NEW YORK— Reaction to Federated Department Stores’ plan to launch a Martha Stewart home collection in 2007— creating an intriguing merchandising triangle linking Stewart, Macy’s and Kmart— generally falls into three camps:
• The Martha Stewart brand is strong and broad enough to encompass both Macy’s and Kmart, as long as Federated develops a clearly differentiated, upscale program.
• Kmart, as a longstanding outlet for the Stewart brand, could benefit from the halo affect of Macy’s branding strategy if shoppers don’t perceive a big difference between the products in both chains.
• Although it’s difficult to move a mass brand upmarket, Macy’s is a better fit for Stewart’s lifestyle image, especially now that Federated offers national distribution.
Many observers suspect the deal between Martha Stewart Living Omnimedia and Federated may hint at the tenuous long-term status of the Kmart-Stewart partnership.
Even Sears Holdings Chairman Edward Lampert sounded uncertain about the future of Kmart’s hold on the Stewart goods as he spoke to reporters at Sears’ recent annual shareholders meeting shortly after the Macy’s-Stewart deal was announced.
Lampert explained Sears Holdings decided not to put Martha Stewart Everyday goods in Sears stores because of the possibility the Kmart-Stewart deal would not be renewed beyond its currently agreed-upon end in 2009. This was in contrast to a brand-swapping strategy between Sears and Kmart that has seen longstanding Sears-owned brands such as Craftsman and Kenmore move into Kmart.
Some observers wonder if Stewart goods never made it to Sears stores because the two sides couldn’t agree on terms. Lampert reportedly has been trying to renegotiate the Kmart deal with Stewart to reduce Kmart’s sales minimums in the program.
The Kmart-Stewart agreement, which predates the merger of 2005 merger of Sears and Kmart, restricts Stewart from selling certain retailers, of which Macy’s is not one.
Federated, meanwhile, has expanded its department store base to more than 850 outlets in 45 states following its acquisition of May Department Stores— a move that offers Stewart significant volume potential as she crafts an upscale merchandising image on the Macy’s shelves.
Both Macy’s and MSLO are positioning their deal as a return of Stewart’s brand to the kinds of goods her fans formerly found in her catalog, an assortment significantly more upscale than those currently found at Kmart.
“The new Martha Stewart Collection at Macy’s will be … a chance for Martha’s customers to have access to the product they love, and to take the assortment in exciting directions,” Janet Grove, chairman of Macy’s Merchandising Group and vice chair of Federated Department Stores, told HOMEWORLD BUSINESS®.
“The Martha Stewart Collection will be at pricepoints that are attractive and familiar to the Macy’s customer,” Grove added. “Affordable luxury is the common denominator.”
A spokesperson for MSLO, said, “Our research shows that women want Martha Stewart product to be available where they shop— 30 million women say they would go to a store specifically because it carries Martha Stewart products. Our brand is known for creativity, high quality, style and affordable luxury. Now that Macy’s is becoming a truly national brand, we are able to take full advantage of a partnership with national distribution.”
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Here’s what branding experts and housewares suppliers expect in the aftermath of Macy’s announcement to launch its Martha Stewart home collection in 2007:
(New York-based brand consultant)
“If I’m in charge of the Martha Stewart brand, I’d make a choice to be in one place. I’d be more surprised if a year from now, the brand was still in both retailers. Why would Macy’s want a brand that sells in Kmart?
But Kmart could be the big winner. If they continue to carry the Martha Stewart brand, and Macy’s does a good job of getting the word out, that halo is likely to spill over onto Kmart.”
(New York-based branding firm)
“This will not be easy— having a brand at both retailers— but it can be done. I would say Macy’s is a better fit. Macy’s and the Martha Stewart brand are more premium and upscale, and Kmart is struggling now. But if she renews her deal with Kmart, Macy’s has to make it clear and obvious to the customer what the difference is between Martha Macy’s and Martha Kmart.”
“I think it would be problematic if Kmart and Macy’s both carried a Martha Stewart kitchenware line.
“On the positive side, Martha Stewart has a great furniture line which is carried by nicer furniture stores. It is definitely not a low-end line. She also just started offering mid- to upscale house plans, which look really nice. So, it could be that the direction of Martha Stewart is to make sure her brand image stays in the up-market.”
“I wonder what this actually means for Macy’s? Are they looking for more broad appeal? It’s not a personification of their high-end style that you would think they would go after.
“Consumers are smart and savvy enough to make the translation— I believe the consuming public will be able to differentiate between the two lines [if Martha Stewart goods are available at both Kmart and Macy’s].”
“More and more companies are now selling to mass and upscale accounts. As long as the [Martha Stewart] brand and product mix works for each channel, it will be fine.”
— Ed Lieber and Cynthia Ward Vesey contributed to this report