Federated to 'reinvent' home business
By Carole Sloan -- Furniture Today, June 21, 2004
Cincinnati — Cincinnati— Federated Department Stores plans to "reinvent 70% of the volume" in its home furnishings business under its new Macy's Home Store banner, according to Chairman, President and CEO Terry Lundgren.
He said the company will make the changes in an effort to reverse several years of slumping home products sales.
Reinvention could mean redoing the product mix or presentation at the five Federated divisions whose home business will now be coordinated by the Macy's Home Store organization. Burdines, the Bon Marche, Macy's East, Macy's West and Rich's/Lazarus/Goldsmith's — all the company's divisions except New York-based Bloomingdale's — fall under the Macy's Home purview.
By Oct. 15, Lundgren said, three full-line stores will be testing the reinvented home offerings.
He declined to identify the store locations, and cautioned that the reinvention will take time to perfect.
"We don't expect to get it completely right the first time," he said, speaking after the company's annual shareholders meeting here last month.
He said the changes are intended to reverse a slump in home sales throughout the company, except at Bloomingdale's, over the past several years. He did not specify how much home sales have declined.
Lundgren projects it will take a year for the home changes to fully take effect. "We'll see results the end of 2005," he said.
Furniture and bedding are key parts of the home business, which also includes products such as rugs, home textiles and luggage.
Federated said in February it was forming the Macy's Home Store to bring a more central buying and merchandising approach to the five non-Bloomie's divisions — each of which now includes "Macy's" as part of its name.
In part, Lundgren said the new approach will help fight "sameness" in home merchandise, because a central buying staff will be able to make faster decisions to change the product mix more often, and with greater buying power can lock up full product runs from suppliers to project a unique and exclusive styling. Merchandise still will differ from market to market based on regional consumer preferences, but there will be more consistency, he said.
While the company hasn't said whether it might drop the regional department store names, it does plan some national advertising of the Macy's brand.
"With the Macy name, we will get the efficiencies of marketing the national Macy's brand," Lundgren said.
While Federated will keep its reputation as a "promotional" department store, he said the company will cut back on promotional activity by about 20%.
He added that he had a positive feeling about the company's freestanding furniture, mattress and rug stores. Once the Macy's Home Store organization is fully in place, the company will look at adding more, he said.
Another part of the furniture business that has his support is putting mattresses and recliners in more full-line stores. A number of Burdines, Macy's East, Macy's West and Rich's/Lazarus/Goldsmith's stores without full furniture departments now have mattress or mattress-recliner presentations.
"I love it. I'm very happy with the results," Lundgren said, although he added that he's "not sold on" freestanding mattress and recliner stores under the Macy's East banner.
He does see opportunities where the company has "two boxes in the same mall" to improve sales by moving men's and home to one box and all apparel to the other. Already operating under this format are Aventura Mall and Dadeland in Florida for Burdines, and several Macy's West units.
The largest piece of the Home Store program that hasn't been resolved is area rugs, which has had its target consolidation schedule moved out to year-end or beyond, said Sue Kronick, Federated's vice chair. She said the various divisions run their area rug businesses differently, from completely leased to partially leased, and the company has to determine how it wants to approach this business.
