[Please obscure my email address as always.]
Lisa Hancock wrote:
> Nobody seems to have any anti-trust concerns about this merger, which
> puzzles me. To me it represents all the reasons we developed
> anti-trust laws in the first place, and the same rationale we were
> told to justify breaking up the Bell System.
I think the reason that anti-trust concerns about this merger are so
muted is precisely that it is so UNLIKE the old Ma Bell situation,
which was a true monopoly for most of the country (barring the
relatively small market share that the independent telcos had).
Macy's, Lord & Taylor, etc. don't compete in a "department store
market"; instead, they are merely smallish players in a much larger
RETAIL market. And over the past few years, they have been getting
their butts kicked in that market, by the likes of Wal-Mart, Target,
Kohl's, Home Depot, Lowes (both now selling lots of appliances and
home furnishings), Costco, Best Buy, Old Navy, Dick's Sporting Goods,
Linens & Things, and so on.
I would be surprised if even the combined market share of Federated
and May approached the market share that Sears, Roebuck achieved in
its heyday. In fact, the proposed combination of Federated and May
reminds me of the recent shotgun marriage of two other troubled retail
giants, Sears and Kmart. Each of these new combo chains, in fact, owns
less than 10 percent of the overall retail market (see
The management of some of the old department store chains that have
fallen by the wayside (e.g., Montgomery-Ward) seems to have stumbled
into the same trap that railroad companies fell prey to half a century
ago. Namely, they defined their market sectors too narrowly. While
railroad executives believed they were in the "railroad business",
their consumers treated them as being in the *transportation*
business. Thus, the railroads got their lunch eaten by airlines (to
which most of the railroads' former long-distance passengers eagerly
flocked) and to a lesser extent by trucking firms (which grabbed a
quick-growing share of the freight-transport business, though rail
still plays a much more important role in moving freight than it does
in moving people).
I think this sort of gradual fade into irrelevance is what terrifies
the heads of Federated and (heavily-indebted) May. They are starting
to notice that department stores are a shrinking sector of the overall
retail market, and that many young people think of stuffy old
department stores as a place where their parents shop. It will be
interesting to see if they can fight this trend, but I have my doubts.
That's why the consolidation of the department-store sub-sector of the
overall retail market troubles me no more than the shakeout that
occurred in the typewriter manufacturer sector a few decades ago, or
in the buggy-whip manufacturer sector several decades before that.