CHICAGO - The sprawling Macy's store on State Street here was once home to the premier name in Chicago retailing, Marshall Field's. But about a year and a half ago, Macy's forged one chain, with one name, out of Marshall Field's, Hecht's, Robinsons-May, Kaufmann's and other local department store names that it owned across the country.
But Macy Inc.'s same-store sales were 1.3 percent lower last year than in 2006, and Chief Executive Officer Terry Lundgren is changing course, ditching the nationwide cookie-cutter approach in favor of tailoring merchandise at the world's largest department store chain by targeting local tastes.
"What the consumer wants in the Galleria of St. Louis is different from what the consumer wants in State Street Chicago, or what the consumer wants in Portland, Oregon," Lundgren says. He wants 15 percent of the merchandise in stores to reflect local preferences.
Over the next several months, Macy's on State Street will begin stocking more brightly colored clothes and men's all-white suits, items that store manager Linda Piepho noticed were favored by her store's urban clientele. In cosmetics, she plans to add a greater variety of makeup shades to attract trendier shoppers, while adding larger 3.4-oz. bottles of perfume for thriftier shoppers.
The new strategy, called "My Macy's," is a stark reversal for Macy's and Lundgren, who set out to end the decades-long slide of department stores by creating a huge national chain that had more influence with vendors and stronger marketing, and by airing fewer expensive local TV and print ads and more national ones.
After purchasing rival May Department Stores in 2005 for $11.5 billion, Lundgren dropped 11 venerable names to create a cohesive national identity for the more than 800 stores under the Macy's nameplate.
In some ways the plan worked - Macy's got Martha Stewart to create a line of products exclusively for the chain because of its immense reach - but pressures on Lundgren are growing as the economic slowdown worsens. In his annual shareholder letter last week, he said 2007 results were "softer than we had originally anticipated" because of a weaker economy but added that Macy's had done better than most of its primary competitors in the crucial fourth quarter.
