While many business leaders claim to embrace change, Macy’s CEO Terry Lundgren may have learned that some parts of the past were valuable keys to customer loyalty.

Throughout its 150-year history, the midrange department store had grown by acquiring small regional department store chains such as Bamberger’s in New Jersey (1929), O’Connor Moffat in San Francisco (1945), and John Taylor Dry Goods in Kansas City (1947). These stores were usually renamed Macy’s within a few years. Besides economies of scale in advertising and back-office operations, Macy’s management thought that customers would be attracted to the cachet of a New York City icon in their cities and towns. While there was often nostalgia for the traditional local retailer’s name, the renamed stores generally prospered.

The purchase-and-rename strategy continued throughout the 1990s as Macy’s merged with Federated. Indeed, the merged department store giants were renamed Macy’s, Inc., and a strategy was in place to make the Macy’s name a national department store brand. However, the recent acquisition of the May Department Store chain by Federated/Macy’s meant the demise of some highly regarded regional chains: Filene’s, Jordan Marsh, The Broadway, Emporium, Hecht’s, Woodward-Lothrop, John Wanamaker, Bullock’s, I. Magnin, Abraham Strauss, Liberty House, Burdine’s, Goldsmith’s, Lazarus, and Bon Marche.

These acquired chains often had a loyal customer group that relished the unique heritage of the regional brand. The customers of Chicago’s Marshall Field’s department stores were particularly incensed when they learned in 2006 that Macy’s would replace the Field’s name. Field’s had always positioned itself as an upmarket brand that attracted middle- and upper-income customers, a notch above the typical Macy’s positioning. Its enormous flagship on State Street had similar historic associations and ritual destination shopping activity as to Macy’s Herald Square location. Macy’s may have its Thanksgiving Parade, but Field’s had the Walnut Room, Tiffany glass ceilings, and sections of high-end designer goods such as the 28 Shop. Field’s had also developed its local identity through its signature Frango mints, as much an embodiment of refined Chicago as the Field’s name.

Soon after the announcement of the name change, Field’s State Street location saw dozens of customers picketing and protesting. The anniversary of the name change is still marked by demonstration protests from those who had been Fields’ most loyal customers. Credit cards were cut up and mailed to Macy’s offices. The Macy’s outlets that had been Marshall Field’s reported slower sales, but the company’s strategy would not retreat to the past. While it had continued some signature items such as Frango’s mints and Chicago-themed tourist merchandise, Macy’s would not try to persuade Fields’ former customers to give the store another look. Instead, Macy’s would focus on attracting a new group of customers with exclusive merchandise from Martha Stewart, Tommy Hilfiger, and Donald Trump, as well as its Alfani and I.N.C. private label brands. It would further its shop-within-a-shop strategy with Thomas Pink shirts, Levenger leather goods, and an FAO Schwarz toy floor. The updated glitz would come with a wine bar added to the Walnut Room and its Christmas tree decorated by Martha Stewart.

Questions

1.How should Macy’s balance the strength in advertising and promotion from having a nationally branded store with the strength that comes from having a locally branded store? After all, do consumers in Chicago care that much about a Thanksgiving Day parade in New York City?

2.If Macy’s continues as a national brand, other than merchandising to local tastes, what can be done to make the store more local?

Note: This case was written by Professor Jan Owens, Carthage College, Kenosha, Wisconsin.