DEARTH OF THE COOL

Bloomingdale’s concept attracts shoppers, but not targeted hipsters
BY DAKOTA SMITH

It has been a year since Federated Department Stores unveiled one of its more ambitious projects to date: a specialty Bloomingdale’s department store in New York City’s SoHo district, in downtown Manhattan. And though the store might not be attracting the moneyed hipsters it was intended to, sales are encouraging. The concept could still be expanded to additional locations, executives say.

The store, which opened in April of last year at 504 Broadway, marked a departure for the chain, both in layout and merchandise. Unlike the other Bloomingdale’s stores across the country, the SoHo unit is small (only 80,000 square feet of selling space) and focuses on cutting-edge designers, and niche cosmetics and skin-care brands.

Executives had hoped the store, positioned as the hip, downtown companion to the Bloomingdale’s flagship, uptown on 59th Street, would add some edge to the department store’s image, while area retailers had anticipated an economic boost for SoHo.

Federated does not release earnings for individual stores, but Bloomingdale’s executives are calling the SoHo store a success, though they acknowledge that it still needs tweaking. “We’ve been thrilled with the performance so far,” said Michael Gould, chairman and CEO of Bloomingdale’s. “We’re hearing positive things from consumers, the marketplace and even from our competitors.”

The chain is looking at adding a third New York store. “I do believe there is another opportunity for another Bloomingdale’s,” Gould said.

In reviewing what has and hasn’t worked at the SoHo store, Gould says the denim, cosmetics and skin-care departments have done particularly well. The home section, which sells gadgets and houseware gifts, has been less successful. And the fine-jewelry department could be better too, he says.

Bloomies on edge
But the biggest surprise has to do with the customers who patronize the new store, Gould says. Bloomingdale’s executives thought the place would draw a very fashion-forward type. Instead, it is attracting pretty much the same kind of shopper as the 59th Street store, though slightly younger and less affluent.

“We’re not getting that very — and emphasis is on the word very — edgy customer,” said Gould. “That was our biggest misconception; we thought it would be edgier. Even the Bloomingdale’s at Beverly Center [in Los Angeles] is edgier.”

Further, he says, the merchandise that sells well at the 59th Street store also sells at the SoHo store, and vice versa.

Local commercial real estate agents and retail experts are not surprised. Some say SoHo is increasingly drawing youth-oriented retailers rather than the trendy top-end stores that have traditionally made their home there.

“I’m guessing that Bloomingdale’s believed they would sell more Zac Posen, and instead they are selling more Juicy Couture,” said Karen Bellantoni, senior managing director at Robert K. Futterman & Associates, a commercial real estate firm in New York City. (Bellantoni was referring to a high-end designer and a more mainstream apparel line, respectively.)

Though such luxury names as Chanel and Louis Vuitton remain in SoHo, Ferragamo recently announced that it would be leaving its outpost on Spring Street, while the stretch of Broadway surrounding Bloomingdale’s now contains chains typically found in suburban malls: Club Monaco, H&M and Old Navy, for example.

Farther up Broadway, Ann Taylor, Banana Republic and Sephora maintain stores, and specialty shops such as Scoop offer boutiquelike merchandise. Liz Claiborne’s Dutch fast-fashion chain Mexx is moving to SoHo from Union Square (around 14th Street), and another purveyor of cheap chic, U.K. chain Riess, opened its first U.S. store in SoHo in March.

The popularity of the Bloomingdale’s has pulled foot traffic past Spring Street, a stretch of Broadway that has been long been filled with discount clothing stores, says Bellantoni, who expects retail growth to extend farther down Broadway.

And the success of a large store in SoHo (Bloomingdale’s is the largest store to open below 59th Street in 50 years) may persuade other chains to venture into the area with a large flagship, says Bellantoni. A Bed Bath & Beyond or a Gap could easily move into SoHo, she points out.

Ever-SoHo bold
Federated had long considered adding a second New York store, says Robert Pressman, executive vice president of the national retail division at Studley, a New York City-based commercial real estate firm. Pressman, who represents Federated in commercial deals, says the choice to put a boutiquelike store at 504 Broadway was driven by economics (it is virtually impossible to put a large department store in a city these days) as well as the desire to attract a downtown customer base. When Canal Jeans, a local retailer, announced in 2001 that it would be vacating 504 Broadway, Federated took a look at the space, even though SoHo was in a post-Sept. 11 retail slump.

“It was a bold move coming into SoHo,” said Pressman. “They looked at this deal one month after September 11 and still decided to go with the deal.”

The new store opens up the possibility that a specialty Bloomingdale’s could enter another city, one that already contains a larger Bloomingdale’s. Gould says he thinks a small store could work in Chicago or Philadelphia. But it is less likely that a smaller Bloomingdale’s would enter a shopping mall, he says.

“I believe the same concept could work in a number of different places around the country, but ultimately, that is up to Federated to decide,” he said.

But Milton Pedraza, CEO of the New York City-based Luxury Institute, a research firm for providers of luxury goods and services, suggests that adding smaller, boutiquelike stores will only confuse customers. Bloomingdale’s New York flagship store sets a tone with its high quantity of merchandise, he says, and customers could leave disappointed if they walk into a smaller Bloomingdale’s expecting the same experience.

Bloomingdale’s biggest slip, Pedraza says, consists of the failure to decide whether it wants to target the luxury crowd, as Bergdorf Goodman has successfully done, or the mass-market crowd. “Bloomingdale’s is a wonderful brand,” he said. “But is it now a boutique or a department store? It becomes schizophrenic when you are trying to do both, and customers like consistency.”

Candace Corlett, a partner at Manhattan-based retail consulting firm WSL Strategic Retail, faults Bloomingdale’s for not updating most of its stores around the country, even as WSL research shows that nationwide, department store sales are on the decline.

“The majority of shoppers are seeing the same Bloomingdale’s they did 10 years ago,” said Corlett. “Bloomingdale’s classic mistake is patting themselves on the back for the launch of an edgier store while the company hasn’t done anything to impact the majority of the stores that shoppers are going to.”

We can be different
But Gould says Bloomingdale’s stands out as the one department store chain that is making an effort to be different. Renovations continue at other stores, he says, pointing to recent changes at the Bloomingdale’s stores in Boca Raton, Fla., and Chestnut Hill, N.J.

Changes are coming to the SoHo store too; Gould says there are plans to add a spa on the fifth and sixth floors eventually.

But Bloomingdale’s next big adventure is set for next year: the opening of a store in the Westfield San Francisco Centre in downtown San Francisco. At 337,000 square feet, this will be the country’s second-largest Bloomingdale’s after the 59th Street store.

The San Francisco store will incorporate some of the elements from the SoHo store, particularly with regard to space, focus and intimacy, says Gould.

“Very few people believed a department store could think outside the box,” said Gould. “I think we got out of the box, and we’re showing people that we’re not just going to be another department store.”