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Bergdorf Goodman’s Joshua Schulman Unveils Store Strategy

The luxe retailer is unleashing a spectrum of projects this year — 40 in all — putting construction at a feverish pitch at both the women’s and men’s stores.

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Joshua Schulman is reworking Bergdorf Goodman's real estate.

John Aquino

Rendering of the "ultraluxe" format for Chanel accessories.

Rendering of the "ultraluxe" format for Chanel accessories.

Courtesy Photo

The vision for Berluti at Bergdorf's

The vision for Berluti at Bergdorf's

Courtesy Photo

Bergdorf's will create an area for men's leather goods and accessories.

Bergdorf's will create an area for men's leather goods and accessories.

Courtesy Photo

NEW YORK — It’s luxurious and elegant, but there’s room for improvement.

Bergdorf Goodman, seeking to tighten its hold on many of the world’s top designers and enhance its singular shopping experience, is unleashing a spectrum of projects this year — 40 in all — putting construction at a feverish pitch at both the women’s and men’s stores.

It’s an unprecedented spurt of change, from creating new designer shops, to relocating and rebuilding others and unveiling a few formats not seen at the store before.

It’s also the first major strategic maneuver by Joshua Schulman, who has been president of Bergdorf Goodman since May 2012 and wants to make his mark. Schulman is seeking to elevate Bergdorf’s already high productivity and sustain the momentum after last year’s big 111th anniversary celebration for the store, which was in the works before his arrival. Bergdorf’s this month unveiled a redesigned Christian Dior boutique with mirrored walls, a hand-plastered ceiling and one-of-a-kind furniture to reflect the aesthetic of Dior’s artistic director Raf Simons, and last year launched a new men’s contemporary floor and men’s “shoe library” in the men’s store directly opposite the women’s store.

“What I have really been doing since I arrived is getting to know the business, the vendors and the people, and formulating a strategic plan. The most important element of that is how you realign the square footage and deploy the capital investment in the women’s and men’s stores,” Schulman said during an interview in his office, detailing the plans.

Among the key changes he cited at the women’s store are:

• Chanel and Céline accessories will “anchor” the 57th Street and 58th Street sides, respectively, to improve the flow of traffic through the main floor. Chanel triples in size and relocates in direct line of sight from the Fifth Avenue entrance, taking over some back office space and Loro Piana, which relocates to the “arcade” area by the escalator.

 

• The women’s shoe salon on two, typically the busiest destination in the store, will grow 20 percent in size, although Schulman declined to reveal the total square footage. Gianvito Rossi and Paul Andrew will be added on the floor, though more additions could happen as executives reimagine the floor plan.

• The third floor, for advanced designers, will see a realignment entailing a reworked Saint Laurent shop reflecting the influence of creative director Hedi Slimane; Azzedine Alaïa will be expanded with a dramatic frosted backlit wall; Balenciaga will be renovated per Alexander Wang’s vision for the brand; Céline will create its largest in-store shop in the U.S., and there will be new shops for Stella McCartney, Alexander McQueen and Marc Jacobs.

At the men’s store, Bergdorf’s is creating:

• A new second floor renovated with a sophisticated men’s clothing complex and shops for Ermenegildo Zegna and Brioni — the anchors — as well as ones for Ralph Lauren Black and Purple labels and areas for Kiton, Isaia and Attolini. An escalator will connect the second and third levels.

• A luxury accessories section on the main floor, to the right of the Fifth Avenue entrance, including leather goods, sunglasses, fragrances and skin care. Men’s leather goods is one category where Bergdorf’s has only scratched the surface.

• The first Berluti in-store shop in the U.S., for clothing, sportswear, leather goods and shoes, on two, with a separate footwear outpost on one. “LVMH [Moët Hennessy Louis Vuitton] is investing in Berluti’s reinvention,” Schulman said.

• A bar/café, yet to be named, on two by the rotunda.

“Bit by bit, we try to make the space more efficient,” said Schulman, who has likened Bergdorf’s to a Rubik’s Cube — the box doesn’t change in size, but its parts must be manipulated for the best utilization of space. The construction in the months ahead “will result in a little more selling space, but in general the square footage is finite.”

Most of the construction is expected to be complete by the first week in September, with Berluti and the bar seen opening later in the fall. That means some serious disruption to business beforehand. “It’s obviously a challenge because certain businesses do get displaced for a certain amount of time. But we have a team of people that are really dedicated and expert at moving things and keeping the traffic flowing,” Schulman said.

With 150,000 square feet in the women’s store and 40,000 square feet in the men’s store, Bergdorf’s exceeds $600 million in annual sales, comparable to the revenues generated by the Manhattan flagships of Saks Fifth Avenue and Bloomingdale’s, which have far greater square footage and generally less expensive merchandise. Saks Fifth Avenue’s flagship is 646,000 square feet with roughly 340,000 square feet for selling.

There’s a long way to go before Bergdorf’s hits $1 billion in sales, yet there’s a sense the milestone is attainable, and a determination to drive volume given that the store’s parent company, the Neiman Marcus Group, is said to be eager to go public in the near future. NMG was purchased by Texas Pacific Group and Warburg Pincus in 2005 for more than $5 billion, and the owners want some payback. Schulman declined to comment on the speculation.

The Bergdorf team has been aggressive in social media, omnichannel and special events and from time to time has considered opening a third store outside New York City, though that doesn’t seem likely in the near future. If anything, another men’s store is a possibility, considering any attempt to replicate the women’s store, housed in a nine-story 1928 Beaux Arts emporium with unique architecture, would fall short. Prior to the recession, the company reconsidered branches and eyed Las Vegas. In 1972, Bergdorf’s did open a branch in White Plains, which was not successful and was converted to a Neiman Marcus store that is successful.

“The brand is bigger than the business, but there are no specific plans to expand outside New York,” Schulman said. “Right now we are very focused on the existing stores and the Web site. There is a lot for us to do in New York City, and we are also very focused online to reach a broader audience.

“The most important thing is really our strategy to invest in the Bergdorf Goodman brand across channels, to highlight its status as the ultimate luxury store and as a fashion authority,” said Schulman, who was formerly Jimmy Choo’s chief executive officer and, earlier, executive vice president at the Gucci Group.

 

“It is really a balance of luxury and fashion that is part of the magic of Bergdorf Goodman, and we have a pretty significant capital investment program to highlight that,” added Schulman, who declined to reveal the amount the retailer is spending on the various initiatives. “We play strongly with luxury houses like Loro Piana and Chanel, which have really deep heritages like Bergdorf Goodman. We also have a very important fashion business with Givenchy and Azzedine Alaïa,” among other designer labels. “It’s that mix of both that’s really at the heart of the store.

“Clearly we have a core customer who loves Bergdorf Goodman and has been shopping here for decades. We know her very well, and at the same time we have a very important fashion business. Sometimes we don’t get credit for being the fashion authority we are,” said Schulman, who points out such launches as Isabel Marant and, for fall, Christopher Kane and Anthony Vaccarello — which helps reinforce “our fashion authority. It is a healthy balance.”

If there have been any complaints about Bergdorf’s, it’s that some see too many lines and selling floors that are not so easy to navigate. But Schulman counters the criticism, indicating that “we have edited out our contemporary biz on 5F. We’ve edited 22 brands off the floor since my arrival, to have a sharper focus and point of view.” Editing at Bergdorf Goodman is “an ongoing process. If you go through the store carefully, you will notice some important brands that we have decided to part ways with.”

He declined to cite any labels, but other sources pointed out that Gucci handbags, Tory Burch ready-to-wear and Miu Miu are among the departed. “We are being very strategic in our mix. We have cleaned up a lot on 5F,” Schulman stressed.

“Every brand wants to be here, but we can’t and we are not interested in doing business with every brand. We are interested in curating brands. The brand leaders and the designers are very passionate about what happens at Bergdorf Goodman. I am building strategic partnerships and relationships. I am generally not involved with picking products,” though he will visit showrooms and go on buying trips.

In some cases, brands could be better situated. “Chanel has been the best-kept secret at Bergdorf Goodman, tucked behind an escalator and not visible from any main entrance,” Schulman acknowledged. However, Chanel accessories will triple its space, expanding so there’s a clear vista from the Fifth Avenue entrance. The Chanel space will transform into an “ultraluxe” format with a gold woven wall and black marble floor border spotlighting the most precious and expensive skins. It’s being designed by Peter Marino, exclusive to Bergdorf’s.

 

The men’s store, too, has its challenges, particularly on the first floor, which feels choppy, with too many walls, a front rail that does more to impede rather than facilitate traffic and some weak adjacencies. Schulman said there’s “a myriad” of explanations about why brands land where they land in a store. “I can look at things with a fresh set of eyes,” he said.

 

“When I first got on the job at Bergdorf Goodman, I was surprised to see the magnificent array of cuff links,” said Schulman, whose experience is on the wholesale side and not running a big retail operation. “Yet we didn’t have any iPad covers in the men’s store. We are now building a luxury men’s leather goods shop, with iPad covers, messenger bags, briefcases, all sorts of accessories for the modern executive. Men are carrying a lot more stuff and are more comfortable carrying stylish leather goods to tote all of their technology At the same time, it’s important to keep the cuff links.”

In other key changes ahead, Bergdorf’s will “refresh” the modernist accessories in the women’s store to do justice to Balenciaga, Proenza Schouler, Givenchy and Lanvin. Products will be displayed in an efficient way for easier shopping and to enhance sales. “Handbags continue to be among the most coveted categories for our consumer. Handbags and shoes have had a great deal of innovation. Wherever you see innovation, whether its ready-to-wear, bags or shoes, you see the consumer respond,” Schulman observed.

On two, the big news is the shoe salon enlargement, into the space currently housing Fendi, which will relocate. “We believe we have a competitive advantage with shoes, because of the residential nature of the salon and because nobody else has the depth of assortment and balance between powerhouse brands and emerging talent,” Schulman said. “Obviously, this is a category I am passionate about.”

At the men’s store to the left of the Fifth Avenue entrance will be Brunello Cucinelli, and in the middle of the floor will be a “special brand” opening its first shop-in-shop in the U.S. Schulman declined to disclose the identity, pending finalizing the arrangement. Charvet will be situated a bit farther back to a more logical space by furnishings.

Outside reworking the brick and mortar, Schulman has reorganized much of the team since joining the store, adding two new senior vice presidents and general merchandise managers: Tracy Margolies for handbags, women’s shoes, beauty and 5F contemporary ready-to-wear, sportswear and accessories, and Elizabeth Hui von der Goltz for fine apparel (couture, advanced designer and evening); designer sportswear; bridal; coats; lingerie; swim, and jewelry. John Capizzi became vice president and general manager for the women’s and men’s stores.

Schulman is also stepping up how digital technologies are incorporated into the store operations for more synergies, with some sharing of inventory in shoes and handbags already begun so the store can ship online orders. All sales associates have been issued iPhones in the past year, and at Céline accessories, there’s an iPad to view the full range of product, which is impossible to put out on display given the finite space. Runners retrieve products from storage when there is a request for an item. Additional iPads elsewhere in the store are being considered. Also, a redesign of the Bergdorf’s Web site is in the works so that by the summer it should be faster, more user-friendly and reflect an “elevated sense of luxe” with greater video content that links to the BG Magazine.

With important brands, Bergdorf’s takes a 360-degree approach. Manolo Blahnik, for example, this month made a personal appearance and was publicized through a “full omnichannel campaign,” executives said, entailing Facebook invitations, an Instagram contest to win a pair of custom Manolos, blog posts, e-mails, an editorial page on bg.com and an ad in The New York Times. The documentary film “Scatter My Ashes at Bergdorf Goodman,” made for the 111th anniversary and shown to Bergdorf employees, vendors and designers and friends, will open in between 15 and 20 major U.S. markets starting May 3, in additional movie theaters overseas in the fall and on airlines. A New York premiere will be held at the end of April, and a DVD will be released in time for New York Fashion Week.

“It’s a little bit about doing everything at once,” Schulman said.

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