Home Town Feeling

I was married in my mother’s wedding dress. She got it at Bullock’s Wilshire, and I had it hemmed there 33 years later. The fantastic art deco, totally L.A. facade housed a high-touch store that was an institution in its day. Bullock’s Wilshire is gone now. So are Bullock’s, Robinson’s, I. Magnin and a whole host of local department stores I grew up with in Southern California.

I was sad when they disappeared. Starting in the early ‘90s, retailers began centralizing corporate functions to wring costs out of their far-flung store operations. Store managers lost control over inventory, and their stature within their organizations began to diminish. Like the computer game Pac-Man, department stores gobbled one another up in search of economies of scale.

In hindsight, it looks like they should have taken a closer look at the intangible assets of the acquired businesses. The goodwill on the company’s balance sheet was largely overlooked in favor of short term cash flow improvements. Too bad. Now it looks like the pendulum may be swinging back.

The Chicago Tribune reported Sunday on Macy’s move to resurrect some of its “retired” brands, including Marshall Fields in Chicago. According to the story, "the steps are part of a pilot program in Chicago and a few other markets where the department store chain is attempting to customize its stores to local tastes after a two-year effort to 'Macy-ize' the hundreds of regional department stores it bought in 2005."

As a team from Bain & Company pointed out in their 2006 article in the WSJ, success at local customization “hinges on getting the balance right: Too much localization can cause costs to spike; too much standardization leads to stagnation.”

So, what are the dimensions that lend themselves to localization? Merchandise assortment, sizing, pricing, store design, and naming all make sense to tailor to the people and the place. Restaurants and grocery stores have known this for ages: McDonald’s serves bratwurst in the Midwest and pineapple in Hawaii.

Banana Republic loads up on small sizes in West Coast stores that cater to Japanese visitors. Origins is another example of a brand that has tailored some products for specific geographies, like its High Elevation Hydration Cream sold in the Denver-area stores. Estee Lauder, Inc., owns Origins, and a huge number of other cosmetics brands (Clinique, Estee Lauder, MAC, Aveda, Prescriptives, Bobbi Brown, and more). Most are offered in the cosmetics department of most department stores – it’s hard to tell one store from another.

What’s unique about the Macy’s situation is its robust portfolio of department store brands that have deep roots in distinct local markets. Selectively bringing back some of those brands can lend real local credibility to the chain and go far to break up the tedium of homogeneous shopping that characterizes today’s malls. As the ‘shop local’ movement accelerates, look for Macy’s to resuscitate more of these retired brands.