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The Wait is Over

Carole Sloan -- Home Textiles Today, March 7, 2005

Well, it finally happened. “It” being the acquisition of May Department Stores by Federated Department Stores.

And if Terry Lundgren, Federated chairman, president and CEO, wasn't exactly letting out whoopees as he loped to the podium at a press conference after the announcement, his opening said it all — “I've been waiting two years” for this to happen.

Of course, what Lundgren got is not just May Co., but its '04 marquee acquisition, Marshall Field's, a prize that Federated backed away from when the price got too high.

Now the hard part begins — especially in the home store. Federated still is having challenges in terms of bringing its corporate Macy's Home Store concept together.

May Co. has its own challenges in the home, from its approach to fashion to its decision-making processes, while it's also behind the market in its private brand program.

As for Field's, its merchants have to be in turmoil with the changes that have taken place in the last decade or more. And while Federated is closer to the Field's image than May, it still doesn't come close across the board in home especially.

Discussing the private brand scenario, Lundgren was quite specific; “There will be a style-out” between the stores' brands “and may the best merchandise win.”

At this point, the marketplace is curious since no firm decisions will be made for some time. But the serious question is being posed — and that is the shrinking availability of choice for consumers. As retailers consolidate, size becomes power, power becomes dictated by process and while private brands and exclusive national brands are today's buzz words, they don't offer customers much in the way of newness, edginess and innovation in choice.

It is beginning to look much the same as it did when the mills began to consolidate. Rather than put extra effort into design, quality and innovation, the modus operandi became bringing stuff down to the common denominator to catch the price advantage.

Since the new Federated will be so dominated by scale, the likelihood of a small creative entrepreneur cracking that wall seems remote. What seems more likely is that entrepreneurs on both the supplier side and the retailing side will emerge.

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