Exclusives Key to Macy's, Federated Fortunes

Retailer Confident in its Direction

Carole Sloan, June 5, 2006

Cincinnati —Macy's Home Store is moving in the right direction.

“We've got two of the best leaders in Tim [Adams, chairman] and Mike [Osborn, president], said Terry Lundgren, chairman, president and ceo of parent Federated Department Stores at the recent annual meeting here. “They have the business moving in a popular way. And now we're filling it will the best people; we have been cross-pollinating with non-home furnishings people.” Notable among them is Jeff Kantor, a former divisional head of May Co., now the president of furniture for the Home Store.

As a result of these moves, “I feel confident about home,” Lundgren said. “I feel great about where it is going.”

“Home product needs to be more and more differentiated,” a similar situation to that in the men's market, Lundgren related. The lack of differentiation was one of the reasons for the shift to centralized home buying two years ago.

Under the new thrust across the company, “more and more of our assortments will be unique to us — and what the customer wants. I don't care whether we make it or the market makes it.”

In line with this approach, Lundgren said that total company private label sales accounted for 18% of the business. May stores had 12% and Marshall Fields were at 9%. The goal is more than 30% on exclusive merchandise, he stressed.

In home, the company launched Style & Co., an extension to bedding of the apparel private brand geared to the “non-traditional” customer. Early response was good in the 153 stores that were part of the launch; 500 more are due to get the program in the fall. “It has the potential to be another private powerhouse brand in home,” like the company's Hotel Collection,” Lundgren offered.

Discussing the Martha Stewart Collection due to launch in fall 2007, Lundgren noted, “Some of our own private label, as well as down-trending resources and businesses, will be eliminated to make room” for Martha. And as far discovering and exploiting overall home objectives and opportunities, Lundgren suggested, “Maybe she can help us with this — what does the customer want from us?”

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