Macy's Grasping for Relevance, Not Just Cleaning House

(MoneyWatch)  Macy's announcement about centralizing its administrative and buying organization, and the accompanying the layoff of 7,000 workers, is drawing a lot of attention but getting lost in the ensuing discussion is the creation of regional merchandising districts, one designed to refocus the company's attention on local customer preferences.

The company has faced a big problem as it bought up regional department store chains and renamed them Macy's. A lot of the customers who had shopped those chains decided that the company was taking away their local traditions. Macy's responded in individual cases. For example, it brought production of local favorite Frango chocolates back to Chicago. Marshall Field, which had offered the locally manufactured treat, moved production in 1999 when the department store chain was under the ownership of Dayton Hudson, later Target Corp. Macy's move got it some good press in a town that has grumbled incessantly about the loss of the Marshall Field name, a Windy City hallmark.

Under its new plan, dubbed My Macy's, the company will develop 69 geographic districts each consisting of 10 to 12 stores around eight regional headquarters located in Chicago, Houston, Miami, Los Angeles, New York, Pittsburgh, San Francisco and Washington, D.C.

Each of the districts will have its own merchandising and planning staffs. They won't be doing any buying. That function will be centralized in New York. Rather, they will communicate recommendations that will help buyers select what's appropriate for their stores, said Jim Sluzewski, a Macy's spokesperson, with the "emphasis is on the core assortment, the sizes, the color selection and the brands that are right location by location."

District staffers should even be able to recommend that buyers select local suppliers to satisfy special needs. Eventually. "There will be some accommodation for local merchandise but not as immediate a priority," Sluzewski said.

And there's the challenge. For its strategy to be successful, Macy's will have to provide 69 little merchandising offices with enough authority to force the centralized buying operation to pay attention to their recommendations. When senior executives turn to other priorities, buyers may balk and Macy's harden into a monolith, making it vulnerable to more nimble retailers. Yet, if its centralized administration can successfully respond to local considerations, it could enjoy some positive results, as Costco has in employing both central and regional offices to maintain local relevance.

Anyway, the My Macy's initiative provides a method of gauging if the local part of the company's strategy is being effectively executed. If it carries too many black dresses and not enough peach in its Atlanta stores, the evidence would suggest Macy's district folks are getting the cold shoulder from New York.