Darrell Sapp, Post-Gazette
Macy's threw a block party in September to celebrate the official switch from the Kauffman name at its Downtown store, but so far it hasn't been enough to bring in a new crop of loyal shoppers.
Of all the challenges facing Federated Department Stores as it moves to create a new national department store chain in Macy's, this one may be the biggest: People who don't shop at Macy's think its prices are too high.
That's according to researchers at the University of St. Thomas in St. Paul, Minn., who polled residents in the Minneapolis-St. Paul area on their holiday spending plans. The researchers believe the results can be applied to other markets, too, suggesting Macy's needs to tinker with its merger integration strategy if it is to keep value-minded customers from being lured away by the likes of J.C. Penney, Kohl's and Boscov's.
The findings come only months after Federated dumped several historic monikers such as Kaufmann's, Marshall Fields and Filene's and turned stores formerly owned by rival May Department Stores into Macy's. Cincinnati-based Federated acquired St. Louis-based May a year ago for $17 billion, a final move that freed it to put up the Macy's nameplate all over the country.
Getting former May shoppers to embrace the new concept has not been a smooth process. Even Federated Chairman Terry J. Lundgren has acknowledged as much. Last month, for example, sales results for established Macy's and Bloomingdale's stores beat expectations, but he described the former May location sales as disappointing.
Overall, department stores seem to be on the upswing, with more people planning to shop in that type of store this year than last, according to BIGresearch in Columbus, Ohio. Regular Macy's customers on a nationwide basis make more money than the average shopper and are less concerned about gas prices.
But the survey results from the Twin Cities area raise some flags. About 38 percent of the respondents said they didn't plan to shop at Macy's at all this holiday -- a group that had a much more negative view of the chain's prices even than customers who shop there unenthusiastically, said University of St. Thomas professor John Sailors.
Dr. Sailors didn't think the perception was necessarily fair since Macy's is the mid-market sister to the higher-end Bloomingdale's, but Midwesterners sometimes think a New York name translates stet expensive. He advised the retailer to find ways to get the doubters in the doors, perhaps by offering a free gift with a purchase, but recommended against deep discounts that might fuel the perception that merchandise was overpriced.
The survey also found 21 percent of respondents would not shop at Macy's as much than last year when the store was Marshall Fields. This group wasn't impressed with the new merchandise variety and quality. Macy's may have moved too quickly in replacing brands customers knew with its own private labels, Dr. Sailors speculated.
The care taken in preserving hometown traditions has been appreciated, said Dr. Sailors, who described a Minneapolis tradition of setting up a display from a children's story. In Pittsburgh, it has meant special holiday windows at the Downtown store and operating a Santaland upstairs. "That was the right thing to do," he said.
Tradition was important in Pittsburgh, agreed Macy's Midwest spokesman Nathan Shore, who was amazed by the crowds the city attracted for its annual Light Up Night celebration. He couldn't speak for the response of consumers in Minneapolis, which is part of the company's north division, but noted Pittsburghers have been exposed to Macy's longer. The former Lazarus stores were converted in 2005.
"We do feel that the response has been very positive in Pittsburgh," said Mr. Shore. He declined to break out sales results for this region.
The annual holiday survey was sent to 3,000 households in the Twin Cities area. The 250 responses matched the region's demographics. In addition to Dr. Sailors, researchers Lorman Lundsten and Dave Brennan worked on the survey.
The researchers did find 11 percent of shoppers were devoted Macy's fans. The group, which tended to have higher incomes and spend more on holiday gifts, liked the prices and the store layouts.Mark Lennihan, Associated Press
A woman shops at Macy's flagship New York store last month. A study found that one of the reasons Midwesterners have been reluctant to adopt Macy's is the perception that because it is New York-based, its prices must be higher.
Click photo for larger image.
Teresa F. Lindeman can be reached at email@example.com or at 412-263-2018.