Department-store landmarks give way in big merger

Yet some people still do prefer the large department stores, especially when they are looking for quality.

Monday, outside a Lord & Taylor store on Fifth Avenue in New York, shopper Michael Stewart, a resident of Washington, says he was there in part because of the cachet. "The highest human good is peace of mind. They [department stories] carry a higher-quality product," he says.

New Yorker Chandan Kamble similarly summed up why he was shopping at Lord & Taylor in one word: "Prestige," he said, adding that the quality of goods at department stores was superior to what he could find at a big-box retailer.

However, for the most part, consumer attitudes have changed, points out Mr. MacIntosh. "The discounters, the dollar stores, continue to grab market share," he points out. "At the same time, the high-end stores, which cater to the affluent, are also doing well. It's the midlevel stores that are being hurt and are consolidating."

In fact, with the new mergers, the suburban malls will probably start to look different. Federated has 458 stores and May has 491 emporiums. May's brands include Marshall Field's, Lord & Taylor, Filene's, and Kaufmann's. Federated owns Bloomingdale's, Macy's, and Rich's. Retail analysts expect many of these stores will be closed if they are competing with one another. "Many of these were in downtown areas up to a few years ago," says Joyce Gioia of the Herman Group, a strategic consulting firm. "Then, they went through urban flight, and now they have these huge stores in suburban areas," she says. "But except for sales, they are often ghost towns."

Some suburbanites have mixed views about this phenomenon. One woman, Laurie, who didn't want her last name used, was shopping at the Wal-Mart in Guilford. She recalls how her family regularly shopped at the Fairfield Store, the local department store at the heart of her hometown in Fairfield, Conn.

"It was an institution, one of those places that you could always count on to have your basics," says the Clinton, Conn., resident. "It was sad when it closed down. It was kind of the end of an era."

In more ways than one. Now she rarely shops at department stores. The reason: prices. "When I was growing up, my mother was paying," she says laughing. "Now that I'm paying, I go where the best prices are - Marshall's, TJ Maxx, those kind of stores."

But she's also conflicted. Even though she'd just come out of a Wal-Mart, where she'd picked up toilet paper, tissues, and a storage container, she confessed that she really doesn't like to shop there, despite the lower prices. "I look at Wal-Mart as the evil empire, and I'm afraid they're going to drive all of the other small businesses out and then they're going to start raising their prices and we'll be held hostage to their methods," she says.

• Alexandra Marks in Guilford, Conn., and Robert Tuttle in New York contributed to this story.

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