• Retail Dive

Macy's scrambles to keep Amazon off its big red sign in Herald Square

Dive Brief:

  • The iconic white star on the big red sign abutting Macy's Herald Square flagship in New York could be replaced with the Amazon smile unless the department store can prevail in court against those who control the billboard. Ad Age first reported the news.

  • Macy's has filed an injunction against Rockaway KB Co., care of Kaufman Realty, saying in court filings with the New York State Supreme Court in Manhattan that a decades-old contract prevents the iconic sign from being rented to a competitor. Neither Amazon nor Kaufman immediately responded to requests for comment.

  • "Since the early 1960s Macy's has placed a billboard sign on the building adjacent to our flagship store at the corner of Broadway and 34th Street," a Macy's spokesperson said by email. "Macy's continues to have rights relating to advertisements at that location. We expect to realize the benefits of these rights and have asked the court to protect them. As the matter is in litigation, the company will not have any further comment."

Dive Insight:

Amazon has given most, if not all, retailers fits in the last two decades or so, but Macy's in many ways is especially vulnerable. The e-commerce giant has built up apparel sales that have usurped the department store's primacy in that space. More recently, reports that Amazon is planning a department store-like business had analysts warning about further damage to Macy's market share.

This kerfuffle is less about sales and more about marketing. Yet, this one hurts, given the longstanding prominence of the huge red billboard, which since the mid-20th century has served as the ensign of the sprawling New York City flagship — host of the retailer's famous Thanksgiving Day parade and a popular tourist magnet. In filings, Macy's notes that the 2,200-square-foot sign "is located in the heart of Manhattan, across the street from Penn Station ... viewed annually by the millions of tourists, residents and commuters of New York City."

Then again, also prominent are the "mountains of Amazon boxes" that pile up daily on New York City sidewalks, according to Mark Cohen, director of retail studies at Columbia University's Graduate School of Business.

"It's nothing less than a giant middle finger being pointed at Macy's," Cohen said by email. "Cheeky of Amazon to want to put their name on the Herald Square building. I wonder what they were thinking when 50 years ago they ceded control of that sign to a landlord. Nevertheless, good for Macy's for inserting a forever prohibition on the sign keeping the landlord from ever putting up a competitor's message."

In a filing with the court, attorneys for Macy's outline the debacle. Because the retailer's right to advertise on the space expired Aug. 31, Macy's sought to renew it beginning in May. During the ensuing discussions with the billboard's owner, Macy's came to believe that Amazon is the "prominent online retailer" slated to potentially take over the signage instead, per court documents. Regardless, a "restrictive covenant" against any agreement with a Macy's competitor to advertise on it, inked in 1963, remains in force apart from the now expired advertising agreement, according to court filings.

"One does not have to be an expert to realize the incalculable damage that would result to Macy's customer goodwill, image, reputation and brand, should a 'prominent online retailer' (especially, Amazon) advertise on the Billboard," Macy's attorneys state in one filing. "Examples are easy, and given a 60 year history, not even as compelling, but just imagine Pepsi on a Coca-Cola building or Mercedes advertising on the building of a BMW dealership. The Restrictive Covenant prevents these possibilities."

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