WWD.com/fashion-news/fashion-features/a-10-ton-gorilla-will-bloomingdale-s-alter-face-of-soho-747066/
government-trade
government-trade

A 10-Ton Gorilla: Will Bloomingdale’s Alter Face of SoHo?

NEW YORK — Next fall, scores of specialty stores are expected to feed off the traffic from Bloomingdale’s new site in SoHo. But they will be severely tested too.<br><br>While welcoming the swell of customers, retailers like Scoop, Barneys...

NEW YORK — Next fall, scores of specialty stores are expected to feed off the traffic from Bloomingdale’s new site in SoHo. But they will be severely tested too.

This story first appeared in the October 21, 2002 issue of WWD.  Subscribe Today.

While welcoming the swell of customers, retailers like Scoop, Barneys Co-op, and designer brands with signature shops, like D&G, Helmut Lang and Anna Sui, will be up against the promotional and merchandising might of Bloomingdale’s.

In some cases, they’re likely to see the labels they sell also being sold in the downtown Bloomingdale’s. Even worse, they could see Bloomingdale’s take price cuts on those labels, ahead of their own markdown timetable. They’ll be challenged to hang on to their customers by retooling the merchandise mix, finding new lines with limited distribution, and stepping up service.

“I’ll just have to work harder on getting exclusive styles and more exclusive designers,” said Stefani Greenfield, co-owner of the Scoop boutique chain, which operates at 532 Broadway in SoHo, as well as uptown, on Long Island and in Miami. The chain sells contemporary lines such as Seven jeans, Marc by Marc Jacobs and Juicy Couture, just as Bloomingdale’s does.

“My responsibility to the Scoop girl down there is to find her things that aren’t just coming and going all over Broadway,” Greenfield said. “Hopefully our vendors will protect our business. I have to take another look at our vendor structure. This is New York City, there is enough business to go around. We’re not worried that someone is going to take our business, but it’s our job as merchants to give our customers merchandise that’s special.”

“It’s no surprise Bloomingdale’s wants to cater to a contemporary crowd, because it’s a contemporary crowd here. So, we’ll stay away from brands they’re selling,” said David Katzav, owner of the Big Drop chain, with two of its units at 174 Spring Street and 425 West Broadway in SoHo. “It’s simple, what falls into Bloomingdale’s lap, will stay there.” But he expects some of his “more sophisticated lines” won’t defect to Bloomingdale’s. “To deal with department stores is not easy — they have rules, discounts, markdowns and at they end of the day you look at what you have left on your plate, and it’s not much.”

Asked how vendors with a presence downtown would react to also selling Bloomingdale’s there, Michael Gould, Bloomingdale’s chairman and chief executive, replied: “There are customers that want to shop in department stores and there are some that want to shop freestanding stores. There are different types of customers. I hope our resources understand this. We will talk to each resource, just like we did at our store in the Mall of Millenia,” which opened in Orlando last week. At that store, Gould said, several vendors, like St. John, Coach and Burberry, sell Bloomingdale’s and also have their own stores. Some also sell Neiman Marcus as well.

He said Bloomingdale’s on 59th Street has strong businesses with such brands as Chanel and Armani Black Label, even though these designer brands also operate their own signature shops nearby.

The real test for Bloomingdale’s is whether it can successfully operate in a specialized format. As reported Friday, Bloomingdale’s in SoHo, opening next fall at 504 Broadway on the site of Canal Jeans, will have 90,000 square feet of selling space, roughly half what a typical Bloomingdale’s branch has, and will emphasize contemporary apparel and accessories, cosmetics, shoes and home products. According to estimates, Bloomingdale’s in SoHo is seen doing around $45 million in first-year sales, attaining a sales productivity in the $500 a square foot range. Gould would not comment on projected volume, other than saying that SoHo’s productivity won’t be as high as 59th Street’s. He said Bloomingdale’s uptown does north of $900 in sales per foot.

Bloomingdale’s already has two locations that sell just home products, in Chestnut Hill, Mass. [though there is a Bloomingdale’s apparel-only store in the same mall there] and Newport Beach, Calif. and is planning home stores for Las Vegas and Chicago. The chain also operates two apparel-only locations, in Chestnut Hill, Mass. However, as several retail watchdogs pointed out last week, department store companies have generally failed in the specialty retail arena. Macy’s, for example, once tried with Aeropostale but sold off the brand and the stores. May Co. flopped with Loehmann’s and sold it off, and Neiman Marcus has not found success with its Galleries boutiques that sell gifts, home and jewelry. Nevertheless, department stores are a mature business and must explore new formats off the mall.

Marvin Traub, the former Bloomingdale’s chairman turned consultant, said, “I’m delighted Bloomingdale’s is doing this. The department store business model is a mature business. They should be exploring other formulas. Bloomingdale’s is a strong enough name that it can take away certain pieces to develop different opportunities. The store has great strength in contemporary areas.”

Traub added that he didn’t think Bloomingdale’s would have much difficulty getting vendors to sell the store, even if they do sell other stores or have their own. “It’s an issue, but not a big issue,” Traub said. “Most vendors are trying to figure out how to expand their distribution, and it’s not easy to say no to Bloomingdale’s. It’s a $2 billion business.”

Bill Smith, president of Financo Inc. agreed. “I don’t think vendors will object. Bloomingdale’s will bring great traffic downtown, and there won’t be a huge transfer of business from the 59th Street flagship. They’re two distinct markets.”

Some vendors might think twice about selling Bloomingdale’s in SoHo, but it’s too early to tell who.

Marc by Marc Jacobs, sells two important doors downtown, Barneys Co-op and Scoop, and operates a Marc by Marc Jacobs store on Bleecker and West 11th Streets. The label is sold at Bloomingdale’s uptown, as well as Saks Fifth Avenue, Barneys New York and Scoop uptown on Third Avenue. Asked about selling Bloomingdale’s in SoHo, Kristy Kiraly, account executive for Marc by Marc Jacobs, would only say, “This is a very touchy subject. I can’t comment. Those decisions haven’t been made.” Distribution agreements are “strict.”

But for Necessary Objects, “This is a major opportunity. We’ve had conversations,” with Bloomingdale’s, said Ady Gluck-Frankel, president and creative director at Necessary Objects. “There are no department stores down here.” The line is sold at Bloomingdale’s uptown, Macy’s Herald Square and at some specialty stores around town but not in SoHo.

In any event, Bloomingdale’s is bound to have an enormous impact on SoHo’s retail landscape. “At least initially, Bloomingdale’s will create a lot of excitement down here,” said Ira Russack, owner of Canal Jean Co., which is leasing the Canal Jean space to Bloomingdale’s. “I think SoHo is kind of confused at this point. The lack of tourism and the down economy have hurt sales, especially in SoHo, and I know stores are not doing well in NoLIta either.”

He said Bloomingdale’s could bring “some sort of a direction that the store owners in SoHo will come to terms with.”

“Our clientele has always been very different from the Bloomingdale’s shopper,” said Sarah Easley, co-owner of Kirna Zabete in SoHo. “I think the fact that Bloomingdale’s is moving down to SoHo is a wonderful thing for downtown Manhattan because it is a store that is extremely popular among tourists. People all over the world know about Bloomingdale’s. It will be downtown destination. As far as I’m concerned the more the merrier. Kirna Zabete’s niche is to offer things that you don’t see everywhere. I don’t see a loss in market share by their coming into the neighborhood.”

Real estate sources agree Bloomingdale’s will spur business in SoHo, which has suffered since 9/11, but even before seemed to draw many more window shoppers and cappuccino lovers, rather than real shoppers. “It will be a shot in the arm to the whole lower Manhattan area and a boost for SoHo,” said Caroline Banker, executive vice president at Insignia Douglas Elliman. “It will bring tremendous traffic to the area. Although, I don’t know how they’ll handle parking, that will be interesting.”

Bloomingdale’s could also lure new retailers. “I think the [Bloomingdale’s] pricepoint will be geared to a greater cross section, and that you’ll have more moderate-priced and better apparel and home furnishing companies looking to follow suit,” Banker added.

“What this deal will do is make Bloomingdale’s a southern anchor in SoHo,” said Jeffrey C. Paisner, senior managing director at The Lansco Corp. “With Crate and Barrel opening on the corner of Houston and Broadway, you’ll have a great northern anchor too. This is now going to help spread interest for national and international tenants who will be more open to locating below Spring Street.”

Gould pointed out that the new Bloomingdale’s, while an experiment, is not a prototype, though parts of the SoHo business could be developed for other locations.

“You know I am a big critic of myself, but this is a big deal. I do think Bloomingdale’s can transform the area, with truly exciting product and visual impact,” said Gould. “No one has women’s, men’s, accessories, cosmetics and home all together on the kind of scale that we will have.”

He said Bloomingdale’s could bring “some sort of a direction that the store owners in SoHo will come to terms with.”

“Our clientele has always been very different from the Bloomingdale’s shopper,” said Sarah Easley, co-owner of Kirna Zabete in SoHo. “I think the fact that Bloomingdale’s is moving down to SoHo is a wonderful thing for downtown Manhattan because it is a store that is extremely popular among tourists. People all over the world know about Bloomingdale’s. It will be downtown destination. As far as I’m concerned the more the merrier. Kirna Zabete’s niche is to offer things that you don’t see everywhere. I don’t see a loss in market share by their coming into the neighborhood.”

Real estate sources agree Bloomingdale’s will spur business in SoHo, which has suffered since 9/11, but even before seemed to draw many more window shoppers and cappuccino lovers, rather than real shoppers. “It will be a shot in the arm to the whole lower Manhattan area and a boost for SoHo,” said Caroline Banker, executive vice president at Insignia Douglas Elliman. “It will bring tremendous traffic to the area. Although, I don’t know how they’ll handle parking, that will be interesting.”

Bloomingdale’s could also lure new retailers. “I think the [Bloomingdale’s] pricepoint will be geared to a greater cross section, and that you’ll have more moderate-priced and better apparel and home furnishing companies looking to follow suit,” Banker added.

“What this deal will do is make Bloomingdale’s a southern anchor in SoHo,” said Jeffrey C. Paisner, senior managing director at The Lansco Corp. “With Crate and Barrel opening on the corner of Houston and Broadway, you’ll have a great northern anchor too. This is now going to help spread interest for national and international tenants who will be more open to locating below Spring Street.”

Gould pointed out that the new Bloomingdale’s, while an experiment, is not a prototype, though parts of the SoHo business could be developed for other locations.

“You know I am a big critic of myself, but this is a big deal. I do think Bloomingdale’s can transform the area, with truly exciting product and visual impact,” said Gould. “No one has women’s, men’s, accessories, cosmetics and home all together on the kind of scale that we will have.”