Department Stores

Macy’s is rethinking at least portions of its approach to homogenization; JCPenney proclaims its national identity is a plus; Sears Holdings keeps shuffling its deck in the hope of producing a winning hand.

“What the consumer wants in the Saint Louis Galleria is different from what the consumer wants in State Street Chicago or wants in Portland, Ore.,” says Macy’s CEO Terry Lundgren, who wants 15 percent of the merchandise in each of the chain’s stores to reflect local tastes. This, even as the company has mandated that each Macy’s store should have a toy department operated by F.A.O. Schwarz.

With $2 billion in cash and manageable debt, Penney is in good shape to weather any rough going in the economy, according to chairman and CEO Myron E. Ullman. Nationally, he says, “there’s more spending power above us than below us, so we’re well positioned between the upscale department stores and the discount stores to take advantage of it.” The ones to worry about are regional operators lacking a broad-based cost structure to ride out a downturn. Thirty years ago, there were 65 department store companies, he says. “Now, we have a couple of solid competitors that we respect.”

It’s difficult to predict what the future holds for Sears. Amid quarterly losses, management changes and sagging sales, investors are growing impatient. Dillard’s is battling choppy waters, too, having admitted to entering some markets it shouldn’t have and announcing plans to rein in costs. The company will continue closing stores; six are slated to close this year.