Macy's holiday strategy aims for cheerful new customers

CHICAGO — The bronze signs on the department store's exterior walls still read Marshall Field's, but to Rick Roche, the transformed 10-story Macy's on Chicago's State Street is an unwelcome invader.

"They're not going to get any of my business," huffed Roche, 52, a reference librarian from Downers Grove, Ill.

Roche unceremoniously cut up a Macy's credit card after the retailer acquired Field's and other regional department stores as part of an $11 billion buyout of May Department Stores in August 2005.

Then in September, Federated Department Stores took its Macy's brand nationwide, when longtime retailers with regional appeal such as Portland's Meier & Frank, Filene's, Kaufmann's, Robinson-May, Strawbridge's and Foley's were transformed into Macy's locations.

With Christmas and its voluminous sales around the corner, the most New York of department stores — with its "Miracle on 34th Street" fame and nationally televised Thanksgiving Day parade — needs to prove to the rest of the country that it has improved the shopping experience at the local department stores.

To woo customers, Federated executives are launching an all-out offensive of holiday cheer, blanketing stores coast to coast with lavish displays and emphasizing over-the-top Christmas traditions of its predecessor stores.

"This is really the year that Macy's will have that one shot to show the markets that they've replaced the traditional retailers with a new and improved Macy's," said Marshal Cohen, chief industry analyst for the market-research firm NPD Group.

Already, the task is proving difficult.

During Cincinnati-based Federated's third-quarter earnings this month, executives acknowledged sales in the former St. Louis-based May stores were weaker than expected, especially among home goods. The category, which includes items from furniture to linens, accounts for 15 percent of Macy's sales.

Executives said home-goods sales are lagging nationally but have been particularly tough in former May stores where employees are still learning about the new products.

But they're still optimistic, especially as Macy's shoppers, new and old, gravitate to the store's private-label clothing lines, such as Alfani and I.N.C.

"Change is hard for many people, but also change is exciting, so that's how we feel," said Susan Kronick, vice chairwoman of the nation's biggest department-store retailer. "I think we'll have lots of people experiencing the magic of Macy's."

The transition has gone smoothly in some communities. But nowhere has the task of luring shoppers proved more vexing than in Chicago, where fiercely brand-loyal protesters still pass out anti-Macy's fliers and thousands have signed petitions asking Federated to keep the 154-year-old Field's moniker.

A survey released Nov. 14 by consulting firm Deloitte & Touche USA showed a quarter of Chicago-area shoppers said they would shop less at Macy's this year than they did at Marshall Field's.

Nationwide, only 9 percent of customers said they'd shop less at the new Macy's stores than they would when the sites were operated under a May name.

Complicating the problem in Chicago is a perceived change in the quality of merchandise available compared with the once-upscale Field's.

Macy's bruised even more Chicago egos when it posted in-store signs at the State Street site that incorrectly named three of the four surrounding streets. The signs mistakenly referred to streets as avenues and avenues as streets.

"There are people who won't even go in the stores at all," said Jim McKay, a 43-year-old architecture professor who runs the Web site www.FieldsFansChicago.org. "A lot of them feel like their Chicago traditions have been taken over by a New York name and that it can't be Christmas under that name."

In Pittsburgh, where Macy's replaced the 120-year-old Kaufmann's chain, the city's flagship store has been painted, remodeled and covered with new carpeting.

To honor tradition, Macy's is using Kaufmann's arched plastic pine boughs and Christmas trees and is keeping the store's traditional Thanksgiving parade.

Shirley DiIanni, a retired bank employee and piano teacher from Kennedy Township, Pa., said she thinks the store looks "fresher," even if she misses some of the Kaufmann's clothing and shoes that have since been replaced by Macy's labels.

"They're nice, but there are several that I bought for many years that aren't here now," said DiIanni. "And I miss that."

In Boston, a Macy's store in the city's downtown retail district is carrying on the Filene's traditional tree-lighting ceremony the day after Thanksgiving.

This year, the 50-foot spruce tree that will serve as the ceremony's centerpiece has been erected on the marquee roof of Macy's, a store across the street from the original Filene's location, which is being sold and redeveloped.

Federated executives are banking on nostalgia-hungry shoppers to continue their holiday traditions.

In Chicago, that means being served by tuxedo-clad waitstaff in the seventh-floor Walnut Room, dining under a 45-foot "Great Tree" and browsing for gifts.

Macy's has also added valet parking and reopened a vintage entrance to the store — flanked by a doorman and a private elevator — that leads to a high-fashion section inside the flagship location.

"It's very important that we make a great first impression," said Ralph Hughes, Macy's regional vice president who spent 14 years working for Marshall Field's before the fall transition. "Those are the ones that last, and we know that."

To soothe shoppers, Macy's also added clothing, handbags and accessories made by nearly 50 Chicago designers to its State Street store in September.

The plan to crack even the most entrenched shopper may be working.

"I have been a die-hard Marshall Field's fan but I still like Macy's too," said Julie Emil, a 38-year-old Chicago resident who said she thinks Macy's clothes are more fashionable than those at Marshall Field's. "Taking over Marshall Field's, it doesn't always seem right. But I'll get used to it."

In Seattle, Federated rebranded the regional department stores it owned in 2003 with the Macy's nameplate, and Seattle's 113-year-old department store The Bon Marché became Bon-Macy's.

In 2005, Bon-Macy's became Macy's and almost all references to the Bon were removed from the stores.

But Macy's has retained the annual holiday lighting of the Bon's Christmas star at Fourth Avenue and Pine Street, which is to take place this year on Friday at 5 p.m.

Associated Press business reporters Daniel Lovering in Pittsburgh and Mark Jewell in Boston contributed to this report.