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Macys.Com gets a canopy
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June 26, 1998: 12:13 p.m. ET
With electronic commerce booming, Federated launches Web subsidiary
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NEW YORK (CNNfn) - Is Macy's ripe for a Miracle on 34th Street.Com?
Parent company Federated Department Stores Inc. certainly thinks so. Hence its decision, announced Friday, to launch Macys.Com, the two-year-old Internet counterpart to America's best-known retailer, as a free-standing subsidiary dedicated to creating "a true cyber-shopping experience".
While scores of retailers maintain spiffy addresses in cyberspace, many of the sites are little more than an online pied-a-terre where shoppers may learn more about the physical stores -- but not buy anything. With its Macy's move, Federated is entering uncharted waters, creating a separate subsidiary, to be launched in October, devoted entirely to Internet sales.
Should the online subsidiary prove as successful as Macys.Com, launched in 1996 as an experimental site under Macy's West, Federated may follow suit with its other big-name retail stores, such as Bloomingdale's, Burdines, The Bon Marche and Lazarus.
Some of these sites allow consumers to load items into virtual shopping carts, and charge them to a credit card; but they are nonetheless adjuncts to the physical store, and do little or none of their own promotion. Macys.Com itself offers a range of merchandise and services, from a Bridal Registry to dress shirts and underwear, in a variety of sizes.
"The Internet -- much like our global mail-order catalog businesses -- represents a strategically important complement to our department stores in an era when convenience is becoming a more important component of the value equation for customers," said James Zimmerman, the chairman and chief executive officer of Federated.
It is unclear when -- or if -- other large retailers have similar plans. Jan Kniffen, a spokesperson for May Department Stores Co. (MAY), a leading national retailer with $12.7 billion in annual sales and stores such as Lord & Taylor, Hecht's, Foley's and Filene's in its fold, said his company doesn't discuss its business plans.
Several May stores offer informational Internet sites.
Kent Anderson, the president of Macy's West, who has headed up Macys.Com and will run the new subsidiary, envisions it as "a cyber environment that mirrors the department store in merchandise presentations and product offerings," with 250,000 items for sale.
Talking with IBM
Macys.Com also will allow customers to exchange or return merchandise at any of Macy's department stores worldwide. The company said it is in talks with IBM over a possible agreement to host the site, support systems development and offer guidance on issues relating to electronic commerce, known in the industry as "e-commerce."
Negotiations are also under way with Left Field LLC, an advertising and Internet marketing firm based in San Francisco.
Federated is one of the nation's largest department store retailers, with annual sales of more than $15.6 billion. The corporation operates about 400 department stores and 160 specialty stores in 36 States.
Shares of Federated (FD) were up 5/8 at 52-5/16 in composite trading on the New York Stock Exchange at midday Friday.
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