Federated Direct Embraces Macy’s, Bloomingdale’s and Fingerhut Catalog, E-Commerce Arms

Federated Department Stores Inc. will consolidate its disparate e-commerce and catalog operations under Federated Direct, a new division designed to create retail cohesion within the group.

The division now holds responsibility for bloomingdales.com, Bloomingdale’s By Mail, macys.com, Macy’s By Mail and Fingerhut Companies – direct-to-consumer brands that account for nearly 10 percent of Federated Department Stores’ 1999 revenue of $17.7 billion.

“These extensions of our retail brand in the catalog and e-commerce arenas need to reflect the Federated brand and be integrated with the total business strategy of the company, which is a retail strategy as opposed to a venture-capital kind of Internet growth strategy,” said Carol Sanger, Federated’s vice president of corporate affairs.

Federated Direct will be based in New York, not at its parent’s Cincinnati headquarters, Sanger said yesterday (March 23). Jeffrey Sherman, president of Bloomindale’s, has been named chairman/CEO of Federated Direct.

Federated Department Stores currently has over 400 department stores in 33 states nationwide. It owns bricks-and-mortar, catalog and e-commerce brands like Bloomingdale’s, Fingerhut, Macy’s, Lazarus, Rich’s, The Bon Marche, Burdines, Stern’s, and Goldsmith’s.

Until now, bloomingales.com and Bloomingdale’s By Mail reported directly to executives of Bloomindale’s department stores. Macys.com, Macy’s By Mail and Fingerhut have operated under the Federated Direct banner since last April, a month after Federated Department Stores bought Fingerhut.

Before this announcement, Federated Direct had no physical presence. But it did have a CEO in William L. Lansing, who also headed Fingerhut. Lansing was chairman of Fingerhut since May 1999 and president a year before that. The Fingerhut chairman’s post has been abolished.

Yet Federated isn’t the first major U. S. retailer to consolidate its direct-to-consumer operations under one corporate label. Seattle-based Nordstrom Inc. beat it to the punch.

“Our catalog operation is already part of Nordstrom.com,” said Shasha Richardson, spokesman for Nordstrom. “It’s appropriate because the fulfillment structure for the catalog is also the same function for Nordstrom.com, the Internet operation.”

Conversely, Wal-Mart Stores Inc., the world’s largest retailer, has taken a risk-balancing approach and spun off Wal-Mart.com. The Bentonville, AR-based retailer in January announced a partnership with venture capital firm Accel Partners for Wal-Mart.com. Wal-Mart is the majority shareholder.

Wal-Mart said the spin-off would benefit from Palo Alta, CA-based Accel’s technical expertise as well as Silicon Valley’s talent base.

Accel in February announced a joint venture with New York leveraged buyout specialist Kohlberg Kravis Roberts & Co. Called Accel-KKR Internet Corp., the alliance will provide finance and people to companies that want to integrate their online and offline assets.

That refrain resonates with Federated Department Stores’ strategy. The retailer ideally would like its Bloomingdale’s, Macy’s and Fingerhut e-commerce and catalog brands to walk in lockstep with their terrestrial counterparts.

“We want them to become extensions of our national brands,” said Federated’s Sanger. “We want them to continue to grow and become larger contributors to the bottom line of the company and we want them to reflect in these venues what our stores reflect in the physical venues.”

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