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Though it may take time to sort out and it may not even happen, the news and even serious thoughts of lumbering giant Federated buying lumbering giant May cannot help but be favorable to specialty and smaller-store America.
Gone are the great older upper-scale retail brands like Jordan Marsh, Hudson's, Stern's, Gimbel's, Robinson's, A & S, Harvey's, Broadway, Dayton's, Bergner's, and hundreds of others awash in the ongoing carnage of mergers, buyouts, and failures. And now, more yet to come.
Soon Rich's, The Bon, Kaufmann's, May, Filene's, Field's, and Hecht's will go. In the department-store sector, Burdine's-Macy's and Bloomingdale's brands will dominate the world. All goods will be bought out of NYC and influenced by Cincinnati operatives. Bye-bye to St. Louis purchasing for middle America. Such an amalgamation seems just like the Sears/K-Mart merger but without the highly profitable real estate play. As the old adage wisely states, "What goes around comes around."
Back to the future? Maybe so. Small stores will regain a well-earned advantage as the big ones just get too big.
Why would anyone believe that the new, bigger giant will be any more nimble or provide any better service or even be in a position to consider passing along any combination savings to consumers when they have billions of debt to service, employees to buy out, and stockholders to placate just as the former two giants did separately?
At the highest retail service levels, Nordstrom's and Neiman's continue to do excellent jobs and are regularly rewarded by discerning and loyal customers. At the lesser service levels, Wal-Mart, Sam's, and Costco continue to improve and provide superior quality at value pricing, and day by day, are inching into linens, clothing and white goods, diamond rings, and big-time groceries.
At the supposed discount level, Sears and K-Mart remain Sears and K-Mart. 'Nuf said.
That leaves really good retailers like Penney's, Kohl's, and some others to slug it out for the leftovers. Dillard's and Sak's probably have a limited life and need to combine to stay alive for another generation. BB&B and Linens should combine. Amazon, HSN, and QVC are a sector area that should continue to grow.

What About Specialty?
With continuing combinations and the constant winnowing of brand store names, how is specialty favorably affected? Easy! At Federated and May, with 459 and 500 stores, respectively, service stinks and pricing is high due to overhead costs. Savings will be difficult to pass along when 60 percent of department-store sales occur during 40-percent-off sale times. Vendors will be pressured as much or more, if that is possible, but will now be faced with fewer choices to supply. Loyal local shoppers will have to become accustomed to buying from Burdine's-Macy's or Bloomie's, not their own local standbys.
In the 101 malls where Federated and May now go head to head, plenty of retailing space would seem potentially available at reasonable rates. And, even if the new May-Fed combo would present a "better-and-best" offering in those stores, their service and pricing would remain the same. Federated buying would almost assuredly begin cutting down vendors and reducing choices to concentrate on their own in-house brands and to better focus on in-stock inventory positions.
Without increasing admittedly understaffed sales help to aid in product selection, product self shopping fails to add to increased volume. Specialty might improve its shopping help and replace what might have been bought at Hecht's or Kaufmann's. If Martha can generate higher margins on softer lines, why not Emeril or Jacques with soft lines?

A Suggestion
Here is one personally observed example of what works at Nordstrom's and might be tailored down to specialty size. Personal shoppers help busy career workers. Our 40-year-old daughter fits this description. She lives in Atlanta, and works today's silly 23-hr./6- to 7-day schedule. Forty-five to fifty-five hours was my generation's clocktime and employers and employees alike seem to have lost that concept. In return for this kind of modern-day servitude, she is very well paid and can afford a personal shopper, partially paid for by the store via its solid margins.
Eikenberg German genes deny rack-sized good-fitting clothing as a purchase possibility, so time is necessary to look, shop, sort, and select before even trying on. But time is not what she has. A reasonably stocked pocketbook is what she has. Therefore, the shopper selects for her. A phone call, in which my daughter says, "Put together some good stuff, tell me when it is accumulated, and let's make an appointment to view" initiates the action. The results -- two suits, a few blouses, a casual jacket, matching shoes, a sweater or two, maybe a few tasteful accessories -- and a big credit-card charge complete the transaction.
Neither action would have occurred without the shopper's service. Time and confidence to shop and purchase would not have happened. The customer would not have shopped and the store would not have found income. While clothing is more personal than cookware or dinnerware and the margins are better, time-of-the-year holiday shopping and certain purchases are always daunting and some help is of real value. The service needs to be advertised, handled with aplomb and discretion, and work for both the client and for the store. A $500 transaction at Sur La Table or William-Sonoma is easy.

Consolidation
The consolidation trends have been going on for many years and will continue. They have drastically changed electronics, automotive, appliances, trade shows, trade reporting, and especially retailing. New forms will arise and older ones will meet their demise. Kresge to K-Mart made discounting begin. Trading stamps came and went. Hardware stores were consolidated by Cotter and Ace. Best and Service arrived on the scene, made their aggressive impacts, and went away, making room for the clubs. Wal-Mart changed everything again. Online buying began another new method of shopping.
Specialty can stay well and prosper by implementing greater service and capitalizing on the giants' weaknesses. With half of department-store devotees freely admitting that they shop at Sam's or Costco, price becomes only one component of the purchase decision. Service and available selection still earn the dollars.
Bigger is not necessarily an advantage. Ask GM. What will matter is owner/manager closeness and attentiveness to the small things that touch customers: Bright and well-lit showcases; friendly, knowledgeable clerking; web site access; fair pricing and occasional deals; convenient location and easy, safe parking; credit availability; and a sense of currency and fashion. (As if I have to tell you this, but come on, a guy has to write something.)
When you go to Chicago for the IH&H Show this month, ask the vendors for anything. Many will soon be frozen out as buying consolidates. (Can't afford to sell Wal-Mart, missed this year for Target, and eliminated by line review by Federated leaves the thousands of specialty stores looking more attractive every day.)

Jack and his consulting group Eikenberg Management Services can be both contacted and skewered at his interment phone, 239-498-0040, and by e-mail at JMEmgmt@aol.com.