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Is Macy’s Name Change a Disaster or Brilliant?

Short term, the choice might not have been wise. But in a longer time frame, the one-brand framework makes sense.

In 2005 Macy’s decided to change the brand names among their portfolio of brands which included Marshall Fields, Bon Marche, Rich’s, May, Lazarus, Foley’s, Filene’s, Burdine’s and Goldsmith’s. Each of these brands had a rich history often associated with a beloved family and a customer connection that goes back to see Santa for the first time.

The decision was pronounced as idiotic or worse by many – including me. Why would you throw away such powerful brand equities and customer relationships involving emotional benefits? After two years the decision seemed as bad as predicted. Sales were substantially down, possibly caused in part by merchandise and promotion decisions. However, resentment over the change from loyal customers, although not quite as virulent as the reaction to New Coke, was very visible and, without question, was one factor affecting sales.

After five years, however, it seems very possible that the decision was the right one for Macy’s. Financially, the brand was having its best year and the pay-offs from the name change were materializing. One advertising effort accessing national media replaced some 16 different advertising campaigns. Further, 16 different product assortments were replaced with a high level of commonality.

The single-brand helped generate a cohesion that made that process feasible. Perhaps as important, the Macy’s Thanksgiving Day parade, a centerpiece symbol of Macy’s, could be justified and fully leveraged. It no longer applied to just a few stores. The parade, owned by the Macy’s brand, is a unique brand, a real energizer and its impact was severely restricted without scale.

“The single-brand helped generate a cohesion that made that process feasible.”

One Macy’s brand, Bloomingdales, survived the one-brand initiative. Bloomingdales is more upscale and New York fashion-forward than the other Macy’s brands. It is one thing to replace a brand with one with comparable associations but it is quite another to replace a super premium brand with one of lesser stature. Macy’s made the right call on that one. It is somewhat reminiscent of Marriott’s decision to maintain Ritz-Carlton as a separate brand.


FINAL THOUGHTS

Macy’s was able to take the long-run view and ride out the difficult few years. They were blessed with deep pockets and an economic environment that was not unduly challenged. Not all firms will be in that category and have the luxury of a five-year time frame and might have to take a less aggressive name transition strategy.

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