as Field’s compared to the new Macy’s.
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While centralized buying has some cost savings that are easy to see and understand, the other issue–especially when you consider the velocity of change in fashion trends–is the synergy of having people close together sharing best practices, new concepts and implementation logistics. This makes for a more nimble company with more input into the decision process and the benefits shared by all regions.
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I think that’s a very good point. Macy’s, Field’s or whichever nameplate you choose, always had kind of an allure as a distant purveyor of fashion. However, when these nameplates became accessible in other cities much of the allure was gone…kind of like Cuban Cigars or Coor’s Beer. Macy’s means nothing right now because they stripped away localism, and their focus on private labels over brands really makes them another Sears or Penney’s (think Craftsman, Kenmore, Toughskins, etc.)
Furthermore, if you walk into a Macy’s store, you don’t get the same ambiance, or message that you are in Macy’s. When you walk into a Target, you know exactly where you are…Macy’s has such a hodgepodge of buildings and interior decor packages, I don’t think they will ever be able to send out the same message Target does.
I am amazed at how retail analysts continue to miss the fact that in large metro areas such as here in Minneapolis, St. Louis, Chicago, Detroit, Milwaukee, etc., where Macy’s destroyed our local department stores that were superior in every sense to Macy’s, there will be no time when “the customers return to Macy’s.” There is no reason to return. It’s gone. Where the buying is done has nothing to do with the success of Macy’s in the Midwest. Macy’s is failing here for entirely different reasons and there are now shareholder lawsuits taking place because of it. It matters not where the buying is done and really, we simply cannot keep ignoring that fact.
The excellent service of our beloved Minneapolis corporate citizen, Dayton’s, which later became Field’s is a thing of the past. Most days in the dreary Macy’s stores it is difficult to even find a sales person; finding one who knows much about the merchandise is most rare, although I am often treated to a discussion of when they will be taking their next break.
Merchandise quality took a real nosedive shortly after converting to the Macy’s nameplate last September. In Menswear, unique brands such as Alex Canon and Gene Meyer that Field’s stocked were pushed out in order to make room for in-house brands of poor quality with high price points such as Alfani, INC, and Tasso Elba. Additionally, many designers fled Macy’s. That further reduced the choice to just a few national brands that every store carries that none of us really want to wear since everybody else will be wearing the same thing, plus all the in-house, poor quality, high-priced Macy’s brands.
The problems faced by Macy’s are much more serious than deciding from which locations they will do their buying. Their whole business model is flawed as they have made grave mis-judgments when they eliminated some of the best brands in American retailing.
Why the comment about closing half the stores in Chicago? You must know what most of us do as well. That Marshall Field’s was not the wild success in Chicago and elsewhere that many would like us to believe. In fact, per Target Corp. archived annual reports, in the last 5 years of their ownership, Marshall Field’s sales and profits were falling like a rock and they couldn’t get rid of it fast enough. It was the worst preforming division of the May Company stores and yes, some Chicago stores need to close. More like 4 of them though, not half (or nine). I have no doubt you have never purchased any of Macy’s private label merchandise and are not in the position to comment on it’s quality. As far as Christmas windows, those are planned years in advance and last years windows were planned before the Federated purchase! Field’s hadn’t been a stand alone company for decades. That’s because it could never have survived. It’s many failures over the course of it’s history are well documented. Get a clue!
There is a basic and underlying disconnect going on that Macy’s management is ignoring. They decided they want to create and be “Americas’s Department Store.” Macy’s never fully defined that term in a way the public understands or that differentiated their “new” idea from Penney’s or Sears who have had a national, if bland, presence for years. Additionally, it seems Macy’s did not stop to consider whether America actually WANTS another national department store, or whether there would be lost prestige to their brand in becoming ubiquitous. I suspect that at this point whether Macy’s has a fully centralized or a regional buying structure is almost irrelevant.
Centralization of Macy’s would be great if they want to be Target or Kohl’s or JCPenney.
Macy’s should retain regionalized buying because what sells in SF isn’t going to sell in Boston. Styles are different, tastes are different.
My impression of Macy’s is that it generally attracts a slightly upscale consumer who likes slightly upscale brand names.
Like gravity dragging down a rocket, Macy’s once again draws us in. Macy’s current approach is clearly a compromise between having one buying office and 83–or however many companies it has swallowed up over the years–of them: is it a “good” compromise (one where the best features are combined) or a “bad” one (the worst features)? At this point, I’m not sure anyone can say for sure: most of the comments will be dictated by what one thinks of the macysization process as a whole, rather than a studied response to individual issues. And, of course, this issue highlights one of the downsides of scale: bad decisions now affect not just 1 or 5 or 126 stores, but 800+ of them.
I’m in the centralized buying camp yet for a different reason: Retail has moved away from demographics in favor of pyschographics (which begets lifestyle brands and lifestyle marketing). Localized assortments have a role, of course, yet technology now enables retailers to react to local dynamics and plan assortments for those stores accordingly from the central buying office. Remember that Wal-Mart’s much-discussed Plano prototype represented only a 3% change in product offerings from a traditional Wal-Mart (albeit, a visually-impactful 3%; which was the idea). On the branding side; however, retailers are moving away from automatically rolling out brands that test successfully in limited stores and instead are placing those brands in locations that support the lifestyles those brands represent. That isn’t regional buying, it is corporate strategy and brand deployment; an area in which Federated has long excelled.
It makes no difference whether buying is centralized or not. If psychographics (I had to look up the word) are key, then Macy’s situation is hopeless. Behavioral marketing…well let’s see. As a Chicagoan, I eat pizza stuffed with spinach (yum!), I don’t put ketchup on hot dogs (yuck!) and I shop at Marshall Field’s, NOT Macy’s. I do not like my salespeople dressed in black (it’s morbid or pretentious, take your pick), I do not like my Christmas windows based on a Broadway show and if I have to buy the same poor quality private labels that are for sale in 800 stores across the country, I’m going to save money and buy them from Kohl’s or Target. Macy’s problems have little to do with its buying offices and everything to do with this misconceived notion that all America wants to shop at Macy’s. If Macy’s wants to cut costs, I suggest closing half its stores in Chicagoland, including State Street. I would rather see the building turned into a hotel than further run into the ground.
Obviously, there are advantages and disadvantages to either centralized buying or regional buying offices. Either will only be as effective as they are operated. Macy’s has already alienated many local consumers in markets such as Chicago by dropping the name Marshall Field’s. Why not finish the job and gain the cost advantages of centralized buying?
Local consumers believe that everything is already centralized with the name Macy’s everywhere. A hybrid system with local buyers/merchandisers/category managers forwarding recommendations to a central buying office seems like the best approach to me. The central buyer’s job would be to find the best price and arrange the best logistics for the items that the local people request. Seems easy to me but anybody can be an expert when they have a forum and no responsibility.
I do not support Macy’s closing the Regional Buying Offices. I feel the offices are a point of differentiation for Macy’s. These offices represent a great opportunity to tailor local assortments for specific market needs.
Macy’s could approach the use of these offices more efficiently and achieve replicable results.
1. Focus on true local needs of the stores and consumers.
2. Focus and create opportunities for local events with products that resonate with a specific community.
3. Macy’s is trying to position itself as America’s Department Store. Show America that they can meet the needs of every community with specific products and promotions.
4. Show results–cost savings due to a reduction of offices is one thing–but to show sales increases due to local merchandising efforts would be a beautiful thing.
Anyone who doesn’t believe that the seven regional buying offices are a temporary, transitional, phase for Macy’s isn’t paying attention, nor are they students of history.
I’m going to agree with the comment above about the bulk of the merchandise is coming from corporate but “floor buyers” tweaking the assortment for local preferences. Mercantile stores worked that system beautifully and outlasted nearly all their regional competitors (ADG, Allied, Macy’s Inc, for example) who had far more centralizing buying.
I just visited my first Boscov’s store last week and I predict it is one to keep an eye on. Packed with shoppers of all ages and demographics, the first retailer that felt like a successful, traditional department store to me since the demise of Marshall Field’s.
How many critics have actually run retail stores? If Macy’s had centralized buying and comp sales were lousy, critics would say that local needs aren’t being satisfied, that central buying is suboptimal, etc. Almost certainly the reason for Macy’s poor sales figures: the May Company merger. The merger probably stretched the management, and there’s no doubt that certain shoppers resent the changes. Given the merger disruption, would critics suggest that Macy’s add more disruption by changing its buying structure simultaneously? Maybe one major disruption at a time is the prudent way to go.
If Target, Kohl’s and Penney can make centralized buying work, so can Macy’s. Penney made the transition from localized to centralized buying in the past ten years, and the move left them a stronger and more competitive company despite some of the cultural upheaval that it caused. If Macy’s is making noises about being more promotional (again), the savings need to come from somewhere and this is a logical place to start.
Macy’s needs to be careful, however, to ensure that it has great planning and allocation systems in place to be responsive to regional preferences. It’s all about the mindset: its centralized home store buying function hasn’t done a thing to correct content and promotional weaknesses in this area. So centralized buying won’t be a cure-all unless the product is right.
The regional offices should not necessarily be closed. Instead, the role of the regional office should be altered to accomplish the following objectives:
1) Continue a smooth transition of the past to the present–in other words, Famous-Barr shoppers in St. Louis need a “Famous-Barr” presence for a while until they transform to Macy’s shoppers.
2) Keep an active hand in regional events and practice regional norms to compete better with local entities.
3) More so than Kohl’s or Target, Macy’s needs to be the local department store chain where ever it has stores. New York, Cincinnati, Omaha, and Orange County, are all very different types of markets with different needs, norms, and events.
3) Be locally responsive to competition.
Without the right regional presence, Macy’s will not accomplish its full potential.
The department store industry was built by merchant princes. They owned a cluster of stores in their trading area, visited them regularly, listened to the staff and customers and built a local landmark. The strategy for Macy’s is to structure their clusters, place buyers for fashions, unique goods and services and promotions at each of them, then set up a national merchandising office for the basics–70-80% of the dept store assortment. The local buyers will be “on the floor” making sure their goods sell (and listening to staff & customers) while the central merchants will run the plan and the inventory system for all basics in all stores.
The Macy’s argument is about regionalization of merchandise. They feel that they can better serve the needs of their customer by offering “customized selections” by region. However, if you shopped their stores in various parts of the country, you’d likely find that 99% of the merchandise is the same.
They can cut overhead and increase buying power by centralizing their efforts. There is a lot of duplication now. Maybe a compromise is to keep regional planners, but centralize buying.
Quite honestly, I expected Macy’s to centralize everything awhile ago…it’s kind of a no-brainer.
I worked for Macy’s in the 80s in the Macy’s South region. We picked up New York and Texas stores that had fur-lined boots in them. We had to markdown so many items because they didn’t sell in that climate. Then we had to eat most of those markdowns in our bottom line at the end of the season. It was all done to cover their advertisements that ran each weekend. When they consolidated back to New York again, I saw inappropriate merchandise for the southern market. Sure it can be done, but it loses the flavor of the region and I don’t think they will improve their “National Brand” by missing the local needs of the markets. Let the critics complain, they’ve already pushed out a great Marketing Director. Retail isn’t just about the bottom line, it’s about creating an appeal that can’t be satisfied anywhere else.
I understand the need to centralize and the cost savings associated with centralization. But it seems that more often than not, when a merger in retail takes place and operations are centralized, market share is lost. There are countless botched mergers where local management is taken out in favor of centralization leading to a loss in market share.
It seems that with every nameplate change, market share dribbles away. Lazarus in Columbus was dominant to the point where the only place to go was down. Three or so consolidations later, I don’t see Macy’s as a force anymore even though this market was the birthplace of Federated. Likewise, with the Big Bear grocery chain, neck and neck with Kroger for number one market share. They saved a lot of money consolidating buying offices in New York, but they were clueless about their competition in Ohio … and where is Big Bear today?
Kroger does a good job juggling consolidation with maintaining a local flavor. Since one of Federated’s board members was also the retired CEO of Kroger, I would hope he is a strong voice in keeping Macy’s as local as financially practical.
One final note, if Macy’s doesn’t watch it and they centralize too much, they run the risk of being just another JCPenney or Sears.
I’m not sure if seven offices are overkill or not. It’s very important to know how each office is managed. If Macy’s has a different strategy for each one and give them real empowerment to decide, it can be a very profitable differentiation. But, to have seven nominal offices nowadays is a totally crazy condition. So, there is no way out. Macy’s must close them as fast as possible.
Field’s was not the May Company’s worst performing division. Does Lord & Taylor ring a bell?
Field’s average sales per store were much higher than most other retail chains, and their sales robust and increasing in 2004 and 2005.
The Field’s concept was doing quite well in the upper Midwest. The store’s focus on selling a broad range of upscale and moderate priced merchandise was doing much better as Field’s compared to the new Macy’s.