A poor economy and continuing losses in its direct-to-customer divisions has forced Federated Department Stores Inc. to cut back on its e-commerce and direct marketing efforts.
The Cincinnati retailer said yesterday that it will stop selling on bloomingdales.com except through the gift registry. On macys.com, it will discontinue ready-to-wear apparel like petites, larger sizes, swimwear and career and turn its focus on gifts, jewelry, home and bridal items.
Offline, Federated has pulled the plug on the macys.com catalog, which until last year was known as Macy’s By Mail.
“This is a very fluid segment of our business,” said Carol Sanger, vice president of corporate communications at Federated. “It is an area of our business that is going to continue changing and evolving as we go forward.”
The announcement comes a few days after Wal-Mart Stores Inc. said Jeanne Jackson would resign as CEO of Walmart.com. It illustrates the difficulties faced by major retailers struggling to make their e-commerce operations profitable.
Bloomingdales.com, macys.com, and the Bloomingdale’s By Mail and macys.com catalogs are all part of Federated Direct, the retailer’s direct marketing division. No changes are planned for Fingerhut, which is also part of that division.
Federated’s changes will cost the company a one-time charge of $50 million to $60 million in fourth-quarter earnings. About 100 positions will be eliminated in the merchandising, administrative, technical support and programming areas.
All changes will be effective Feb. 1. After that day, Bloomindales.com will primarily become a marketing vehicle for the Bloomingdale’s store brand. The only e-commerce component will be through a gift registry in conjunction with WeddingChannel.com.
The site also will retain electronic order forms for buying from the Bloomingdale’s By Mail catalog, a 19-year-old book that will continue to mail. Macy’s catalog will not be that lucky. Launched in 1998, the book initially went to an estimated 2 million consumers on the Macy’s and Federated database.
Least affected of the lot is macys.com. Launched just before bloomingdales.com in 1998, macys.com garnered more attention from Federated. Not surprisingly, it performed better.
“We’re keeping macys.com,” Sanger said. “We’re going to expand categories on macys.com that work best for us and we’re going to pull back those categories that do not. That’s an ongoing process. The bloomingdales.com site had never had the amount of investment and attention paid to it as the macys.com site did. Macys.com was out there first. It was bigger. It offered more payback from the get-go.”
While the size of the bloomingdales.com database is not known, it is likely that Federated will not let such valuable information go to waste.
“That database is part of the assets of Federated Direct, which is the umbrella organization,” Sanger said. “So I would imagine there is some ongoing synergy there that will continue.”
Sanger would not say whether the decisions to ratchet bloomingdales.com back to a marketing vehicle had something to do with that brand’s shopping channel preference.
“Now had it been reversed and had bloomingdales.com been bigger first and gotten more resources, would it have done better than macys.com? Maybe. But that’s not how it happened,” she said. “So I don’t think you can infer anything from it other than where you spend the money you get the greater return.”