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Press ReleaseCan Federated Save the Department Store?Retail industry analyst Merrill Lehrer comments on Federated Department Stores' 'reinvent' initiativeSAN DIEGO, CA - Dec. 20, 2002 -- As retailers battle for holiday sales, none are fighting more tenaciously than Federated Department Stores. The industry giant quietly rolled out a new store prototype, called "reinvent," to 42 stores nationwide in mid-November, to their Macy's, Lazarus, Rich's, Burdines, Goldsmith's, and The Bon Marche divisions. But with Federated's November same store sales down 7.4% from last year, will the upgraded stores "wow" consumers? Has Federated gone far enough to save the department store and turn around their sales decreases? Not quite, says one industry expert. Retail consultant Merrill Lehrer, president of Retail Samurai Sales and author of Retail Detailed: Secrets of Selling Retail Chain Stores, was invited to tour a "reinvent" store with a Federated spokesperson as part of an Atlanta Journal-Constitution article published about Federated's changes. Later, he visited a "reinvent" Macy's store in San Diego. "These improvements are nice," said Lehrer. "Federated stores are beautifully merchandised. But I just didn't see the 'wow' factor in either of the stores. That's when a customer enters a store and is highly impressed. And neither store did a good job of communicating these changes to customers." The "reinvent" stores feature improvements like central checkouts near exit doors, fancy shopping carts, upgraded fitting rooms with swank waiting areas, Internet kiosks, and "playaway," a supervised enclosed play area for children. Federated's changes are a good start, according to Lehrer. But the upgrades are not enough. "It's going to take more than an improved shopping experience for Federated to compete with stores like Target and Kohl's who have spent a lot of time and money on their branded fashion and strong prices. A big driver of customer traffic today are stores that offer low prices. Federated stores are not synonymous with low prices." In spite of Lehrer's concerns, Carol Sanger, head of media relations for Federated Department Stores, said, "some items are better priced than [Federated's competition]." But Sanger admitted, "We need to do a better job of communicating" that advantage to customers. Another major improvement was directional signing, "to help shoppers find different departments, which was an improvement, but it was still confusing," explained Lehrer. "We followed one sign in Atlanta to exit the store, but when we made the recommended left turn, there were no signs offering further direction." Clearly, Federated hasn't worked through all the issues yet. The Atlanta Journal-Constitution reported that Bert Szabo, Federated's Regional Director of Stores, said, "This is a laboratory for us. We do not have a read -- it's too new to get a read on it -- until we get through the holiday season, we won't know." Federated's Sanger claimed double-digit increases in several departments at the "reinvent" stores. Still, says Lehrer, "I don't think these changes are enough. If Federated wants to dramatically impact shopping patterns, it needs to focus on some specific issues beyond improving the shopping experience and merchandising, both of which the "reinvent" initiative addresses." Lehrer suggests Federated focus on key item pricing -- lowering the prices of very visible or competitively shopped merchandise to compete with the rest of the market. Also, they need to offer top-notch sales help if they are unwilling to cut prices radically. A former employee of Federated, Lehrer worked for three divisions of the company in the past. "I enjoyed working for them and would get personal pleasure from Federated succeeding," he said. "The bottom line is that Federated is still up against competitors that are hammering them on price, fashion and value," Lehrer finished. "Will the 'reinvent' changes be enough? I'm not convinced. But ultimately, can Federated 'reinvent' themselves -- clearly, they're trying. Can Federated save department stores? We'll have to see how the customers respond. Ultimately, the success of Federated's new prototype will be decided by shoppers." Merrill Lehrer is available for interviews on Federated's "reinvent" campaign, the state of the retail industry, or the complexities of selling merchandise to retailers. CONTACT: Merrill Lehrer Retail Samurai Sales 858-613-0400 (office) 858-442-0203 (cell) mlehrer@san.rr.com www.retail-samurai-sales.com |
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