Shoppers Not Sold on New Macy's Stores

A man walks past a window at Macy's Department Store, Wednesday, Jan. 3, 2007, in University Heights, Ohio. Federated Department Stores Inc. still has some wooing to do to convince shoppers at former May Department Stores Co. stores that Macy's is now the store for them. (AP Photo/Tony Dejak) (Tony Dejak - AP)

CINCINNATI -- Federated Department Stores Inc. still hasn't sold shoppers at former May stores on their new Macy's replacement.

Local loyalists to regional chains such as Filene's, Marshall Field's and Kaufmann's remain cool to the rebranded Macy's stores that replaced them, some analysts say. Cincinnati-based Federated changed the nameplates of 400 former May Department Stores Co. locations to Macy's in September, along with product selection.

The retailer's decision to switch the Macy's moniker for the 155-year-old Marshall Field's name still draws angry reactions in Chicago, and some shoppers in other cities say they miss their familiar stores. Some analysts estimate sales at the converted stores have declined over the past few months.

Federated acknowledges its strategy of building Macy's as a national brand will take time. The company has not been releasing sales figures on the former May locations, but said on Thursday that those stores improved in December from the October-November trend. Federated reported same-store sales rose 4.4 percent in December, below company expectations of 5 to 8 percent, hurt by unseasonably warm weather.

C. Britt Beemer, chairman and founder of America's Research Group, said his research indicates that former May locations may have lost 10 percent to 20 percent of the shopper base from a year ago.

"Clearly, Macy's stores have not won over the May customers to the degree that I thought they would," Beemer said. "They need to rethink how they can attract customers."

A Dec. 19 report to investors from Dana Cohen, a retail analyst with Bank of America, estimated that sales at newly converted Macy's stores dropped 11.3 percent in November.

The report said some possible contributing factors included the sudden conversion of all May nameplates and changes in product assortments emphasizing Macy's private brands and downsizing some national ones.

Cohen stressed that Federated's long-term strategies aren't wrong, but said management underestimated the effect of the changes.

Some analysts say J.C. Penney Co. and Kohl's have benefited from the May conversion problems, though Beemer doesn't think any one store has managed to "gobble up" May customers.

"They're scattering like the wind," he said.

Store environment and pricing also may be creating more challenges than expected.