It also was during this era of powerful and positive change that Federated shifted its concentration from growth through acquisitions to expanding the company's retail formats. Mr. Fred stepped down as CEO in 1966 and passed the reins to his son. Ralph Lazarus recognized retail trends had shifted demand toward better merchandise and more brands, leaving the door wide open for Federated to satisfy consumers whose demand for lower-priced retailers was not being met. So by the 1970s, Federated started a number of discount divisions that operated in Florida, Texas and California. At the same time, Lazarus also set his sights on real estate development through a wholly owned subsidiary, Federated Stores Realty. This resulted in a new string of regional shopping malls with Federated stores as their anchors. Federated ended the decade of the '70s on a high note as it celebrated its 50th anniversary with the acquisition of Rich's in Atlanta, construction of a new corporate headquarters building in Cincinnati and a total of 20 divisions and 364 stores.

It became apparent in the 1980s, as the tone of the industry changed dramatically, that Federated's endurance and resolve as a retail powerhouse were going to be tested. Howard Goldfeder took the reins as CEO from Ralph Lazarus in 1982 amid a period of changes. As divisional consolidation was taking place between the company's Rike's and Shillito's operations, Federated planned for a new retail concept called MainStreet, which it promoted as a "junior" department store. The company also reinforced its longstanding tradition of giving back to the community with the establishment of the Federated Foundation in 1980, setting aside $15 million in earnings to create the corpus of this charitable trust. Things looked stable for the corporation until 1988 when a Canadian real estate developer named Robert Campeau turned his sights on Federated. A takeover ensued, and just two years later Federated was forced to file for bankruptcy.

In perhaps the most difficult period of its history, Federated's strong operations and determined leadership rebuilt the corporation into an even stronger company. By 1992, Federated emerged from the ashes as a new public company. Within three years, Federated had doubled in size, acquiring Macy's in 1994 and Broadway Stores in 1995. It dove into the Internet and e-commerce with macys.com and the acquisition of Fingerhut, a company that was building a sophisticated e-commerce infrastructure. When the e-commerce bubble burst and the acquisition of Fingerhut became a very public failure shortly thereafter, Federated responded with candor. Chairman and CEO Jim Zimmerman declared that the company remained confident in its resolve to take prudent risks rather than choosing to stand still.