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A 21st-Century Marshall Field's for a 21st-Century Chicago

Part 1:
August 12, 2011

The story of our great city of Chicago--its very destiny as one of the world's premier cities--was forged with much thanks to Marshall Field & Company.  Thanks Field's, for your philanthropy--for the Art Institute of Chicago, the University of Chicago, the Shedd Aquarium, the Merchandise Mart, and of course, the Field Museum.  It is no wonder that five years later, four out of five Chicago shoppers still want Marshall Field's to return, especially to State Street.

Some say that if Marshall Field's were to return, it would never be the same as before, ... and in the most positive sense they are correct.  That is because Marshall Field's sustained its greatness by constantly reinventing itself while always adhering to a tradition of high quality, value and service. 

Consider that the man Marshall Field ran a world-renowned emporium in the latter half of the 1800s, yet during his lifetime he never saw the current State Street store completed, never heard of The 28 Shop, nor ever ate a single Frango mint.   All that was yet to come.  Marshall Field & Company kept changing, but always remained uniquely Chicago at its best--bringing internally renown to the city.

The Marshall Field's of the 1890s was not the same as the Marshall Field's of the 1920s, just as Marshall Field's in the 1940s was so different from the Field's experience of the 1970s. 

Marshall Field's on State Street was again setting a new standard for the American department store when it was dismantled into just another Macy's.  It is complete "bunk" that Marshall Field's wasn't on the cutting edge when it was replaced by Macy's in the mid-2000s. 

The most recent reinvention of Marshall Field's was presented on State Street in 2003.  Just eight years ago, with much fanfare, Marshall Field's pioneered the American version of the "store within a store" concept.  The concept's success grew, and a second implementation was planned for Minneapolis when Macy's took over.  The potential of the latest version of Field's was cut short by Macy's.

Just last week, the concept of "a store within a store" was cited as the future of department stores by Stephen Hoch, a professor of marketing at the University of Pennsylvania's Wharton School Business.*  While Macy's is cited as dabbling in the concept, Field's supporters know it makes complete sense for it to reenage at State Street under the Marshall Field's name because that would best attract the highest-quality and best-known brands and in-store shops that would not settle for being in Macy's.  The floors that have emptied out at State Street since Macy's took over attest to the power of the Marshall FIeld's name.

When we rally for Marshall Field's return to State Street, it is in part to celebrate its great history and even engage in some nostalgia.  But ultimately, with that history as a rock-solid foundation, we look to the future with great hope for a new Marshall Field's as Chicago's 21st-century internationally renowned emporium.

Part 2:
August 19, 2011


In last week's FieldsFansChiago.org Newsletter, we inaugurated a series of examples that make the irrepressible case for a reinvented 21st-century Marshall Field's for a 21st-century Chicago.

This week we answer those who say Marshall Field's could never come back by considering another extraordinary example of how an iconic company and brand can come back better than ever.  Please consider the story of Apple.

Apple was founded in 1976,  by "the Two Steves" of Apple (Wozniak and Jobs) who helped to jump-start the personal computer revolution, developing not only ground-breaking products but also a certain ethos with a highly allegiant following dedicated to quality and design in some ways not unlike supporters of Marshall Field's.

In the mid-1980s, under pressure from Wall Street, Apple eventually hired a more "corporate-minded" CEO.  When the dust settled, Steve Jobs--Apple's creative Polaris--was cast out in a contentious internal fight.  Many Apple loyalists were dismayed at Jobs' exile.  Jobs set out on his own, starting NeXT, Inc., an innovative niche computing company that never became mainstream.

Post-Jobs, Apple's fortunes increased for six or seven years, but at the expense of innovation and passion among its engineers, developers and customers.  Nevertheless, Apple's stock peaked in the early 1990s, and financial experts declared that the removal of Steve Jobs was vindicated.

Yet Apple's fortunes ultimately sank.  Quality and innovation skidded.  By 1996, Apple stock had hit bottom, its product innovation was of dubious potential, and its formerly legendary quality control was humbled.  Analysts started predicting the closing of Apple and that its plants would be sold to a rival for the manufacture of Windows-based PCs.  At that point, the minions of Apple fans were looked upon as naive for still pleading for the return of Steve Jobs to Apple.

But then the seeds of a miracle were planted.  Steve Jobs was asked back to Apple as a consultant, and Apple acquired NeXT.  After all these years, it did happen: the Apple loyalists' dream of the second coming of Steve Jobs was realized.  Then more unthinkable things happened.  In an amazing show of support, Apple's archrival, Microsoft, acquired 10% of the company to help it make a comeback.  Apple started to innovate with new products like the iMac, the original iPod and the rededication of NeXT's computer operating system as Apple's new Mac OS.

Apple came roaring back.

In 1996, any business expert would have thought you were crazy if you would have predicted that on August 10, 2011, Apple would exist as an independent company; be led by Steve Jobs; and be the United States' most valuable company.

But that's exactly what happened

Today, Macy's may be doing relatively well in the tumultuous business climate.  But history runs in cycles, with the best ultimately rising the top.  With four out of five Chicago shoppers still pining for the return of Marshall Field's, it is important to remember what happened with Steve Jobs at Apple.

Indeed, in business anything can happen--Marshall Field's can come back, a greater destination than ever.

Part 3:
August 26, 2011

Neiman Marcus & Bergdorf Goodman, Toys "R" Us & F.A.O. Schwarz,  Walgreen's & Duane Reade

In contrast to Macy's conversion of Marshall Field's, the national chains Neiman Marcus, Toys "R" Us and Walgreens have each acquired local stores, retaining and even enhancing their local stores' identities, much to the pleasure and satisfaction of  customers and shareholders alike.

In each of these three cases, the national retailers have recognized the local uniqueness of a local retailer that they have acquired and have used them as contexts for learning; as a way of connecting with local customers; and of building prestige. 

Neiman Marcus & Bergdorf Goodman
Neiman Marcus is a national upscale specialty retailer in the same category as Macy's Bloomingdale's stores.  Neiman Marcus has 41 stores coast-to-coast in 21 states plus the District of Columbia.  By comparison, Bloomingdale's also has 41 stores in 12 states plus a single store in the United Arab Emirates.

Despite Neiman Marcus' national reach, its parent, Neiman Marcus Group, continues to also run a single store as the even-more-upscale Bergdorf Goodman in New York City.  Neiman Marcus has no namesake store in Manhattan.  Furthermore, the two buildings that make up Bergdorf Goodman's Fifth Avenue store constitutes Neiman Marcus Group's largest location, with 25% more square footage than the largest Neiman Marcus store and 60% larger than the typical Neiman Marcus location.  Neiman's could have converted Bergdorf's so that they would have a New York City flagship. just as Macy's converted Marshall Field's on State Street so they could have a Chicago flagship.  Instead, Neiman Marcus Group respects and sees great value in Bergdorf's history, clientele and potential. 

Toys "R" Us & F.A.O. Schwarz
Founded in 1862, New York's F.A.O. Schwarz is considered to be the United States' oldest toy store.  Known worldwide for its New York City flagship,  F.A.O. is perhaps best known to Chicagoans for their Michigan Avenue store that operated in the 1990s and its operation of toy departments in Carson Pirie Scott's State Street flagship circa 2003 and at Macy's on State Street circa 2008-09.  

Despite its legendary history, F.A.O. Schwarz has experienced difficult times in the past two decades.  F.A.O. eventually filed for chapter 11 and was purchased by the massive Toys "R" Us conglomerate.  All  F.A.O's stores were eventually closed save for the beloved N.Y.C. flagship.

If Toys "R" Us had followed Macy's precedent, the F.A.O. flagship would have been closed since they already have an N.Y.C flagship.  Instead, Toys "R" Us valued F.A.O.'s history, tourism and inspirational spirit.  Toys "R" Us is even willing to print up special shopping bags just for one location.

Walgreens & Duane Reade
Duane Reade is a chain of New York City drug stores that grew to over 250 locations, permeating much of Manhattan and the New York City region.  Started in 1960, Duane Reade is not especially key to the Big Apple's history, but its ubiquity makes it a familiar store with which locals have a love-hate relationship. Despite a fledgling remodeling program, financial and management troubles over the past decade led to Duane Reade's acquisition by Deerfield-based Walgreens.  With 7,000 locations nationwide, including some in the New York tristate area, it would have been understandable if choice Duane Reade locations were kept and converted to Walgreen's while the more run-down and less desirable locations were closed.  Instead, Walgreens saw Duane Reade as an opportunity to connect with the unique clientele of New York City. 

Not only was Duane Reade kept as the store name, Duane Reade's remodeling program was accelerated, even creating experimental specialty-format Duane Reades in the Financial District, Upper Manhattan and Brooklyn.  Walgreens is using these stores to test new concepts that can then be rolled out at certain other Walgreens nationwide.*   Furthermore, certain Duane Reade brand items were expanded nationally to all Walgreens stores while Duane Reade's pharmacies were cobranded as being part of the "Walgreens Pharmacy Network."  The new Duane Reade in the Financial District will likely be the precedent for a new Walgreens rumored for State and Randolph Streets here in Chicago.  Rather than discard Duane Reade, Walgreens has created a newer and better Duane Reade in N.Y.C. that in turn influences newer and better Walgreeens nationwide.

All three of these cases illustrate how Macy's could rejuvenate Marshall Field's at State Street.  The return of Marshall Field's would create excitement and profits in Chicago, and, in turn, create a better Macy's, Inc. for its customers and stockholders. 

Bringing back Marshall Field's to at least State Street, just as Neiman Marcus has fostered its single Bergdorf Goodman's prime location and Toys "R" Us celebrates its very special F.A.O. Schwarz location, would restore the highest and best use to what has always been Chicago's premier retail destination.  Better yet, Macy's could do what Walgreens is doing with Duane Reade, using Marshall Field's as Macy's, Inc.'s  ultimate localization connection with what the customers overwhelmingly want.

Likewise, when Hilton Hotels took over the Palmer House and The Drake hotels, Hilton let those locations keep their storied, international identities, distinct style of service and, of course their names.  This was despite the fact that both hotels are mailine Hilton locations.

Based on these success stories and others like them, Macy's could bring back Marshall Field's, and in doing so it would unlock immense shareholder value, generate enormous goodwill among Chicago shoppers, and, most of all fulfill the ultimate value of this unique asset.

Part 4:
September 8, 2011

A Reborn Marshall Field's Means Greatness for Chicago, Macy's and the World

In 2002, the City of Chicago and all of the world celebrated the 150th anniversary of Marshall Field's.  A complete magazine section in the Sunday Chicago Tribune documented Marshall Field & Company's history and world impact.  The sweep of congratulatory ads from top-of-the-line vendors, fashion figures, designers, and public figures demonstrated the reach of Marshall Field's stature as a world-class institution.

But, never to rest on its laurels, Marshall Field's proclaimed that the first 150 years were just a warm up for the the 21st century.

The next 150 years of Marshall Field's began with--what else?--another reinvention of Marshall Field's on State Street.  Just eight years ago, in 2003, with much fanfare, Marshall Field's pioneered the American version of the "stores within a store" concept for department stores.  As noted in FieldsFansChicago Newsletter No. 28, today's retail experts are making much of the concept as the future of the American department store--and Marshall Field's was the first to implement it.  Even Macy's CEO Terry Lundgren has hailed the concept.

Across the Atlantic, other stores like Berlin's KaDeWe and London's Harrods are stores with one-of-a-kind locations experiencing great success with the "stores within a store" concept.  London's Selfridges--the store that traces its lineage to Marshall Field's--is the most prominent and successful example of this concept.

It is now time for Marshall Field's to come back better than ever by picking up where it left off on State Street, leading the way with  the "stores within a store" concept for its next act in the 21st century. 

While State Street would be restored to being the legendary Marshal Field's, Macy's could continue to operate the acclaimed Water Tower store as its Chicago flagship. 

As successes bear out over time, other suburban stores could be considered for designations as Marshall Field's at certain special locations.  Such conversions would be judicious so as not to oversaturate the market with Marshall Field's stores.

This one-of-a-kind emporium on State Street, when operated in the unique spirit of Marshall Field's, would achieve at least four objectives--but the benefits would be boundless for all involved:

* First, restoring Marshall Field's to State Street would reclaim for shareholders the maximum value of the Marshall Field's tradenames and its historic flagship building.

Marshall Field's tradenames are greatly underused corporate assets whose shareholder value and impact are grossly unrealized.  In 2004, just before Macy's acquired Marshall Field's, May Department Stores (MayCo) placed the value of Marshall Field's tradenames at $419 million.  By comparison, the combined value of all other ten MayCo department store tradenames--including Lord & Taylor--was just $183 million. (1)   Macy's tradenames combined were valued at $377 million in 2004 and  $487 million in 2007. (2, 3)  (Since 2008, Macy's no longer breaks out this amount in annual reports.)

The immense value of Marshall Field's tradenames is most fully maximized when they are used in conjunction with the historic State Street store.  Conversely, the maximum value of the State Street store is realized when it is operated in name and style as Marshall Field's.

* Second, restoring Marshall Field's to State Street would reinvigorate Chicago's international fashion, design and culinary reputation under Chicago's best-known name.

During a recent public forum hosted by Chicago Public Radio at the Chicago History Museum, Chicago Mayor Rahm Emanuel underscored how Chicago's greatness and growth hinge on maintaining its status as one of the world's 50 international cities. 

With Marshall Field's on State Street, Chicago had one of only a handful of the greatest department stores in the world; a local emporium with something for all; and a culturally rich, international institution that dramatically elevated Chicago's global status and influence.  It makes no sense to dramatically reduce the international prominence and stature of Marshall Field's and Chicago by operating it under a name and  style associated with New York CIty.  Is it really productive to grow Chicago's fashion, design and culinary reputation under the New York-associated brands of Macy's?  Utilizing world-renowned names likes Trend House, The 28 Shop, the Fashion Incubator and others can best maintain and build Chicago's stature when operated under the international name associated more than any other with Chicago--Marshall Field's. At the same time, Macy's, Inc. would have an international store with a unique identity for testing what could not be done in a relatively ordinary department store like Macy's.

* Third, restoring Marshall Field's to State Street would generate increased revenues for both Chicago and Macy's (or any department store operator).

Since the State Street store became Macy's, more than a few very respected shops associated with the 2003 "stores within a store" concept left and scattered to Michigan Avenue, Oak Street and other areas.  While Macy's has replaced some of these, the store still is not nearly up to the levels of occupation prior to the conversion.  This has resulted in the reduction of utilized selling space in the store and reduced cachet for what was once Chicago's third most popular destination. (4)  Escalators and elevators have even been walled off as a result of shrinking the sales floor of the store. 

Moreover, the emptied retail spaces appear to have resulted in property tax appeals and reductions from the Cook County Assessor's Office based on "partial occupancy."  Our preliminary investigation at the Cook County Assessor's web site suggests that the appeals for the six properties making up the State Street flagship resulted in a tax break of $1.9 million or 35% for 2009.  Such property tax breaks were not effective when the store was Marshall Field's flagship. (5)

Bringing back Marshall Field's would bring back a number of exclusive brands, labels, designers, and shops that left when Marshall Field's was discontinued.  Informally, we at FieldsFansChicago.org hear much interest in returning to the store should Marshall Field's be reborn on State Street.  Moreover, others eager would be eager join the revived emporium for the first time.

As presented in our last FieldsFansChicago.org newsletter, the examples of Bergdorf Goodman, F.A.O. Schwarz, Harrods and others demonstrate how a single, special destination store can reach customers in very unique and successful ways that their parent retail chains cannot.

The reintroduction of Marshall Field's at State Street with its "stores within a store" would thus generate more sales traffic and taxes.

* Fourth, restoring Marshall Field's to State Street would be a tremendous boost to the economy and spirit of Chicago while generating immense goodwill for Macy's.

For three consecutive years since 2009, FieldsFansChicago.org has conducted statistically rigorous, anonymous surveys of Chicago shoppers on State Street and Michigan Avenue.  The overwhelming yearning for the return of Marshall Field's has not wavered with four out of five surveyed insisting on the return of Marshall Field's to State Street. (6)

Restoring Marshall Field's to State Street would create immense positive buzz for Macy's, State Street shopping, Block 37, the Loop and Chicago.  In these difficult times, we have seen how offering something truly special and unique can be an overwhelming success.  Consider from our previous newsletter the example of Apple.  After almost folding 15 years ago, today Apple is a wildly successful company and retailer that has bucked today's difficult times by combining must-have products, top-notch service and a unique experience.

During a recent interview with Women's Wear Daily and other members of the press, Macy's CEO Terry Lundgren said that the time is right to test new concepts and for "encouraging a higher level of risk-taking across all functions...We have to try new things - all kinds - and if one of them doesn't work, that's OK."  (7)

As we begin the 21st century with difficult times, it is perfectly clear that restoring and reinventing Marshall FIeld's on State Street is a low-risk opportunity that would provide massive excitement,  profits, value and joy to all.  Four out of five shoppers overwhelmingly want Marshall Field's back.

One of our favorite blog entries comes from a Field's Fan named Zelda, who wrote,

"Now is the time for the restoration of Field's.  It would absolutely warm Chicago's heart, and people would turn out in droves to shop there.  If anything would get people to spend again, it would be such a turnaround.  Lord knows we could use a sign to reassure us that all will be well again.  That's what Marshall Field's stood for, if you think about.  In good times and bad, it was a gentle reminder of the good life.  A fine store was a reminder of tradition and quality, even in the Great Depression.  We need Field's more than ever."

Marshall Field's has long set an example for the spirit of Chicago.  Having survived fires, relocations, wars and economic depressions, the return of Marshall Field's is an eventuality. 

The first 150 years were just a warm-up.  Here's to the once and future Marshall Field's, a 21st-century emporium for a 21st-century world-class city, Chicago.


   (*) "Can J.C.Penney's New CEO Reinvent the Department Store?" Motley-Fool, Knowledge@Wharton, July 24, 2011, http://m.fool.com/investing/general/2011/07/24/can-jc-penneys-new-ceo-reinvent-the-department-sto
   (1) The May Department Stores Company Form 10-K/A for the fiscal year ended January 29, 2005.
   (2) Federated Department Stores, Inc. Form 10-K for the fiscal year ended January 29, 2005.
   (3) Macy's, Inc. Form 10-K for the fiscal year ended February 2, 2008.
   (4) Marshall Field's literature, 2005; also VisitFields.com (2005) Macys.com (2006)
   (5) Cook County Asessor's  Office Website, cookcountyassessor.com,  Property Search Database, Appeals.
   (6) FieldsFansChicago.org, 2011 Survey Results, http://www.fieldsfanschicago.org/survey2011.html
   (7) Womens Wear Daily, WWD.com,  May 23, 2011, "Macy's Speeds Up Innovation Agenda."

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