Does Macy’s tell Penney?

by Alexandra Biesada, February 28th, 2007, 7:00 am

The once-popular phrase “Does Macy’s tell Gimbels?” has faded from use as fewer people remember Gimbels, Macy’s retail rival on New York’s Herald Square for much of the last century. Gimbels disappeared in the 1970s, joining other famous names such as B. Altman in New York, Lazarus in Cincinnati, and more recently, Chicago’s own Marshall Field’s, in the retail graveyard.

Field’s and Lazarus were consumed by Federated Department Stores, which has become the nation’s largest department store operator largely by swallowing beloved local chains and renaming them all (except for Bloomingdale’s) Macy’s. Led by the dapper Terry Lundgren – whose mission is to reinvent the American department store by attracting younger shoppers– Federated is set on making Macy’s a national brand with all the benefits that come from such heft, much like Wal-Mart has done at the discount end of the market. (In fact, Federated plans to change its corporate name to Macy’s Group in June.)

Lundgren’s chief rival for the hearts and dollars of Middle America is Myron E. Ullman, the talented merchant who heads  J. C. Penney. Ullman is credited with staging an impressive turnaround for the dowdy 105-year-old company, capped by the premiere on Sunday night’s Academy Awards ceremony of its “Every Day Matters” marketing campaign. (That couldn’t have been cheap!) The campaign is designed to build and deepen an emotional relationship with shoppers, while Federated is busy trying to make nice with Chicagoans irate over the renaming of Marshall Field’s.

Penney and Federated are using many of the same tactics to make their stores more stylish and appealing, chief among them is signing exclusive deals with big name designers. Federated has enlisted the likes of Martha Stewart and Elie Tahari, while Penney has signed Liz Claiborne and Nicole Miller, and has partnered with cosmetics retailer Sephora to open small in-store Sephora shops in its department stores. Penney has also lassoed a new line called American Living, designed at Polo Ralph Lauren, to debut next year.

After years of losing sales to specialty stores and discounters like The Gap (before its death spiral), Bed Bath & Beyond, and Target, merchants Lundgren and Ullman appear to be staging a comeback for department stores. They’re also creating a new rivalry for the 21st Century.