NEW YORK (CNN/Money) - Federated Department Stores CEO Terry Lundgren said Monday his company's $11 billion merger with rival May is a first step towards "reinventing" department stores in the United States.

But some industry experts wonder if it's worth "reinventing the wheel," especially if it's one that may be outdated.

"When you're a cash cow like Federated, you should invest in a growth business and not another buggy whip company," said Howard Davidowitz, an independent retail consultant in New York.

"I had a conversation with Terry this morning and I told him that I don't support a decision to make a huge investment in another department store when many more consumers are shopping at off-mall retailers such as Wal-Mart, Target, Costco and Kohl's," Davidowitz added.

Indeed, department store chains have been posting weak sales as they battle with big discounters like Wal-Mart (Research) and Target (Research) on the one hand and trendy specialty retailers such as Abercrombie & Fitch (Research) or American Eagle (Research) on the other.

"Lundgren will really have to succeed in pulling something very different out of the hat if this [merger] is to succeed," said Ken Perkins, retail analyst with RetailMetrics.

"For the past two to three years, this sector is struggling very hard in terms of trying to excite the consumer, with the exception of the high-end players like Nordstrom or Neiman Marcus."

Lundgren saw it somewhat differently.

"Department stores are a vibrant form of retailing," he told reporters at news conference in New York, monitored via telephone. "We believe that growth through consolidation offers the best shareholder value and opportunity for the consumer."

Lundgren laid out a four-pronged strategy for the combined company: unique marketing to support a national brand; expansion and cost savings; better merchandising, and an improved in-store experience for shoppers.

"With the merger, we'll become stronger, faster-growing and more profitable than if we went ahead alone," Lundgren said. "The strength of our branding will be across twice the number of stores than we currently operate."

At the same time, Federated and May both operate mall-anchor stores. That means the merger is likely to create an overlap in a number of markets.

Lundgren didn't offer details about potential store closings or layoffs, but said the company would review the markets where the companies now operate.

Federated indicated that most of May's regional department stores will eventually be converted to Macy's or Bloomingdales. Regarding May's upscale Marshall Field's and Lord & Taylor chains, Lundgren said no decision had been made. "No doubt, these are both very well known retailing brands to the consumer."

Both companies also operate credit card divisions, which analysts estimated to be worth over $ 3 billion for Federated and $2 billion for May.

Regarding the credit operations, Federated CFO Karen Hoguet said the retailer was evaluating its options and would make a decision in the second-half of the year. Analysts speculated Federated might sell one or both of the units.

"We would look for a similar decision regarding May's credit business," Hoguet said.