All of sudden, the idea seems so 1990s: Spin off your dot-com so the hip, fast-moving techno-somethings who run the company won’t be bogged down by the corporate suits who only want to do things the way they’ve always done things.
Today, doing things the way they’ve always been done is known as leveraging your brand and infrastructure and it’s driving more and more multi-channel strategies. The latest: Federated Department Stores Inc. last month roped Macys.com and Bloomingdale’s By Mail back into the corporate structure to operate directly under their namesake store divisions. “There is greater potential in more closely aligning these direct-to-customer channels with the marketing strategies of the department stores,” says Terry J. Lundgren, Federated’s president and COO.
Jim Okamura, retail analyst with J.C. Williams Group in Chicago, says the realignment makes sense, as more retailers are organizing into a brand structure instead of dividing into channels that don’t coordinate marketing and merchandising. “Many of the barriers to multi-channel integration are internal,” he says. “In many cases, getting the online management team together with the stores management team was awkward. They weren’t communicating and weren’t aware of the other’s activities.”
Federated had moved Macys.com and the Bloomingdale’s catalog outside of their branded divisions and into a corporate-serving Federated Direct unit in 1999, following acquisition of Fingerhut Cos. Inc. which included several catalog and e-commerce retail operations. Macys.com was intended to support all of Federated’s e-commerce activities. “When direct-to-customer was a larger part of the business, it made sense to have Macys.com focused on all e-commerce, bringing the brands together,” a spokeswoman says. “Today it’s a much different world.” Federated sold Fingerhut last summer.
Under the new alignment, Macys.com president Kent Anderson will report to Macy’s West president Michael J. Osborn effective March 1. This will enable Macy’s to exert more direct control over a multi-channel strategy that supports the Macy’s brand, such as better coordinated cross-marketing and cross-merchandising strategies, the spokeswoman says.
Okamura adds that the move toward a brand-based multi-channel organizational structure is emerging as a new best practice for the retail industry.