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Martha Stewart, Macy's & the meaning of 'store'

Author Martha Stewart poses before signing her books ''Wedding Cakes'' and 'Cookies' at Macy's Herald Square on March 16, 2008 in New York City.

Martha Stewart, it turns out, has a sense of humor. She spent the better part of Tuesday in court testifying in a lawsuit that Macy's has filed against her company. At one point on the witness stand, Stewart was asked how she spends her time each day.
Without missing a beat, she said, "I did my time." Five months back in 2004 for conspiracy and obstruction of justice related to insider trading.

The present case is more mundane. Macy's says Stewart violated an exclusivity agreement when she signed a deal to sell products through J.C. Penney. At the heart of the case is this seemingly obvious question: What is a store?

The specific question in the case calls for the King Solomon of retail. Is a store within a store, a separate store? J.C. Penney plans to sell Martha Stewart products in Martha Stewart stores within J.C. Penney department stores. Stewart says that’s allowed under her deal with Macy’s. Macy’s thinks not.

So let’s start with a simple definition, from Nancy Koehn, a retail historian at Harvard.
 
“A store is a marketplace of goods and services and experiences. And that has been proved since Laura Ingalls Wilder’s father Paul was buying calico and lemon drops,” Koehn says.
 
But fast forward 150 years and we’ve gone from "Little House on the Prairie" to the Clinique counter, which, Koehn says, from the business owner’s perspective, is a separate store within a store. Staff behind department store counters are often hired and trained by brands, not the department store.

But Wendy Liebman, CEO of WSL Strategic Retail, says the consumer's take is key.

“Do they think about it as, 'Well actually I’m buying Martha Stewart at J.C. Penney?' Or do they think about it as, "I’m going to Martha Stewart,'” she says.
 
Consider what shoppers have told Liebman's company about Sephora cosmetics -- another brand sold at J.C. Penney.
 
“What’s pretty clear to people who shop the Sephora in J.C. Penney is that they’re actually going to a Sephora store. And most people while they know they’re in J.C. Penney buying it will say, 'Oh no, I’m going to Sephora.'”
 
To answer the question, what is a store, effectively, it may be better to ask consumers than a judge.

About the author

Sally Herships is a regular contributor to Marketplace.
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I'm surprised that the Point of Sale concept didn't come up in this piece. If the Point of Sale is in JCPenny's, the store is JCPenny's. If I pick up an item and start walking off, the point where I've crossed the boundary to "stealing the item" is where the store boundary is.

The “store within a store” concept is not just about the interests of merchants because consumers have a right to know who they are really making purchases from when they shop at a store. For example, Sears.com now has a line of business called Sears Marketplace that it would like to run like other online shopping websites, such as eBay and Amazon. This includes allowing third party businesses to sell their items on Sears.com, which might provide consumers more options and better pricing. Unfortunately, Sears.com does not yet effectively disclose to consumers that purchases on the "Sears Marketplace" are not from Sears and that Sears will accept no responsibility for inappropriate business practices by third party businesses selling on Sears.com. For example, Sears.com does not have eBay's "rules and policies" for sellers and buyers, nor eBay's "Buyer protection" program. This may soon result in a legal action against Sears regarding whether there is sufficient disclosure to consumers regarding who the merchants are on Sears.com.

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