By Barbara Thau
NEW YORK–In 2002, Bloomingdale’s had lost some of its tony sheen.
The retailer known for glitz and glamour had gotten too promotional. Its assortments had slipped down market.
“We decided that we were not going to win playing in the mainline department store arena,” Michael Gould, chairman and chief executive officer, told HFN.
That’s when Gould decided it was time to trade up the business and push it into the league of Neiman Marcus, Nordstrom and Saks Fifth Avenue.
Two key findings emerged from an 80-page survey Bloomingdale’s sent out to 21,000 of its shoppers.
“One, they did not want us to be both a department store and a specialty store: They wanted us to be in the specialty store area,” Gould said.
“Two, they wanted service levels on par with Saks and Neimans.”
What’s happened since 2002 has been a dramatic change that resulted from the then-new brand strategy.
“In 2007, when we followed up on the same group, we got a lot of credit for moving from the department store to the specialty store arena,” Gould said.
But the numbers speak louder than words.
Today, 71 percent of Bloomingdale’s business is limited-distribution, upscale merchandise, up from 44 percent in 2002, Gould said.
And the retailer will seek even higher ground.
“Our growth opportunity will be to continue to find ways to move this business upscale,” he said. “That is our DNA.”
Growth also will come via expansion and the Bloomingdale’s Direct business with a beefed-up leadership team.
Last month, Bloomingdale’s tapped Tony Spring, an executive who came up through the retailer’s home ranks, to be president. At the same time, Frank Doroff was named vice chairman over Bloomingdale’s Direct.
And parent company Macy’s is hot on the business.
On a recent conference call, Macy’s Chief Financial Officer Karen Hoguet called the retailer a star performer, and singled out the chain as an “aggressive growth vehicle.” Macy’s is now scouting sites for the upscale division, she said. Expansion will largely come from more open-air lifestyle centers as opposed to traditional malls—fewer of which are being built these days.
There also have been whispers that the retailer is feeling out international markets such as Dubai and China.
New stores would mark Bloomingdale’s next growth spurt.
The 40-store merchant has been in expansion mode in the past few years. Bloomingdale’s has opened five new units since 2006, including a West Coast flagship in San Francisco, and underwent “an enormous number of [store] redos,” Gould said.
Next up is a new store in Phoenix, which will bow in 2009.
Merchandising-wise, Bloomingdale’s upgrade has brought about a perceptual shift among tonier home vendors as it has worked to transform the brand into a kind of highly profitable, grand boutique.
“We’ve evolved to be a better store from the quality of merchandise, from the shopping experience,” Gould said.
“The bar moves everyday in business—we’re making those things appreciably better to be more of a relationship business, and moving away from being a transactional business.”
For example, the retailer secured prestige crystal supplier William Yeoward, “which is one of the key brands at Bergdorf. Now we’re building a relationship with Daum,” the French luxury home brand, Gould said.
“Lots of people can buy pretty merchandise,” Gould said. “We’re in the business of selling high quality, but have the ability to sell it profitably for ourselves and our manufacturers. We’re running a business that is highly profitable, and substantially more profitable than [some] others.”
Gould has often said Bloomingdale’s is the only upscale department store with a total home mix.
So how does he feel about Lord & Taylor entering that space as the department store plans to offer Fortunoff-branded home departments in the next few years? “We’ll see what happens,” Gould said. “Just because you can buy another business and pull it in” doesn’t mean it will be an automatic success, he said, noting Sears’ less-than-impressive integration of cataloger Lands’ End.
Unlike its brick-and-mortar business, Bloomingdale’s online arm is undeveloped, particularly in the home area.
“The Bloomingdale’s Direct business is the single biggest opportunity we have. We’re putting together a team there to drive that business.”
Last month, Bruce Berman, Bloomingdale’s chief financial officer, added president of Bloomingdale’s Direct to his title. The direct business includes Bloomingdales.com and the Bloomingdale’s By Mail catalog.
Making the online business “more compatible with the four-wall business is the great challenge we have,” Gould said.