How to Kill a Brand
I’ve been meaning to write this for weeks. Thankfully, Randy Saunders over at the Perfect Customer Experience has done much of the work to make my case in his recent post. The focus of this rant is Macys, or more accurately, Federated Department Stores, who in 1994, acquired the brand. Shortly after, they began the process of rebranding all their other holdings to the Macy’s name in order to facilitate a national brand advertising strategy.
Macy’s had been through rocky times in the 80′ and eventually filed for bankruptcy in 1992. Nevertheless, millions of Americans who lived in markets served by one or more of Federated’s other brands, typically viewed Macy’s as something more than the mid-level department store that it really was. Chalk this mystique up to the annual Thanksgiving Day parade which prominently features their Herald Square flagship store. To those folks who had never been in a Macy’s, this magnificent store was Macy’s.
I live the mid-Atlantic, where the Hechts brand has ruled for many years. In 2006, we learned that our Hechts were to become Macy’s. Unfortunately, the change did not deliver something better than what we already had. I had hoped that the change would bring some of the higher end fashion lines that I had seen in the flagship store. No such luck. In fact, prior to the changeover, they actually began eliminating some of the more interesting lines of mens clothing in favor of more of the same conservative stuff that you can get anywhere in central Virginia, and house brands. I used to shop at Hechts frequently. Since the changeover, I have been in Macy’s twice and will likely not go back.
This may be just my experience, but I have suspected that many others have been experiencing the same thing as Federated has been renaming all of their holdings. Randy’s post seems to back that theory up:
A new report from Dana Cohen, managing director of Bank of America Securities reduced Federated from a recommended “buy” to “neutral,” in part because of flagging sales at Marshall Fields and other ex-May stores. Although Federated’s legacy Macy and Bloomingdale’s stores reported a 4.4 percent gain, the same-store sales at hundreds of former May Department stores were down by 11 percent.
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.
“The key issue we are facing is that management miscalculated the impact of these changes,” said Cohen.
Another report drom WSL Strategic Retail suggests that converted May locations may have lost 10-20 percent of their shopper base from a year ago because “They are asking shoppers around the country to give up a brand that a lot of them have had for a long time and have been emotionally attached to, whether it’s a store or product brand.”
Local brands under Federated worked. Tey were more expensive to operate with national brands and on economies of scale for national advertising, but the customers generally liked what they had. Federated’s strategy ignored the customer and the results speak for themselves. To many, the Macy’s name brought high expectations, but in the end, has not delivered and that’s how you destroy a brand.