Macy's will emphasize private labels

Things have been tough for a while for manufacturers who rely on department stores as their principal channel. The channel's share has shrunk and the number of players has followed southward, to the point that it is almost a one-player channel -- Federated (aka, Macy's).

And for the manufacturer, it gets worse, in that Macy's is planning a survival strategy based on private label.

The strategy, detailed in a recent conference call with analysts, will involve the rollout of an estimated $2 billion worth of Macy's private labels to all May stores, as well as the introduction of some of May's brands to Macy's stores.

Further on, after discussing Federated's plan to "reinvent" the department store, the article adds:

The single most important factor of reinvent is Federated's merchandise, an increasing amount of which is one-of-a-kind. About one-third of Macy's 2004 sales of $13.6 billion was generated from merchandise that is exclusive or of limited distribution. That's up from about 25 percent in 2003.

Private label goods, such as INC, Alfani and Charter Club, make up 18 percent of that figure, or $2.3 billion. The balance is exclusive merchandise provided by national vendors such as Tommy Hilfiger.

By adding the May stores, Federated expects in the next year or two to nearly double sales of its private labels and to increase their percentage of total sales to 20 percent.

I tend to be very skeptical of fine-sounding but vague words and phrases like "reinvent". And as an alumnus of the department store biz, I tend to be skeptical of everything they do and say. But I can certainly agree that if there ever was a channel that needed reinventing, they're it.