Tuesday, June 06, 2006

Name change has hurt Macy’s

Note from Steve: Be sure to check out Michael Meckler's take on this issue at Red-State.com

Decision to drop ‘Lazarus’ not a hit in central Ohio.

Jeffrey Sheban

COLUMBUS, Oh. - Macy’s is not as big a draw in central Ohio since the chain’s name was changed from Lazarus last year, market research indicates.

In 2005, customer visits to Macy’s in the Columbus market declined 4.5 percentage points, or by more than 50,000 people, according to the independent marketresearch firm Scarborough Research.

The drop was steeper than Lazarus experienced during the previous five years combined.

Parent company Federated Department Stores changed the Lazarus name on six department stores and two furniture stores in central Ohio in March 2005, ending a 154-year run for a brand that had become synonymous with shopping in Columbus. The first Lazarus store opened in 1851 Downtown and grew into a regional chain of more than 40 stores in Ohio and four other states.

The change was part of Federated’s strategy to retire regional names, such as Bon Marche, Burdines, Goldsmith’s, Lazarus and Rich’s, in favor of a single national brand: Macy’s.

Federated also is converting 400 stores acquired last year from May Department Stores, including Kaufmann’s, to Macy’s. By the end of the year, the company plans to operate 850 stores, most of them under the name Macy’s.

Chicago-based retail analyst James E. Dion said the Columbus market-share data, the first he’s seen compiled, suggests to him that Federated might have misjudged consumer sentiment.

"I think it’s a huge warning flag," he said. "The customers are basically saying, ‘We liked our hometown department store. We liked Lazarus. We trusted it.’ "

Shopper Libby Benson agreed.

"I shopped Lazarus for many years. I went every time I had a chance," said Benson, a model for Lazarus in the 1970s.

While she continues to shop at Macy’s, she’s spending more time in rival Nordstrom and specialty shops.

"Since Lazarus left, I kind of shop around," she said.

According to Scarborough Research, Benson is not alone. Lazarus foot traffic declined modestly between 2000 and 2004, the last full year for the Lazarus name. Nearly 320,000 central Ohioans, or 28.7 percent of adults, said they visited a Lazarus in 2000.

By 2004, the number had declined to nearly 306,000, or 24.3 percent of adult shoppers.

A year later, less than 252,000 adult shoppers, or 19.8 percent of the market, said they visited Macy’s.

"Normally, you would not expect that level of decline," Dion said. "Lazarus absolutely had value as a name, and the customer is saying one size does not fit all."

Store numbers don’t account for it. Since 2001, Lazarus has closed five central Ohio stores: Downtown, Heath, Henderson Road, Northland and Westerville. Since 1997, it has opened four: Easton, Polaris, the Mall at Tuttle Crossing and Tuttle furniture. The company has said the new stores have more than twice the sales volume of those they replaced.

Other department stores, including Sears and JCPenney, have lost market share in the period, while Target and Wal-Mart have gained share. Newcomers in the market — Kaufmann’s, Kohl’s, Nordstrom, Saks Fifth Avenue and Von Maur — also have siphoned customers from Macy’s.

Federated spokesman Jim Sluzewski said the Cincinnatibased company doesn’t disclose customer traffic, and he declined to comment on the Columbus data.

But he said it’s too soon to judge the drawing power of the Macy’s brand, which will not be marketed aggressively on a national basis until the fall, when all the May stores are rebranded.

"At this point, the customer is waiting to see," Sluzewski said. "There’s always concern when we change names because change is difficult. But customers always tell us it’s what’s inside the store that’s important with them."

That’s how shopper Michael Sanders of Gahanna sees it. The 35-year-old father of two hasn’t scaled back his Macy’s shopping compared with Lazarus because the new stores meet his needs.

"To me, it’s the same," he said, leaving the Macy’s at Easton last week with a purchase. "The only thing that changed is the sign on the outside and who I send my payment to."

Neva Kraatz of Reynoldsburg sees more differences between the two, however, and prefers Lazarus.

"Since the change, I’m finding less brand-name assortments and more private labels at Macy’s," she said. "They tend to get more vanilla."

Kraatz also misses the high level of community involvement and philanthropy of a homegrown department store.

"Local businesses give back to the community," she said. "Given the choice of two stores right next to each other, I’d definitely go to the one I felt supported the community."


  1. This is bad news for Federated, largely because the company has its roots in Lazarus and Ohio. The "new" nationwide Macy's better have one hell of a marketing plan if it hopes to retain shoppers who hold allegiance to regional names.

    In all fairness, though, we're going to have a wait a few years to see if the conversion to Macy's was a wise decision. This data might prove to be an anomaly. Macy's will soon operate in scores of markets, supplanting over a dozen local names, and it will take time to ascertain the larger trends.

    Ms. Kraatz's comment demonstrates some of the consumer "disconnect" that will hurt Macy's. Macy's in Ohio may not be a "local business," but neither was Lazarus. Ms. Kraatz and other shoppers don't care that Federated has owned these stores for decades...they care about the "local" store name.

  2. When people can look back fondly on Christmas, Back-to-School and other firsts at a store, the emotional attachment is very hard to break. Burying over a century of brand equity is a dumb move.

    True, Lazarus stores were units of a holding company, but the consumer doesn’t really see this unless they study the retail industry or travel around a bit and observe. Federated is largely invisible as a corporate entity, always has been. But people knew The Bon, Rich’s and Burdines’s as quality regional stores, and their collective memories of the golden days of those stores speak volumes.

    I’m disappointed that Macy’s isn’t working in Columbus. As much smack as I’ve talked about the Federated-May merger, the synergies that are being attempted by rebranding do make sense on an administrative and marketing level. The problem is, obviously, people aren’t connecting with the brand and see it as an intruder into their markets. This same thing happened with Marshall Field’s in Detroit, where customers rejected the new nameplate even though the ownership and marketing were identical to Hudson’s.

    I agree that it’s way too early to make a judgment on this plan. Federated deserves time to fully implement Macy’s to see if in fact they can turn it into a national name. Obviously I have my doubts, and I’ve explored the future of Bloomingdale’s surviving as a separate division in a scenario like this, but the wheels are in place to make this happen, and the company, Terry Lundgren, and in short, the entire department store industry hinges on Federated’s ability to deliver what they promised.

  3. In Atlanta, Macy's eventually took away both of the big name hometown stores, Davison's first, then Rich's. They competed for decades and offered Southerners 2 choices in department stores. As a kid, we had family in Atlanta and when you unwrapped a gift and it was in a Rich's box, that was neat.

    The biggest complaint is that Macy's has no roots or cultural relvance in the commuities they've taken over. Rich's meant the Pink Pig, the Clock, the great downtown store ...like they said, they were "A Southern Institution." I hope Macy's doesn't create a monster that becomes like Wal-Mart.

  4. What's interesting about Federated burying all of its regional marketing is that they did it on their own and used the Macy's name change to justify it.

    It's devious and it will come back to haunt them in the end.

  5. It'll haunt them in the end. Even after naming it "Lazerus-Macy's" for years.

    Think.. Hecht's will go directly to Macy's.

  6. Who needs Armani when you can Alfani? Who needs Ralph Lauren linens when you can have Charter Club for the over inflated prices of Macy's!

    Renaming Marshall Field's is the ultimate mistake, soon to take over renaming Coke.....