Macy’s might follow Bloomingdale’s in the industrywide push to open outlets, a sector surging in popularity among brands, retailers and consumers.
This story first appeared in the January 22, 2010 issue of WWD. Subscribe Today.
“To me, Bloomingdale’s was the first priority and a natural opportunity,” Terry Lundgren, chairman, president and chief executive officer of Bloomingdale’s parent Macy’s Inc. told WWD, referring to the retailer’s move into outlets this year.
“The upscale specialty department store group is well known in the outlet centers,” Lundgren added, referring to Nordstrom Rack, Neiman Marcus’ Last Call and Saks Fifth Avenue’s Off 5th chains. “Bloomingdale’s would be a natural addition. There is no plan for Macy’s outlets at the moment. As we learn the business with Bloomingdale’s, it could be something we consider.”
Bloomingdale’s said Thursday it will open its first four fashion outlets this summer or fall, confirming a WWD report on Jan. 13 that the chain was headed toward the lucrative distribution channel. The outlets will be about 25,000 square feet each and will sell apparel, accessories, shoes and jewelry. They are opening in Bergen Town Center, Paramus, N.J.; Dolphin Mall, Miami; Potomac Mills, Woodbridge, Va., and Sawgrass Mills, Sunrise, Fla.
“The timing now is right given the consumer’s particular focus on value in addition to fashion and quality,” Lundgren said. “The first Bloomingdale’s Outlet stores will be in excellent, high-traffic locations. Our real estate developer partners have been very supportive and encouraging as we pursued this strategy.”
With only 40 locations, it made more sense to lead with Bloomingdale’s outlets, Lundgren explained. Macy’s has more than 800 locations and would have to be more careful not to cannibalize existing units with outlets, and it’s already price promotional.
Some retail experts questioned why Bloomingdale’s didn’t select more upscale outlet centers such as those operated by Simon Property Group Inc. under the Chelsea Premium Outlet banner. But Lundgren said, “It’s just a matter of finding the right opportunities early on and these were available. Presumably, over time, we will find more locations.”
Nordstrom, Neiman Marcus, Saks Fifth Avenue and Lord & Taylor are accelerating outlet strategies. Coach is considered king of the sector, followed by Ralph Lauren and Phillips-Van Heusen, with its Calvin Klein brand. Bass, Adidas, Lacoste and Tommy Hilfiger are among the many players. Burberry has become more active, as has Victoria’s Secret, among others.
“The attitude is changing,” said Marvin Traub, the industry consultant and former Bloomingdale’s chairman. “Retailers now regard outlets as not simply a way of disposing problem merchandise but as an additional way of business like they regard the Internet. Outlets allow retailers to be more disciplined at full price.”
At the Bloomingdale’s Outlets, “A small percentage of the merchandise will come from our stores, but the vast majority will be fresh for the outlets and within the Bloomingdale’s matrix,” said Michael Gould, the retailer’s chairman and ceo. “They will not have any home furnishings in the beginning.” Bloomingdale’s already operates a furniture clearance center in Westchester County, N.Y.
Gould said some West Coast outlets will be considered in the future.
Arnold Orlick, a former Bloomingdale’s executive vice president for home, cosmetics and restaurant operations, who subsequently ran Rich’s and then Fortunoff’s, has rejoined Bloomingdale’s as senior vice president for outlet stores.
Of the four Bloomingdale’s outlets, Gould said only the Bergen Town Center unit is near a regular Bloomingdale’s store a few miles away at The Shops at Riverside in Hackensack, N.J. How the two coexist will be closely watched, he said, adding he suspects the proximity won’t be an issue. For Bloomingdale’s, “It’s no different from when you look at brands such as Calvin Klein, Ralph Lauren, Coach,” he said. “They all have outlets, and they’re nothing but positives. Our outlets will be consistent to Bloomingdale’s.”