FEDERATED IS READY TO REINVENT ITS RETAIL SELF TO STAY ON TOP

The integration of 400 May Co. stores into Federated Department Stores is headed into a crucial stage on Sept. 9. Rumor has it that Federated will continue to advance its program of exclusive merchandise.

At Federated's annual meeting, the key message from Terry Lundgren, chairman, president and chief executive officer, revolved around new initiatives in ready-to-wear, electronics and even candy.

Federated also is getting back into consumer electronics by selling Apple iPods and iPod accessories in a robotics-driven vending machine that is about 7 feet high, 7 feet wide and 4 feet deep. The specially designed kiosk is a self-service touch-screen-activated machine from Zoom Systems, a reseller of Apple products based in San Francisco. Other electronic items such as BlackBerrys (and products from Sony and Motorola) will be tested this fall with the vending machines.

"We will take nonselling space and give it to young designers we believe have potential — starving artists, if you will,” said Lundgren.

Federated is phasing out all of May's private labels, including Ideology and Valerie Stevens, but retaining two opening price point lines, Karen Scott and John Ashford. While all this occurs, the Lord & Taylor division is on the selling block. "The process is going well. The books are out. There is a great deal of interest," Lundgren said.

The best selling categories are currently: juniors, shoes and dresses for women and suits, dress shirts, neckwear and footwear for men.

* It seems that department stores are finally taking bolder steps to distinguish themselves from the pack. Dylan Lauren (Ralph’s daughter) is making such waves with her Manhattan candy store that other retailers are taking note. This candy colored store, appropriately named Dylan’s Candy Bar, is on 60 Street and Third Avenue. They host birthday parties and sell everything from Candy clothing to Frozen Hot Chocolate. The store is mobbed with tourists and locals who can afford $5 for an ice cream cone and need a sugar fix. The energy is explosive.

* Selling electonics from a kiosk is great, but how about a Hat Kiosk that dispenses hats? Eventurally everyone is going to get the message that hats prevent skin cancer and help prevent the aging process. When that day comes a vending machine for hats will be in demand. Who’s aboard?