Hecht's stores to vanish after nearly 150 years

THE BALTIMORE SUN

The 148-year-old Hecht's name will disappear next year, and anchor stores in three Baltimore-area malls will close under Federated Department Stores Inc.'s plan to convert most of the stores it is acquiring from May Department Stores Co. to the Macy's nameplate.

In addition to Hecht's, which grew from a Baltimore furniture store started by Samuel Hecht in 1857, the Filene's, Famous-Barr and Kaufmann's names will disappear. In all, 330 stores around the country will change their names to Macy's.

Federated also said it will close 68 stores in malls where it and May overlap. In the Baltimore area, Macy's stores at White Marsh Mall, Owings Mills Mall and Marley Station Mall in Glen Burnie will close by next fall, and Hecht's stores there will be renamed Macy's. The stores to be closed accounted for about $2 billion of the companies' combined sales of $30 billion in 2004.

Most employees will be reassigned to surviving Macy's stores. The company said it eventually expects to reduce employment in the Macy's stores through attrition.

While the move had been expected for months, it is still expected to have a wide impact, sending mall owners scrambling to fill vacant space, reducing advertising revenue at newspapers and television stations, and changing shopping customs for millions.

Hecht's and the other department stores will keep their names at least through the Christmas shopping season. Federated will begin shutting stores next year.

Shareholders approved Federated's $11 billion takeover of May this month, creating the nation's largest department store owner. The deal is expected to close in the third quarter, pending regulatory approval.

The name conversion is part of a strategy by Cincinnati-based Federated to make Macy's a national brand. This year, the company converted Rich's in the Atlanta area, Burdines in Florida, Bon in the Northwest, Lazarus in the Midwest and Goldsmiths in Tennessee to Macy's.

Like many department stores, Hecht's has struggled in recent years to find its identity between high-end stores such as Nordstrom, discount stores like Target and specialty stores such as Gap and Old Navy.

Federated said Macy's has a more recognizable name than the regional stores and that research showed customers reacted favorably to the name.

"The Macy's name is an iconic brand," said Carol Sanger, a Federated spokeswoman. "People know the name Macy's. People who live in a city without a Macy's know it because of the Thanksgiving Day parade and Miracle on 34th Street."

Cathy Bonney, a New Jersey native going into the Hecht's at Marley Station Mall yesterday, registered for her wedding at Macy's because she knew her family could shop there.

"If anything, I'm pleasantly surprised" about the name change, she said. "It seems to make sense."

The company expects the conversions to give Macy's more marketing clout, and more leverage in negotiating ad rates and deals with vendors.

"If you have more stores, you can spread the advertising costs over a bigger base," said Richard E. Jaffe, a retail analyst with Legg Mason. "If you're bigger, it's better. You can do more on a national basis than you could afford to do if you were only based on the East Coast."

Others say the Federated merger is the latest in a string of retail consolidations over the past decade that is creating a homogenized shopping experience.

"They claim there are efficiencies, and I'm sure there are, but I'm sure you lose more when you wipe out a trusted and often revered local retailer and replace it with a faceless national monolith," said Adam Hanft, CEO of Hanft Unlimited, a marketing and branding company.

Even as Hecht's has struggled with stale inventory and a lackluster mall environment, the department store still evokes nostalgia for people who have shopped there for years.

Naomi Jessop went to Hecht's at Marley Station yesterday to pick up a shirt on sale. She said the loss of the name would be a blow to shoppers in the region.

"Hecht's is a giant here," said Jessop, who has shopped at the department store for 50 years. "I'm sad to see it go."

Hecht's shopper Kathy O'Roark said she never shops at Macy's and isn't going to start once Hecht's is gone.

"It's terrible," she said as she entered the Marley Station Hecht's. "This is going to hurt Marley Station more than it will help it. The mall will lose business."

But Hecht's isn't the first department store to get swallowed up by a competitor. Storied regional sellers such as Hutzler's in Baltimore, Garfinckel's in Washington, Wanamaker's in Philadelphia and Davisons in Atlanta have disappeared in the past 20 years. In those cases the nostalgia wasn't long-lasting.

"You always get customers who will send you their cut-up credit card and say they'll never shop in your store again. But there aren't too many of them, and, realistically speaking, it does not tip the scale," Sanger said. "It's a different world today, and people are used to name changes in the business."

Yesterday's announcement left mall owners wondering how they would fill the space the Macy's closings will leave.

General Growth Properties, owner of the malls in White Marsh and Owings Mills, said it was too early to tell.

"There's not a lot of information that we have or that we can even talk about at this time," said spokesman David Keating.

At Marley Station Mall, there had been rumors about Hecht's name change and closings, but the announcement still caught mall manager Charmaine Lawrence by surprise.

"It's a great opportunity to bring in new tenants to further our offerings," Lawrence said. "We always look for the opportunity."

But malls in recent years have had a harder time keeping customers and tenants as they've faced more competition from Main Street-style centers and the return of some retailers to urban cores. Fewer expanding department stores are left to fill large spaces.

"This is not good for malls," said Erik Gordon, a marketing professor at the Johns Hopkins University. "There aren't a lot of people banging on doors to get in a space that big."

Area brokers said mall owners will need to look past traditional department stores as anchors.

Some have turned to big-box retailers such as Target while others have divided up large anchor spaces into smaller stores. At Security Square Mall in Woodlawn, an Asian mall and grocery serves as an anchor.

"In the short term, it will be a challenge. In the long term, it will be an opportunity," said Thomas H. Maddux, president of KLNB Retail. "I think getting this space back gives these centers an opportunity to reinvent themselves."

The Macy's conversion will likely cut ad revenues of media outlets across the country. Federated and May combined were the nation's 10th largest advertiser in 2004, spending about $1.3 billion on radio, television and newspaper advertising, according to TNS Media Intelligence, a New York firm that tracks media spending.

TNS predicts the companies will spend a little more to promote the conversion to the Macy's name in 2006, but that by the next year Federated will spend 5 percent to 10 percent less on advertising than it and May have spent.

Local newspapers, which now get two-thirds of the companies' advertising spending, likely will be the hardest hit. Hecht's is The Sun's largest advertiser.

"Since the landscape seems to make Macy's a national brand, it now creates an opportunity for the company to make use of national media, whether it be network television, cable television or national newspapers," said Jon Swallen, director of research for T&S; Media. "If local newspapers are already getting every two out of three dollars, they're at greatest risk for the greatest cutbacks."

Sun staff writer Lizzie Newland contributed to this article.

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