CALIFORNIA OPENINGS: RETURNING THE EDGE TO BLOOMINGDALE’S
Byline: David Moin / Louise Farr / Sarah Goldsmith
LOS ANGELES — It’s show time again at Bloomingdale’s.
At 9:30 a.m. Friday inside the new Century City store here, half an hour before the store’s doors were to open to the public for the first time, Michael Gould, chairman and chief executive officer, presided over a storewide meeting with 400 workers on the main floor.
And he didn’t mince words: “Today is a monumental day, the most important day in the history of this company,” Gould said.
Other Bloomingdale’s stores are opening in Newport Beach and Sherman Oaks Friday, and one opened in Palo Alto last Thursday. But the Century City site is “the bellwether store” for the California expansion, Gould told his workers.
The former Giorgio Beverly Hills ceo, who moved to New York to head Bloomingdale’s in 1991, said, “Ever since I left here five years ago, it’s been my dream to be back here in L.A.”
Now Gould has fulfilled his dream — at least partly — in the heart of the highly competitive California market.
The rest of his vision is to restore the glory and reputation Bloomingdale’s had in the Seventies and Eighties as the nation’s most innovative and hippest department store.
California could hold the key: It’s Bloomingdale’s big opportunity to step out again and propel the 124-year-old chain towards $2 billion in annual volume. Currently, it’s a $1.4 billion business including catalog sales. But the four California stores — Bloomingdale’s first in the state — are projected to add at least $250 million in combined sales. A fifth unit is opening in March in Beverly Center in Los Angeles, and two other units are set for Huntington, N.Y., and Aventura, Fla., next year.
Initially, the California expansion plan was loosely defined, involving opening a Beverly Hills store late next year and possibly one store a year for several years after that.
Plans were actually drawn up for Beverly Hills, but after Bloomingdale’s parent, Federated Department Stores, took over Broadway Stores in 1995, a quicker and easier vehicle for Bloomingdale’s expansion was at hand.
To open four stores this month, with more than 800,000 square feet of retail space combined, Bloomingdale’s doubled its usual construction pace, preparing furiously to build volume and customer relationships. As of last week, more than 100,000 store credit cards had been issued after the company blitzed the state with more than 800,000 applications.
Top store managers from far-flung locations were shifted to the West Coast, including Chris Cottey from the Chicago store, who is general manager of the 230,000-square-foot Century City unit. Bloomingdale’s also set up a regional office with about 12 executives — buyers, merchandisers and human resources personnel — to tailor the stores to the California market and report back to Bloomingdale’s central offices. Bloomingdale’s has two other regional offices, for the Northeast, and for the Midwest and Florida.
The chain also swiped executives from the competition, including Michael Lindblad, the regional vice president heading the California office, and Kathryn McDonnell, general manager of the Fashion Island unit. Both crossed over from Robinsons-May. In addition, dozens of former Nordstrom workers are at Bloomingdale’s Century City, possibly as many as 50, according to one Bloomingdale’s source. Gould said he had no information on that.
Before Federated gave the green light for expansion, Bloomingdale’s — a blue-chip retail name long perceived as able to grow into many more locations nationally, and possibly internationally — had to get its house in order.
Since 1991, it has been rebuilding, overhauling branches and operations, strengthening customer relationships through private shopping nights and maintaining customer profile books. The store also has been cutting costs and centralizing back-office functions such as accounts payable and credit into Federated headquarters in Cincinnati. The chain has more than doubled its rate of EBIT profits, reportedly to 11 percent of sales, from around 5 percent in 1991.
To pump up its branch system, Bloomingdale’s in the last five years has made greater use of sales data, EDI and Quick Response systems. In the process, it lowered its profile somewhat, eliminating the huge import merchandise extravaganzas that kicked off up each fall season with lavish, formal dinners yet actually did little for the bottom line, and losing thunder to Saks Fifth Avenue who snatched a lot of the high-powered cosmetic launches.
During this period, Bloomingdale’s was more fixed on key details, such as having the proper service and house-cleaning; assortments that were less cosmopolitan and more appropriate for the suburbs, and giving more emphasis to bridge, rather than designer collections.
“We moved most of the merchandise to a replenishment philosophy,” said Jeffrey Sherman, Bloomingdale’s president. Merchandise is being shipped more frequently, timed to when shoppers want to buy it, he said. “We’re in stock more often on what is selling,” Sherman said.
This year, Bloomingdale’s branches are posting 5 percent same-store increases, topping the gains of most other chains, which generally are running flat or a couple of points ahead nationwide. However, some units of its sister company, Macy’s West, which is one of Bloomingdale’s prime competitors in California, are said to be beating Bloomingdale’s numbers.
Bloomingdale’s 17 branches — there are 21 with the four new California stores — account for about 70 percent of the chain’s volume; the $500 million flagship contributes roughly 30 percent.
Even with all of the improvements, Bloomingdale’s has been criticized as having lost some of its edge in recent decades and for carrying many of the same labels as its competitors.
Gould, however, contends that the sparkle is back. “Bloomingdale’s in the Seventies and Eighties was a circus. People still want theater, they want to learn about merchandise and they want excitement.”
“There’s more happening today in our stores than ever, but it’s a very different world today. I’m talking about events with resources, with magazines. I’m talking about Only at Bloomingdale’s [a program for private label and exclusive branded merchandise].”
Gould said that in California, the chain may be able to tie in merchandise and run special events with Hollywood studios, and he stressed, “Relationships with customers are at a new level.
“The big dinners — I don’t think that’s where it’s at, unless there’s something very special happening. A grand opening is something very special.”
And as far as grand openings go, Bloomingdale’s came, saw and conquered. Gould, Sherman and fashion director Kal Ruttenstein were joined at the new store in Century City Thursday by Disney president Michael Ovitz for an opening gala raising $4 million to benefit UCLA’s School of Medicine support group, The Aesculapians.
Roller-skating clowns, limbo dancers and people dressed as Bloomingdale’s bags greeted the crowd of 1,200, including Disney’s Michael Eisner, and Joe Roth, Billy Crystal, Michael Keaton, Anne Archer, Magic and Cookie Johnson, Sydney Pollack and Quincy Jones.
“I’m in the stereo department now. I am Spartacus,” declaimed Crystal, struggling to make himself heard over the blare of repeated trumpet fanfares at the store entrance.
Jon Lovitz, holding court in front of Coach handbags, was reminiscing about the New York store. “I used to shoplift from there. Socks and underwear. It was a challenge,” he said.
By the end of the evening — highlighted by Jerry Seinfeld, who told infomercial and David Brinkley jokes: “Unlike David Brinkley, I know I’m on;” and a laid-back John Mellencamp, who managed to chew gum and sing at the same time — the crowd had swarmed to the front of the tent to dance along to Phil Collins.
The night before, Gould and company presided over a gala at the new 220,000-square-foot Palo Alto store in the Stanford Shopping Center that attracted 2,000 well-heeled guests and featured a Liza Minnelli concert. The event raised more than $1 million for Stanford University Medical Center.
Bloomingdale’s Sherman described the Palo Alto store as deliberately different from its East Coast counterparts: “This store is brighter, with white walls and less clutter, designed specifically for making it easy to shop for the consumers.”
Although the Stanford Shopping Center already hosts Banana Republic, Neiman Marcus, Nordstrom’s and Saks, Bloomingdale’s is hoping to “give shoppers a point of difference from other stores,” said Gould. “We will have a heightened level of customer service even in relation to our East Coast stores.” For example, the store’s state-of-the-art cosmetics and fragrance department accepts phone or fax orders that can be delivered or picked up.
Indeed, Gould’s retail theater is less about black ties and buffets, and more about finding different formats for merchandise presentation, easy shopping and service. Architecture and glitz come second.
He concedes to some merchandise overlapping the competition’s, particularly in designer labels, but points out Bloomingdale’s advantage as a full-line department store, selling home goods that Nordstrom, Saks and Neiman’s, as fashion specialty stores, don’t carry. While Saks and Neiman’s are deeper in high-end designer collections, Bloomingdale’s comes back strong in such areas as bridge, dresses, petites and in Paradox, for newer, trendier designers.
Moreover, Gould adds, private label is another point of departure, noting it represents 30 percent of men’s wear. He also says shops for designers, including DKNY, Ralph Lauren and Tommy Hilfiger, are being built with common interior design elements, to blend into the less cluttered, contemporary Bloomingdale’s settings, but without “neutering” designer identities.
There are other innovations in the new stores, such as the “59th and Lex” New York-style cafe, and Clinique’s “cyber” shop where customers can computer surf for products.
More dramatic are the store exteriors where Bloomingdale’s projects giant fashion images and text across metal screens, and the “open sell” cosmetic departments that invite customers to sample lipsticks and powders with a beauty adviser close by. Only one-third of the department has showcases; the rest is for touching and sampling.
There’s a customer makeover area surrounded by glass that darkens with the slip of a switch for privacy. The intent is not only to provide privacy, but to encourage interaction between the cosmetics experts and the customers. Gone are the traditional long cosmetics bays that separate shoppers from products and beauty advisers.
Similarly, jewelry counters run askew so shoppers can walk around and view merchandise from both sides of the cases. There are also “sliver shops” in sweaters, bridge areas and other categories that run down the center of the aisles, providing more opportunity to get close to the goods. Departments are shallower so the merchandise is never buried and is easier to see. Walls and aisles are curved for a smoother flow of traffic.
In many merchandise categories, there are four, six or more mannequins massed together, on the floor instead of on platforms, so customers can get up close. “I’m crazed about wanting the customer to touch the merchandise,” Gould said.