More from MPR
Minneapolis, Minn. — There are probably some sighs of relief at Marshall Field's. May company officials say they will keep all 25,000 employees in eight states, from part-timers all the way to president Linda Ahlers. May also plans to keep Marshall Field's name, the Frango mints and other exclusive products. Minneapolis gets to keep the operation's headquarters.
May spokeswoman Sharon Bateman says Marshall Field's is a great fit. The company has various chains have department stores running in a "u" around the United States, with a gap running west from Wisconsin to Washington.
"For us it fills in a vital geographic hole, moving the May presence into the north. On the other side, Marshall Field's has a great vendor structure, and great merchandising impact and we think we can learn from that so all of the department stores serve the customer better," says Bateman.
The fate of the nine Twin Cities Mervyn's stores is more up in the air. Bateman says some could be used in the Marshall Field's business. As for those that are not, she would only say they will be redeveloped to enhance the shopping centers where they're located. She wouldn't elaborate.
The Mervyn's part of the deal only includes the stores, not their 780 employees. Target Corporation spokeswoman Carolyn Brookter says workers affected by the closings will be eligible for severance pay, but many can find work elsewhere in the company.
"Mervyn's employees will have an opportunity to interview for some open positions at Target stores within the Twin Cities, or be able to transfer to other Mervyn's locations outside the Twin Cities. A substantial number of them will get that opportunity," says Brookter.
Brookter says Target officials wanted to see Marshall Field's continue as an ongoing business, and reaching an agreement that allowed employees to keep their jobs was an important consideration.
Gov. Tim Pawlenty hailed the deal for sparing so many jobs. "We are really pleased, and depending on how you count it, that has the effect of somewhere between 10- and maybe as much as 25,000 jobs that could have been negatively impacted, but instead are going to be retained," says Pawlenty.
If there is relief among Marshall Field's employees, that's not the only emotion. As employees filed out a meeting room above the Marshall Field's downtown Minneapolis store on Wednesday afternoon, most declined to talk with a reporter about the sale.
Downstairs, in front of a perfume counter, women's fragrance worker Loren Esposito, said everyone was talking about the sale.
Esposito said, more than concern for their own jobs, many of her colleagues worry the new owners may take Marshall Field's in a new, perhaps less elegant direction.
Esposito says she was hoping the buyer would be the upscale retailer Federated Department Stores, which operates Macy's and Bloomingdale's.
"I think the main concerns people are having is what's going to happen with the store? Whether it's going to be downgraded to a lesser store. I know a lot of people wanted an upgrade in the store, but those are a lot of the concerns," she said.
May Company will bring a different approach, according to Martin Sneider, a retail consultant and adjunct faculty member at Washington University's Olin School of Business in St. Louis. Sneider says Federated is more innovative, upscale and fashion forward. May, he says is more of a basic, middle America style retailer.
"The stores will likely not be the leading edge of fashion. The design of the stores will probably not be as exciting as some people want. But they know how to run a department store," says Sneider.
University of St. Thomas marketing professor Dave Brennan agrees. He also says expect a lot of sales, or promotions as they're called in the industry.
"I think you're going to see less pizzazz, probably, in terms of merchandising, and the quality and the variety of the merchandise. I think you'll see plenty of product. I think you'll see it as a lot more promotional, even more promotional than Macy's is," says Brennan.
Brennan says the difference will be most apparent in the fashion selection, but also in kitchen products, an area of focus for Marshall Field's and Macy's, he says, but not for May.
Brennan says he was surprised that May won the bidding over Federated. But he says a couple of factors may have made for a better fit. May was willing to take all 62 Marshall Field's stores, some of which are in smaller markets like Eau Claire, Wisc.
"Federated usually does not deal as much with smaller markets and May company is used to doing some of that," says Brennan.
The inclusion of nine Twin Cities Mervyn's stores, helps Target in its effort to sell the Mervyn's chain, and Brennan says it also protects May against competition.
"That really is a good defensive move in keeping Macy's at bay, and possibly Nordstrom. In terms of buying additional ones. I could have seen where Mervyn's at Rosedale, for example, that would have been a pretty decent deal for certainly Macy's, but also Nordstrom," says Brennan.
Jeff Stinson, retail industry analyst with FTN Midwest Research says Marshall Fields was a better fit for Federated, but he says May probably wanted it more, to get the Marshall Field's name.
"For May, the Marshall Field's nameplate is something that works well within their core midwest franchise. I think it's a name that can be transported to Cleveland, St. Louis, Indianapolis, and would probably play well and replace some of the lesser known nameplates that they have in those markets," says Stinson.
Stinson says that would work better than converting stores to the Lord and Taylor nameplate, which he says is not as well known and has less cache in the Midwest than Marshall Field's.
May's decision to retain all employees is rare in mergers. And retail consultant Martin Sneider says it remains to be seen whether all Marshall Field's employees do keep their jobs in the months after May takes over.
"They have an infrastructure and overhead and so forth that knows how to do the department store business. So, it'd be an unusual acquisition for May to say, 'Everybody stays forever; we'll use Marshall Field's systems in those stores and May company systems in the rest of our chain,'" says Sneider.
The deal is expected to close in late July. The nine Mervyn's stores are expected to close around that time as well. That leaves Target officials the job of selling the rest of the more than 250 remaining Mervyn's stores, a task many analysts consider harder than selling Marshall Field's. The company put both chains on the block last March. Both had posted declining sales in five of the last six years.
Target officials estimate the company will gain about $1 billion on the sale of Marshall Field's. They plan to spend $3 billion buying back Target stock, a strategy usually intended to increase a company's share price.