Macy's MacDonald must find elusive middle ground

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Transforming a well known regional retail name into a national icon is a bold play, even for risk-taker Anne MacDonald.

But Federated Department Stores Chairman-CEO Terry Lundgren is wagering that Ms. MacDonald, the company's new chief marketing officer, will help Federated do what no other department store has been able to: create a mid-range to upscale national brand in Macy's. Some stores like Sears, J.C. Penney and Kohl's have succeeded in a lower-range price point, but none in the middle.

Selecting a veteran marketer, as opposed to a merchandiser, is a major departure from the typical pedigree of those in Federated's top marketing echelons. "What a novel idea-having someone in charge of marketing who actually knows about marketing," said one ex-Federated executive.

Ms. MacDonald, 50, has a solid track record building consumer brands (she's worked with both Citibank and Pizza Hut). And those who know her say she's bright and sophisticated. "She's open to the new. She's good at embracing a new thing and funneling it into what's relevant and makes sense," said David Lubars, chairman-chief creative officer, Omnicom Group's BBDO North America.

Prior relationship

Mr. Lubars worked with Ms. MacDonald when he was at Fallon, the advertising agency she selected for Citibank following a review in 2000. "She said to us, Citibank has an image of a cold, steel and glass institution. She wanted us to turn Citibank into something-and this is her word-that's unbank-like."

A former account executive who worked at Grey Advertising and then N.W. Ayer, Ms. MacDonald moved to the client-side in 1993 as VP-brand management at Pizza Hut. She joined Citibank in 1997 as managing director- global branding communications and in 2004 became chief marketing officer for the consumer group, responsible for a multimillion-dollar marketing budget. While there, Ms. MacDonald helped develop, along with the unit's CFO, metrics on the marketing spending as well as a framework for marketing-program effectiveness.

Her decision to select Fallon over longtime partner Young & Rubicam was risky but paid off. Under her direction, Fallon created several memorable campaigns, including "The Citi never sleeps" and more recently, "Live richly." "If anyone can evolve and transform Federated, it would be Anne MacDonald," said Elizabeth Zea, partner at recruiting firm Gilbert Taney Farlie. "She's a hugely talented marketer as well as a savvy businesswoman."

Ms. MacDonald will have to unify numerous disparate entities under a single brand that has a spending potential of $1 billion. The company merged with May Co. in August, and this fall about 400 May store locations will be converted to Macy's, bringing the number of Macy's stores to over 800. A national launch is slated for September.

In addition, the company last week selected a new media agency-Publicis Groupe's Starcom Worldwide-to handle its initial $200 million media budget. Earlier this month WPP Group's JWT, Chicago, won creative duties for the launch project.

Consumers riled

The store conversions, which include Marshall Field's in Chicago, Kaufmann's in Pittsburgh and Famous-Barr in St. Louis, have riled many consumers. One group in Chicago even created a Web site,, to protest Federated's decision to ditch the Marshall Field name. (See story, right.)

Wrote one visitor to the site: "I believe the decision to change Marshall Fields' name is a total disregard for Chicago's history and traditions. I intend to never shop at Macy's...." Ms. MacDonald's challenge, said one marketing expert, "is to give consumers something new and better than what they had before with the local brands, so they don't miss the local brands."

Despite Ms. MacDonald's vast marketing experience, she'll need plenty of help from Federated's famed merchandising ranks, said Stan Eichelbaum of Marketing Developments, a retail research firm in Cincinnati. "The biggest fear in retailing now is: Where is the merchant voice? Yes, Macy's has to build a national voice, but it has to build a connection with the consumer. It doesn't matter if the name catches on if it's still not driving customers to the store."

Contributing: Matthew Creamer

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