Brand Vs. Street: The Classic Clash Fells Macy's CMO

MacDonald's Long-Term Vision Lost Out to Public Co.'s Short-Term Pressures

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NEW YORK (AdAge.com) -- The surprise departure of one of the country's top chief marketing officers -- Anne MacDonald from Macy's -- underscores a disturbing reality for all marketers: Increasingly, public companies and long-term brand building don't mix.
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Anne MacDonald

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Just 13 months into the job, Ms. MacDonald, 51, was replaced by longtime Federated executive Peter Sachse, the very man whose duties Ms. MacDonald assumed when she joined. While Macy's won't discuss the matter and Ms. MacDonald did not return phone calls for comment, a person close to the situation said, "She was locked in a strategic stalemate with Federated management." It was the all-too-familiar conundrum of merchant vs. marketer: Merchants drive sales in quarterly bursts with coupons and price promotions; marketers build brand equity over years.

But public companies -- and CMOs -- are being afforded less and less time to show more and more results. And Federated is under the gun from Wall Street to show results from its acquisition of May Co. in August 2005. It reported sales of $5.92 billion for the first quarter ended May 5, a decrease of 0.2% compared to the same period a year ago. On a same-store basis, first-quarter sales were up 0.6%. Management guidance to analysts was higher, for sales in the range of $6 billion to $6.1 billion.

Patience
"It takes time to build a national brand," said Marge Magner, the ex-CEO of Citi's global consumer group who is managing partner of private-equity firm Brysam Global Partners and Ms. MacDonald's former boss (Ms. MacDonald came to Federated from Citi). "Results don't get seen with such immediacy."

The philosophical divide appears particularly strong in the retail sector. Recruiter Sharon Spielman, managing director, Jerry Fields Associates, said "Many big-box retailers don't understand the investment of time and money needed to create a long-term brand image."

Indeed, numerous executives successful in nonfashion retail endeavors have fallen flat in stores. One example: former Walt Disney Co. executive Paul Pressler who moved to the Gap but struggled to boost sales there.

"You've to got provide equal emphasis on strategy and tactics," said John Costello, president of Pay By Touch, a provider of biometric authentication for retail transactions and loyalty programs, who has also held top executive marketing posts at Sears, PepsiCo and Home Depot.

"In retail, driving weekly sales is as important as building your brand, and you've got to have close partnerships with merchandising and store operations," Mr. Costello said. Retail marketers must partner with their internal constituencies in ways that aren't required in industries such as package goods and soft drinks. There, marketers develop the brand but aren't responsible for implementation, he said.

Had high hopes
Clearly Macy's had high hopes for Ms. MacDonald, a seasoned and highly regarded executive who oversaw Citibank's "Live richly" campaign. She was sought by Federated as a marketing maestro to turn Macy's into a household name and a destination retailer while also unifying its disparate department stores -- including Marshall Field's, Hecht's and May's -- under the Macy's moniker.

With her $1 billion budget, she wielded a lot of influence -- in fact, The New York Times last week credited her speech critical of newspapers to the Newspaper Advertising Bureau as one factor in the decision of the Bancroft family, owners of the Wall Street Journal, to consider a sale to Rupert Murdoch.

At the time of her hiring in April, Federated Chairman-CEO Terry Lundgren effused that Ms. MacDonald's "track record with iconic brands will help take Macy's to the next level of strategic marketing insight and innovation," noting that her mission "will be to lead us outside of the traditional realm of retail-store marketing." It appears now that Macy's wasn't so comfortable leaving that sale-cycle realm after all.

In the end, the explanation of what happened with Ms. MacDonald may be quite simple. Noting that Federated replaced Ms. MacDonald with her predecessor, one industry insider said Macy's might have questioned whether it needs as much "horsepower as she brought, or if they want to do what they thought they wanted to do."
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