In an age of increased competition from discount retailers in a hypercompetitive retail space, department stores are under increasing pressure to make themselves stand out from the crowd. Federated Department Stores (NYSE:FD) is doing it with the help of a special import. No, it's not electronics from China, but rather handmade crafts from Rwanda.

Consumers once flocked to the likes of Federated and J.C. Penney (NYSE:JCP) for specialized services and wide selections of merchandise, but today they're increasingly turning to giant discounters such as Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) for the cut-rate prices. The department-store companies are attempting to level the playing field, mainly by consolidating. Uniting under one banner provides the combined chains with merchandise-buying power and strong national brands akin to those of the discounters. As they become more like their competitors, though, department stores face the challenge of setting themselves apart in consumers' minds. That's how we got to the point where Federated made its move.

Federated began selling Rwandan baskets, bowls, and ornaments in its Macy's New York City flagship store and on in time for Christmas. Part of the profit goes to the weavers, many of whom are widows of the notorious genocide in Rwanda. However, the project is strictly a business deal, not a charity.

Initial indications are that the crafts are selling very well, and that's hardly surprising. Consumers are always looking for something unique, and the story behind the crafts makes them more compelling. A Federated executive indicated in September that sell-through has been "tremendous" and that the long-term potential of the project is limited by supply, not demand.

The Rwandan merchandise has the immediate benefits of setting Macy's apart and boosting sales. But more importantly, this effort -- and others like in it the future -- could be a major long-term boon to Macy's brand. Customers aren't likely to miss the point that Federated is indirectly aiding people desperately in need of help. A few more initiatives like the Rwandan project could help cement a reputation for Federated and Macy's as a "socially responsible" company. Outfits like Starbucks (NASDAQ:SBUX) and Motley Fool Stock Advisor recommendation Whole Foods (NASDAQ:WFMI) that fall in this category certainly reap benefits like increased customer loyalty, if nothing else.

Federated has to be applauded for taking a risk into largely uncharted territory. The venture is already paying off, and if the company pursues more projects like it, the effect could truly be powerful.

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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.