Friday, September 08, 2006

House brands heavy at Macy's - Federated uses a legion of designers to help set its clothes, other products apart, increase profitability

FIELD'S FINAL DAYS
House brands heavy at Macy's - Federated uses a legion of designers to help set its clothes, other products apart, increase profitability
By Sandra Jones
Copyright © 2006, Chicago Tribune
Published September 8, 2006


When Marshall Field's officially converts to Macy's on Saturday, the star of the show will be Macy's in-house brands--a contingent of clothing, handbags, costume jewelry, cookware and even furniture that takes center stage.

Federated Department Stores Inc., parent of Macy's, is banking on designing and selling more of its own merchandise, allowing it to offer lower prices and make a higher profit. In-house brands account for 18 percent of Macy's store sales, higher than most department stores. Federated plans to bring the in-house brands at the newly converted Macy's stores up to that same level within the next two years.

The strategy is key to winning over shoppers who have complained for years that all department stores look the same. And it's a linchpin in the efforts to woo Chicago shoppers, many of whom are irritated about losing the Marshall Field's moniker.

"I'd like to see how they feel two months from now," said Macy's North Chairman Frank Guzetta, during an impromptu interview while touring the former Field's store at Old Orchard shopping center in Skokie in preparation for Saturday's big event. Guzetta is betting that the changes will restore Field's long string of declining sales.

With about $95 million in annual sales, according to industry estimates, Old Orchard is one of Field's largest-volume stores and a significant contributor to the 63 Macy's stores that will make up the Macy's North division Guzetta runs out of Minneapolis.

Federated, which also owns Bloomingdale's, employs scores of designers who watch fashion trends and create affordable versions for Macy's. It's an operation that rivals the size of some manufacturers.

One example: In women's clothing, Macy's generates more sales from its in-house traditional sportswear line called Charter Club than from Ralph Lauren, the powerhouse traditional sportswear vendor also available at Macy's, Guzetta said.

"It's very clear that Macy's private label will be given a lot more prominence," said Donald Soares, principal of Capgemini's Midwest consumer products and retail practice. "The very high-end brands that don't fit with the Macy's profile are probably going to be replaced."

Indeed, designers Prada, Miu Miu and Jimmy Choo are already gone, while Yves St. Laurent has scaled back its handbag collection.

Instead, the in-house brands are displayed prominently throughout the store, taking up key positions near entryways and major aisles.

In women's clothing, Charter Club, I.N.C., Alfani and Style & Co. dominate the floor.

Alfani and Club Room by Charter Club have a big presence in the men's department.

And in home goods, Tools of the Trade cookware and the Hotel Collection bedding and tabletop collections are front and center.

The retailer also has agreements with well-known designers to offer collections exclusive to Macy's: T Tahari, a hip women's clothing line from Elie Tahari, is in stores now. O Oscar, an affordable apparel line from Oscar de la Renta, is due to arrive in February. And Martha Stewart will be selling her home collection next year. All are exclusive arrangements with Macy's.

Field's shoppers will also notice changes in the stores' layout--wider aisles, less clutter, sitting areas near the fitting rooms and wheeled shopping carts.

Sales clerks are required to dress in black in order to be more easily recognizable. And computerized price scanners allow shoppers to check prices themselves.

Amira Krvarac has lived in the Chicago area for a decade and walked out of the Old Orchard store on Thursday with two dresses and two pairs of shoes for her children.

"I think it's better," Krvavac said. "There's more to choose from and the prices are better. If I had more time, I'd shop more.

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