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Bloomingdale’s has been driving hard to distinguish itself from the department store pack.
This story first appeared in the June 16, 2008 issue of WWD. Subscribe Today.
While the strategy has had more ups than downs, the retailer continues to elevate its appeal and offerings, expand to new locations and improve its top and bottom lines. And last month, its strategy received an industry seal of approval. Bloomingdale’s was named “Department Store of the Year” at the Global Department Store Summit, a conference in London where 53 chief executive officers of major department stores were asked to vote for the best in the sector in 2008 based on which one had an enviable profile, differentiated positioning, innovative product and service strategies and strong financial performance.
The $2.6 billion chain has 33 locations selling apparel and home merchandise, three that just sell home, and one furniture clearance unit.
Recently, the first Arizona location in Phoenix was announced, Texas and the Pacific Northwest are on the radar and overseas ambitions are growing, with the first site expected to be Dubai.
In an interview last week, Michael Gould, Bloomingdale’s chairman and ceo, said it was particularly gratifying to be recognized by a worldwide peer group, and discussed what Bloomingdale’s DNA is about and the future for the brand.
WWD: What makes the Bloomingdale’s profile so different from other department stores?
Michael Gould: Over the course of the last six years we have redirected our brand strategy to really move upscale, versus playing in the department store arena. It’s really about creating a Bloomingdale’s that’s branded, with a very distinct impression. When you look at what we have done, you have to see what happened in SoHo [where Bloomingdale’s four years ago opened a 79,000-square-foot unit specializing in contemporary merchandise]. This was the first time in my mind a department store really created a different model. Instead of the usual 170,000-square-foot or even 120,000-square-foot box, we did something that was unique. I always remember what Eugenia Ulasewicz, the president of Burberry in the U.S., said to me. She said in SoHo you have defined yourself more by what brands are not in the store, rather than who was in the store. We really proved that we could assort differently and truly define our customer differently.
WWD: What were some of the brands that got left out?
M.G.: Three of our largest. There’s no Ellen Tracy. We felt it did not fit the profile of younger contemporary customers we saw in SoHo, although we feel SoHo appeals to other customers too. Ralph Lauren did not open in that store. We didn’t think it was appropriate. We had long conversations with them. We did not open with Estée Lauder. We felt that we wanted to do certain things in our beauty department. We [took] a very pointed view.
WWD: How has the store performed?
M.G.: Year-to-date business is just phenomenal.
WWD: Doesn’t the pace of business have a lot do with New York’s strong tourist trade?
M.G.: Forty to 50 percent of that store is tourism, uptown [at the 59th Street flagship] it’s less. Probably 25 or 30. But the significance is we took [elements of] SoHo and went to San Francisco with it. Downtown San Francisco did not need another store. But we came in, defined ourselves again and then we went to South Coast Plaza [Costa Mesa, Calif.].
WWD: Describe the DNA.
M.G.: We have really tried to brand ourselves and who we are, and play in the upscale arena and still try to be differentiated. It’s a different DNA than the other outstanding upscale stores. We are not going to have the amount of designers that Neiman Marcus has. We are composed of a strong contemporary business. I do believe my people have made the biggest beachhead in contemporary. There’s also a different way of approaching our events, a different way that we approach cosmetics. The branding is also about taking the merchandise out of the aisles, putting more into the store design and making stores less cluttered. We reduced our signing by over 80 percent. In the old days, you would have Ellen Tracy on all three walls [of the shop]. On every T-stand or four-way, the name would be there too. We’ve spent tens of millions on services, seating areas, restrooms.
In intimate apparel on 59th Street we have a concierge service, telephones in the fitting rooms [to contact the sales help]. We are trying to take service to a whole new level. With all the difficulties in bridge, we reconceptualized the floor, mixing designer in. There’s Ralph Lauren Black, Missoni, Tory Burch. It’s another example of thinking out of the box.
From a survey of 20,000 of our customers, we came away with two epiphanies. First, that shoppers don’t want us to compete in both the upscale and department store arena [with similar merchandise that competed with Neiman’s lower price points and Macy’s highest]. At the time, 44 percent of our merchandise we defined as exclusive or limited distribution. In three years, we thought it could move to 55 percent. It’s currently at 72 percent, in five years. We have almost doubled the average unit sale over the course of six years. The second epiphany is that people expected our service levels to be at parity to Neiman’s and Saks, but they didn’t expect us to be as good as Nordstrom.
WWD: Can your service ever be as good as Nordstrom’s?
M.G.: Yes. It’s a goal. Nothing happens overnight. They are terrific. They have created a mind-set and a perception. The thing that impresses me about Nordstrom and its service is the consistency. We have a lot of instances of great service, but they are consistently at a very high level. We are working on it, and running really fast.
WWD: Can the SoHo scaled-down Bloomingdale’s be replicated?
M.G.: I think it can. It hasn’t been yet, but it’s one of the many things we are looking at. If we can find appropriate places, the success there can absolutely be replicated.
WWD: What’s the plan for renovating the main floor of the flagship?
M.G.: There will be a lot of innovation. We’ll show product differently. We will have some very expanded businesses and a lot of new brands coming in. We’ll make walking that floor much easier. No resource will be behind any other resource. Just about every one will be on an aisle. This will be our single biggest renovation.
WWD: You have also been adding restaurants to your stores, such as Charlie Palmer in South Coast Plaza.
M.G.: It’s the first time there’s a high-class celebrity chef in a store. The whole concept is something unique. We believe food has to play a bigger role in our stores. Someone who shops in one of our restaurants, spends two or three times as much. It’s a more loyal customer.
WWD: Bloomingdale’s had a tough first quarter, though not as tough as Macy’s and better than most. How has the store been performing over the longer term?
M.G.: Our performance since 2002 has been spectacular. We are performing [on par] with Neiman’s and Nordstrom. Since 2001, actually, every year has been a major improvement over the year before.
WWD: Where will you open stores next?
M.G.: I think there are a lot of opportunities for Bloomingdale’s around the country. SoHo has proven that you can run stores at different sizes in different markets with a sense of creativity.
WWD: When will you announce that you are opening in Dubai?
M.G.: We don’t speculate on rumors.