“[SoHo] has opened our minds.”— Michael Gould, Bloomingdale’s

Bloomingdale’s SoHo is the smallest store in the chain, representing a sliver of total sales and selling space and a slice of the assortment at the 59th Street flagship. <BR><BR>But its impact has been huge, according to Bloomingdale’s...

Bloomingdale’s SoHo is the smallest store in the chain, representing a sliver of total sales and selling space and a slice of the assortment at the 59th Street flagship.

But its impact has been huge, according to Bloomingdale’s chairman and chief executive officer Michael Gould.

“It has opened our minds,” stated Gould. “It has already made an indelible impression on our organization and, even more significantly, on the consumer and resource marketplace.”

He’s striking back at the critics — and there have been plenty of them — who for decades have accused department stores and their merchants of lacking creativity, merchandising sameness from door to door, providing poor service and little ambience and heading for extinction.

Gould makes it clear that he sees things differently. “That we could develop a successful new format reflects the versatility and power that resides in our brand and in our people,” he contended in his speech. “Such power is unusual and is something we value immensely. It gives us great confidence to think about a future with new formats that adapt Bloomingdale’s to local market opportunities.”

Gould also sees the SoHo store as vindication of a three-year-old, chainwide strategy focusing on more upscale brands, less widely distributed labels, crisper editing and reduced clutter. Bloomingdale’s stores have taken away about 70 percent of their signs, and key item displays no longer block aisles or other presentations.

“What you see in SoHo is very clearly a Bloomingdale’s store, but smaller, more edited and focused than any other store we have. It reflects a change in how we define our brand,” Gould said.

The 79,000-square-foot, six-level branch is weighted to contemporary and bridge lines in women’s and men’s, advanced denims, accessories and cosmetics, along with some private label and gifts. It’s housed in a 19th-century former brick factory with cast iron columns, exposed pipes and tin ceilings juxtaposed against high tech plasma screens, theatrical spotlighting, escalators and restored oak floors that still creak under customers’ feet. Located at 504 Broadway, the site last housed Canal Jeans Co. and reopened as Bloomingdale’s last April.

This story first appeared in the November 17, 2004 issue of WWD.  Subscribe Today.

It also reflects findings from the market research conducted by Gould’s group to figure out what shoppers want from the Bloomingdale’s experience. The store interviewed 20,000 customers from all of the 32 stores in the chain. “We completed this work in 2002 and we are incorporating its findings into our plans ever since,” Gould said.

“Customers want us to be their neighborhood store, stocked with merchandise that is ‘right’ for them, presented in bright, inviting and energizing formats and accompanied by service and amenities that support the upscale merchandise. Customers want us to be a destination. They want to be pulled in to see what is new this week.”

The customers also said that Bloomingdale’s is more about lifestyle than price. “So we intend to be dominant in contemporary assortments and stay focused in bridge as well.”

Gould also feels that what the SoHo store doesn’t have is as important as what it does have, and he’s not just talking about the merchandise. It’s about having less-aggressive discounting compared with the uptown store and other department stores. “A reduction in promotional activity is a natural extension of our upscale positioning,” he said. “We are aggressively distancing our brand from what many consider a department store promotional cadence. Regular-price selling is as important to our brand strategy, image and profitability.” According to Gould, at the SoHo store, the average unit sale for like families of business runs anywhere between 20 and 85 percent higher than average unit sales in all the other Bloomingdale’s stores.

Bloomingdale’s long wanted to open a second location in Manhattan, even if it doesn’t have any other locations elsewhere in New York City. A store in the Fresh Meadows section of Queens was closed years ago after the demographics of the community changed, and Bloomingdale’s shifted its focus to opening stores further out on Long Island, where many of its Queens clientele were moving.

The opening of the SoHo store, and its apparent success, raises expectations about Bloomingdale’s stepping out again with another scaled-down version of the famous 59th Street flagship, and whether the uptown/downtown strategy playing in Manhattan could work in other major cities.

Gould heightened the curiosity by suggesting the SoHo format has “great applications” in other locations, although he declined to specify what other cities in the U.S. are being scouted for possible SoHo-type stores. It is believed that Miami, Chicago and Los Angeles, where there are already Bloomingdale’s stores, could support SoHo-sized clones, whether the merchandise is skewed to contemporary offerings similar to SoHo, or whether it’s a more conservative approach to fashion.

However, operating two fashion stores not far apart presents the risk of one store cannibalizing sales from the other. Providing somewhat of a first-half review of the SoHo site, Gould said his organization saw that risk in Manhattan, and initially believed that SoHo would siphon about 3 percent of the sales from the uptown 59th Street flagship. But he added that preliminary indications suggest there could be less than a 1 percent transfer of sales.

SoHo, he maintained, would be “a complement, not a rival, to our Midtown flagship. So when the building on Broadway came on the market, the decision was relatively easy. Here was an opportunity for a small, tightly edited version of Bloomingdale’s, exaggerating the contemporary elements of our merchandise mix and store design that best suited that neighborhood.”

Gould said sales in SoHo have far exceeded expectations but didn’t provide specifics. Reportedly, the company expects first-year volume to exceed $50 million, compared with a preopening forecast of $45 million; productivity is close to $600 in sales per square foot, compared with $500 initially forecast.

In an interview earlier this year, Gould disclosed that Bloomingdale’s SoHo was selling more of the Young East Sider contemporary category than any other store in the chain, except for the flagship. Outside 59th Street, SoHo also is tracking as the top branch for men’s designer sportswear, the top cosmetics branch and the number three branch for handbags and fashion accessories.

It’s a given that elements of the SoHo store will filter into future locations. “Lessons from SoHo are being applied to plans for a new San Francisco store, to open in 2006,” Gould said. Though it’s far away from, and will be much larger than, SoHo, Gould said the San Francisco store is being developed with the same focused strategy and with a distinctive San Francisco mind-set. “While certainly far larger than SoHo, we will be just as pointed with our assortment editing and store presentations to create a store ambience and feel that is focused and relevant for this market. We see a significant role for exclusive product and limited distribution brands.” In a nutshell, he envisions the big San Francisco branch as feeling “specialized and easy-to-shop.”

Previously, Gould has said that store, which will open on Market Street, will include an assortment skewed to contemporary and bridge fashions and an ambience shaped more by Bloomingdale’s decor and personality than by vendor shops. San Francisco will be the 32-unit chain’s largest branch, with 270,000 square feet for selling. Bloomingdale’s also could try to reenter the Texas market, where it once operated a store in Dallas. The branch closed years ago.

The more specialized approach is not really new to Bloomingdale’s, considering the company has a new home store concept that’s up and running in Las Vegas in the Fashion Show Mall, and in Chicago, where there are two home units, in the former Medinah Temple in the city and in Oakbrook, a suburb. The SoHo store is too small to sell home goods, though there is a small gift shop.

When news broke that Bloomingdale’s was moving into SoHo, other retailers downtown felt threatened. However, Gould said the opening has been a “catalyst” for business at other stores in the neighborhood, rather than gobbling up a lot of business from nearby smaller stores. “Everything we see and hear suggests that we have captured a new customer base and generated incremental business in the market. We hear that many of our resources with their own retail stores in SoHo are actually doing better than before we opened.”

So rather than snatching sales from nearby stores, Gould said Bloomingdale’s, by its very presence, can actually help the neighborhood merchant by being “a brand builder.” The $2 billion Bloomingdale’s is a business that’s big, Gould said, but one that can still think local.