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MINNEAPOLIS-In the wake of Federated Department Stores' $11-billion deal announced this week to buy May Department Stores, local retailers such as Nordstrom's could end up facing a larger competitor. The deal would transfer the Dayton's legacy--10 department stores in the Twin Cities area, Rochester and St. Cloud plus two home stores here--to Federated, which just has the one Macy's department store in the Twin Cities.

Instead of being known as Marshall Field's, Federated is expected to rebrand them Macy's. The deal would enable Macy's to go from just one department store in Minnesota--at the Mall of America--to 11. Federated executives say there would be no divisional consolidations or name changes for the retail banners until at least next year and any changes would be spread over two years. Analysts have been told the company would conduct consumer research before deciding whether to rebrand May's chains to the Macy's banner. In any case, Macy's would gain the economies of scale that come with multiple stores, such as more-efficient advertising, movement of personnel from one store to another and better inventory management, according to retail analysts.

Department store rival Nordstrom will continue to have only one store in Minnesota with only dim prospects of adding more. The Federated-May deal would likely freeze out Seattle-based Nordstrom from some of the top regional malls in the Twin Cities, including Rosedale in Roseville, Southdale in Edina and Ridgedale in Minnetonka, among others. In some cases, Field's can block a competitor from coming into a mall.