Last week Terry Lundgren announced he’ll be stepping down as CEO and Chairman of the Board of Macy’s next year. His replacement, Jeff Gennette, has been groomed for the role for several years and has been with Macy’s since 1983.

As analysts, we are frequently asked to comment on changes in the retail industry, and this occasion is no exception. Reporters were eager to tie Mr. Lundgren’s retirement to Macy’s somewhat weak performance this past year. It makes for an interesting story. Unfortunately, it’s not the right one. That doesn’t change the challenges Mr. Gennette will face in his role – department stores are a hurting vertical no matter how you look at it – but it’s also worthwhile to take a look at Mr. Lundgren’s accomplishments.

No discussion of Terry Lundgren can ignore his merger of Federated Department Stores, Inc. and May Company in 2005. He merged a boatload of brands under the single banner “Macy’s. ” I know there are people who will never forgive him for the destruction of iconic brands like Marshall-Fields, Burdines, and Rich’s, but he managed to make it work.

I didn’t think it was possible. It seemed to me that there were just too many stores to possibly work, and given the lack of bankruptcy protection, getting out of extra leases was going to be challenging. I thought the chain would collapse under its own weight.

I was wrong. Mr. Lundgren steered the company into new waters.

• He spearheaded an increase in its own private label product, and made them brands unto themselves like Style & Co. and Inc.
• He was early to recognize the emerging buying power of Millennials and began to feature more Millennial-oriented product like the Material Girl clothing line, touted as the brainchild of both Madonna and her daughter Lourdes. This caught the attention of Madonna-loving moms and their children.
• He was an early advocate and adopter of omnichannel retailing. Sure, many have talked the talk, but Lundgren put his money where his mouth is, investing in people and technologies to make omnichannel work. The sheer size and inventory volumes in his store may make fulfillment profitability sub-optimal, but he deserves tremendous props for smelling the trend, responding to it, and moving his enormous ship in the omnichannel direction.

Bloomingdale’s remains its own entity, and Mr. Lundgren was wise not to mess with it too much.

I think it’s too early to evaluate the recent Backstage Store “aspirational ” off-price Macy’s banner. After all, Macy’s is itself and off-price banner. I would have likely preferred to see a “Backstage at Bloomingdales ” brand, even though the company does have a smattering of outlets already. Still, I’m not willing to make a prediction. When it comes to Mr. Lundgren’s ideas, I’ve been wrong enough to avoid second-guessing him.

Lastly, I have to make mention of the Terry J. Lundgren Center for Retailing at the University of Arizona. Considered one of the top retailing undergraduate programs in the U.S., the Center also puts on one of the best kept secrets in Retail every April: The Global Retailing Conference. It’s an opportunity for students and retailers to hear from some of the biggest names in retail – mostly friends of Mr. Lundgren. I was privileged to speak at the GRC in 2012 and consider it the high point of my analyst career. After all, how often does someone like me get to follow Frank Blake, CEO of Home Depot at the time? I didn’t embarrass myself, and was incredibly proud to be on the roster.

While the mass media may have the reasons for Mr. Lundgren’s departure wrong, they’re not wrong about the challenges the company faces going forward.

The department store in general is something of an anachronism. Products are arrayed by brand and assortments are incredibly broad. Most research seems to tell us that those same Millennials, who are now all grown up, prefer their assortments curated by lifestyle rather than brand. After all, if they are interested in shopping by brand, they can buy direct from the brand manager on line or in their own stores and avoid the hassle of the department store completely.

There isn’t a lot of data showing synergies across departments. That has to be changed to create a new, more sustainable business model. I’m not a fan of the “bazaar ” concept, where the entire store is a collection of stores within a store. Again, I keep coming back to the question “Why bother going to a store like that? “

These are the problems Mr. Gennette will face and I don’t envy him those.

So this is Terry Lundgren’s legacy. As a sharp dresser, you could easily mistake him for a “suit ” but he is actually a quintessential merchant. He may have run an old-line department store, but he steered it in new directions. He accomplished some goals people on the sidelines deemed impossible.

Here’s hoping Mr. Gennette can continue to build on that legacy.