Federated Department Stores made a decision in 2005 to reposition and consolidate 15 of its regional department store chains under just one national brand—Macy’s. This decision was in response to the decline in sales and profits that had hit the traditional department store industry, which was in a maturing stage and moving towards a downward trend for some time. Just three years later, in 2008, U.S. economy was hit with a recession that threatened the livelihood of many successful retail giants. While Macy’s did experience a significant drop in revenue in 2008 with a net loss of $4,803 million, compared to other department stores such as Mervyn’s that went bankrupt when the recession hit, Macy’s managed to stay in the game. Macy’s ability…show more content… In addition, Macy’s launched Everyday Value strategy program that promoted value pricing such that customers would be able to purchase products without having to wait for sales day and the availability of coupons to get the most bang for their buck. In this way, Macy’s would have a better chance to stay close to its customers, provide affordable luxury and find a viable middle ground.
While consolidation and repositioning efforts had their benefits, there were some challenges. Change is often very difficult as most individuals are creatures of habit. Thus, consolidation of department stores to one brand (in this case Macy’s) meant that existing consumers who had regularly shopped at their favorite department stores (such as Marshall Field’s in Chicago) would now have to adjust to new products, prices and services. In fact, the perception of some loyal consumers post consolidation was negative, complaining that Macy’s store had lower quality products and services. In addition, Macy’s had standardized its products and pricing nationwide to lower purchasing cost, however this tactic actually backfired. Standardization resulted in higher prices of products offered at Macy’s compared to the former regional department stores chains, thus consumers were apprehensive to shop at the