PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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The strategy also poses short term risks because consumers may not migrate quickly to the national brand, Garf says. “From a merchandising perspective, how nimble they can be when they cross-merchandise private-label goods through each of their web sites, and ultimately to the Macys.com site, is a big deal,” he says.
Federated also will have to deliver those private-label products to consumers in the various regions in a timely and cost-effective way, Garf says.
But Rosenblum says Federated’s web strategy likely will succeed. “This is something that if you just throw money at it, you can pull it off,” she says. “They can buy a lot of expertise.”
Even though Federated’s web retailing operations are still growing and evolving, Lundgren is optimistic. “It’s hitting its stride,” he told attendees at the NRF. “I used to think of Macys.com as a single store. Now, I see it as one of our single best stores and a store that’s still gathering momentum.”