Byline: David Moin

NEW YORK — At Federated Direct, executives say it’s more about building up the brand rather than building up the stockkeeping unit count.
The operator of, and the Bloomingdale’s and Macy’s mail order catalogs wants the experience of shopping online and by mail to closely reflect and enhance the experience of shopping the stores. It’s revamping the sites and integrating operations, with a major relaunch of the sites expected in the spring.
Mirror images they will never be, but, this week, Federated Direct took a big step forward. The firm started integrating fulfillment operations and merchandise offerings of and Bloomingdale’s By Mail, and created a Bloomingdale’s Direct umbrella organization.
Franz Weiglein, a 10-year veteran of Lands’ End catalog and e-tailer, was named president of Bloomingdale’s Direct, reporting to Dawn Robertson, president of Federated Direct. Weiglein was vice president and general merchandise manager of men’s wear at Lands’ End, and, before that, managing director of tailored men’s-and-women’s specialty catalogs. Prior to Lands’ End, he was a senior manager at The Orvis Co.
Last year, Federated did the same thing with Macy’s. It merged the Macy’s catalog and macy’ under one management to match up the merchandise and the images to better reflect what’s in the Macy’s stores.
“The integration of Macy’s catalog and is effective for spring, with a big part of that effort to drive catalog shoppers online,” said Jeffrey Sherman, chairman of Federated Direct, in an exclusive interview with WWD. The catalog pages, he noted, have formatted visuals and pages and some of the same written content as seen on The url,, is listed to provide the option of ordering online.
“That integration has met all of our objectives,” Sherman said. “The customer reaction is very positive. We’re ready to do the same with Bloomingdale’s.”
The Bloomingdale’s integration is expected to be completed by fall and not lead to any layoffs, Sherman said. The process of creating one team of buyers and planners for the catalog and e-commerce businesses is under way. Finance, Web management, human resources and technology functions will also be consolidated.
“In writing our mission statement, it became very clear to us that [Federated Direct] would be a business that’s created and driven on an integrated strategy with Federated’s existing stores,” Sherman said. “The purpose of Federated Direct is to enhance and expand the customer experience in the stores. We’re not really looking to bring in customers new to the brand. The sole purpose is to protect the brand loyalty.”
Federated, while seeking to elevate the online experience through integrations and consolidations, also seeks to raise the bottom line. The company hopes to turn its Internet business profitable in under three years. While countless other Web retailers have been posting more and more sku’s and mining for more customers seeking to make money, Federated, at least for now, seems to be taking an alternate course.
“It’s not our intention to put the entire Bloomingdale’s store online,” Sherman explained. “We will appropriately edit the assortment to provide the best of the store.” Bloomingdale’s has about 18,000 sku’s online and Macy’s has about 50,000. By comparison, each store has hundreds of thousands of sku’s.
“We want the sites to look and feel very much like what the customer would experience in the store,” Robertson added, and, in particular, reflect some of the fashion campaigns of the stores, such as Bloomingdale’s “Hot At” spring promotion, or the “Only At” promotion offering exclusives, in addition to categories where Bloomingdale’s excels, such as home textiles and Y.E.S. for contemporary fashion.
“With Y.E.S., we are charting new territory online. Not everybody has sold a lot of fashion online,” Robertson said.
With the Macy’s site, the intention is also to play up the strengths, including private-label and big-name brands, and such categories as home textiles and The Cellar.
With both sites, “gifts will be a very important category, as is the bridal registry,” Robertson said. The major gift-giving holidays, such as Valentine’s Day, will become bigger themes.
“Bridal is really the model” for where integrations between bricks and clicks can occur, Robertson said. “The bridal registry is a big percentage of our business online. You can register online and get a consultant in the store. You can also add merchandise online to the registry list, and check on the status of orders and deliveries,” saving trips to the store.
Online, “we will promote more than the merchandise,” including services and special events, she said.
But price in the virtual world won’t be promoted as heavily as it is in the real world.
“We really have not found price to be a significant driver to our sites,” Robertson said. While the Bloomingdale’s site does coincide with the pricing at Bloomingdale’s 59th Street flagship, “at Macy’s, we made a strategic decision not to,” she said. “We want to try to get away from the price mentality, though the technology to keep up with the pace of price breaks is there. We won’t be promoting sales. What we are promoting are special events, such as the Thanksgiving Day parade.”
Both sites have a long way to go. The Macy’s catalog, launched in 1998, is still not meeting expectations, whereas the 12-year-old Bloomingdale’s mail order book is established.
“I think we are still in the early stages of learning what Macy’s and Bloomingdale’s can sell online,” Sherman said. “In general, we are very pleased with our Internet business. In the fourth quarter, we more than doubled its business. I think the familiarity customers have with the brand enables them to overcome hesitations about shopping online.”
Sherman would not disclose sales figures for the Web sites, but acknowledged that the increases are off a small base of business. Last year, Federated projected $170 million in online sales for 2000, including macy’, bloomingdale’ and, compared to $60 million the year before. According to reports, the contribution last year was around $35 million. At its outset, the Macy’s catalog had a target of generating $250 million in annual sales within five years.
Macy’s Direct merchandising and planning operations are housed in the Macy’s offices in downtown Brooklyn, but moving to 1440 Broadway at the end of April, while finance, human resources, technical and support operations are in San Francisco. The creative organization is split between the two cities. Macy’s Direct is headed by Kent Anderson, its president.
Bloomingdale’s Direct is also located at 1440 Broadway, which is also home to Federated Direct. Besides the Bloomingdale’s and Macy’s direct businesses, Federated Direct operates the Fingerhut catalog and e-commerce businesses, which have been dragging down corporate profits. Federated is considering selling off the Fingerhut operations, or some of them. Earlier this year, it let go about one quarter of the Fingerhut staff.
By merging catalog and e-commerce buying and planning functions, among other functions, costs can be saved. More costs can be saved when catalog shoppers decide to purchase online.
“It can be a cheaper transaction over time,” Sherman said. “The fulfillment can be quicker and more efficient, but only if you satisfy all of the customer’s expectations.”