Bloomingdale’s Inc.

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Bloomingdale’s Inc.

1000 3rd Avenue
New York, New York 10022
U.S.A.
(212) 705-2000
Fax: (212) 705-2001

Division of Federated Department Stores, Inc.
Incorporated: 1872
Employees: 10,800
Sales: $1.1 billion
Stock Exchanges: New York
SICs: 5311 Department Stores

Bloomingdale’s Inc. operates 15 premier department stores in nine U.S. states, bringing in a total of approximately $1.1 billion in annual revenues. Famous for its glamorous flagship store in uptown Manhattan, Bloomingdale’s traditionally caters to an upscale, trendy crowd. In the 1970s and 1980s, the store’s flashy merchandise displays and intensely theatrical atmosphere made it a major tourist attraction in New York City, second only to the Statue of Liberty. Bloomingdale’s fell on hard times in the early 1990s, when Campeau Corp. bought its parent company, Federated Department Stores for $6.6 billion. Federated filed for Chapter 11 bankruptcy in 1991. After undergoing a number of management changes, Bloomingdale’s emerged as a more subdued and less theatrical merchandiser with a focus on customer service and shopping ease.

According to a Dun and Bradstreet report, Bloomingdale’s history can be indirectly traced to mid-nineteenth century France, when the wife of Napoleon III invented the hoopskirt to hide her pregnancy from the French aristocracy. Across the Atlantic, Benjamin Bloomingdale, a New York entrepreneur, sensed that a major fashion trend had begun in France and opened Bloomingdale’s Hoopskirt and Ladies’ Notions Shop on Manhattan’s upper East Side. His sons Lymen and Joseph ran the store while Benjamin peddled the highly fashionable hoop-skirts to dressmakers and merchants across the eastern states.

At that time, the East Side was a working class neighborhood, full of shanty towns, garbage dumps, and stockyards. In spite of it’s humble location, Bloomingdale’s attempted to position itself as a vanguard of fashion for New York socialites. In 1872, as the popularity of the hoopskirt was declining, Lymen and Joseph opened Bloomingdale’s East Side Bazaar and offered a variety of ladies’ “skirts corsets and fancy goods,” and “gent’s furnishings.” The move was a bold one at the time because most respectable retail stores specialized in only one trade. Even bolder was the decision to remain in the upper East Side. Most of their customers (and all of their competitors) were located on the borough’s tonier West Side. Nevertheless, the Bloomingdale brothers set up shop in a small, ordinary-looking row house near Third Avenue and 56th Street. Their store was a harbinger of things to come.

It seems the brothers were aware that their neighborhood was undergoing a major transformation. The Metropolitan Museum of Art had recently opened on the East Side, St. Patrick’s Cathedral was erected a few blocks from Bloomingdale’s, and Central Park and the New York City subway system were being developed. Within three years after the store’s opening, wealthy families began moving into the upper East Side, building elegant brownstones that surrounded the new park. Bloomingdale’s, a pioneer of the department stores that would dominate the twentieth century retail market, was there to greet them, offering ladies a dazzling assortment of high-end women’s fashions.

In 1886, the brothers opened a new store with large plate glass display windows and spacious merchandising areas at Third Avenue and 59th Street. The two had a flair for dramatic presentation of merchandise, which continues to be a Bloomingdale’s trademark to this day. Instead of “stuffing [windows] with an assortment of the goods they sold—as was common practice—they designed each window as a dramatic tableau,” noted one writer. “Only a couple of their products served as props on a theatrical mise-en-scene.” Many of these products were European imports, which greatly added to the store’s elegant image.

By the turn of the century, the department store was becoming a mainstay of the urban retail industry. Bloomingdale’s growth skyrocketed, offering customers everything from ladies’ stockings at 10 cents a pair, to $10 men’s wool suits and $149 upright pianos. The store’s growth was facilitated by its convenient location at a hub of New York City’s horse-drawn trolley system. In 1902, Lymen Bloomingdale’s son, Samuel J., capitalized on the store’s location by adopting the advertising slogan, “All Cars Transfer to Bloomingdale’s,” and commissioned artist Robert F. Oucault, creator of the famed Buster Brown Shoe drawings, to create a series of paintings around the theme. The campaign was the largest of its era, with the slogan appearing on everything from billboards to over 5,000 beach umbrellas offered free to street vendors and delivery cart drivers.

When Lymen Bloomingdale died in 1905, Bloomingdale’s was handling a volume of $5 million per year. Hard times hit shortly after, as the whims of the upper class shifted once again and a popular shopping area sprang up further downtown, on Sixth Avenue between 14th and 23rd Street. Samuel J. Bloomingdale took over as president, and kept the business from declining drastically. When player pianos were invented, Bloomingdale’s sensed another hot trend, and became the largest player piano distributor in the nation, adding an annual average of $2.5 million to its coffers. In 1913, the 58th Street Station of the Lexington Avenue subway was constructed in Bloomingdale’s basement (further supporting the “All Cars Transfer to Bloomingdale’s” message) and business picked up again.

By 1929, sales were $25 million. The following year, Bloomingdale’s merged with Federated Department Stores, uniting it with three retail giants: Wm. Filene’s of Boston, Abraham and Straus of Brooklyn, New York, and F. & R. Lazarus of Columbus, Ohio. Samuel Bloomingdale stayed on as honorary chairman of Bloomingdale’s board and later went on to serve as director of Federated. In 1931, the Bloomingdale’s building, which had grown by spurts and starts to engulf the entire block, was completely redesigned by architects Starret and Van Vleck in the Art Deco style. The store weathered the economic hardships of the Great Depression and World War II, and in 1947 entered into a new era of fashion merchandising.

“Exclusivity, excitement and sophistication,” were the images Bloomingdale’s sought to create when it hired prominent fashion designers Claire McCardell, Adele Simpson, and Pauline Tirgere to create an exclusive “Bloomingdale’s Collection” in 1947. The collection was launched with an enormous media event entitled, “Women of the Year, 1947,” and paved the road for further, far more elaborate events in the future. That year, Bloomingdale’s also instituted its “model rooms,” which showcased the talents of designers and artists such as architect Frank Ghery and filmmaker Federico Fellini while at the same time promoting special merchandise that tied in with the theme. Both campaigns were successful. Components of the original “Bloomingdale’s Collection” are now part of the Metropolitan Museum of Art, and—more importantly for business—when Bloomingdale’s inaugurated its first branch store in Fresh Meadows, New York, in 1949, over 25,000 people came through the store on opening day.

A decade later, Bloomingdale’s expanded on these two concepts and introduced “Casa Bella,” a 1960 promotional campaign that featured in-store cultural exhibits highlighting home furnishings and products from Italy. The following year, the store captured the media’s attention by creating the first “designer shopping bag” to promote its “Esprit de France” exhibit. The design by artist Joseph Kinigstein was a reproduction of French tarot cards in dramatic shades of red, black, and white.

In 1962, Marvin S. Traub became merchandising manager at the store. A “constant traveler in search of the unusual,” Traub made the store his museum. “The new direction in merchandising was both to seek and to create,” says company material. “Buyers covered the globe to find exclusive and one-of-a-kind items. When they couldn’t find what they wanted, they had it made.” Traub made an institution of Bloomingdale’s international fairs, which highlighted products from countries such as China, Mexico, and France, and inaugurated an era marked by even higher glamour and extensive in-store displays.

In 1969, Traub was appointed president of the company. Bloomingdale’s volume was outgrowing its flagship store and, in addition to “generating excitement” with its merchandising, management focused on managing space and expanding business through opening branch stores. That year, two more branch stores opened in Garden City, Long Island, and Jenkintown, Pennsylvania. Bloomingdale’s also launched a chain of home furnishing stores on the East Coast, offering products from the flagship’s home furnishings department.

By the time Bloomingdale’s celebrated its 100th anniversary in 1972, its flagship store had estimated sales of $100 million a year. In-store displays became so elaborate that retail analysts coined the term “retailing as theater” to describe them. Model rooms became even more showy, typified by a 1971 display called “The Cave,” a multi-level structure wrapped completely in white polyurethane. According to a survey at the time, over 60 percent of its customers lived and worked in the luxury high-rise apartment and office towers nearby. Bloomingdale’s catered to the neighborhood’s young, affluent crowd by capitalizing on the popular trends of the day, be they pet rocks or glacial ice cubes. To maintain its prestigious image, Blooming-dale’s launched fashion designers such as Ralph Lauren, Perry Ellis, and Norma Kamali, and opened in-store boutiques for well known designer labels such as Yves St. Laurent and Calvin Klein.

“On Saturdays, Bloomingdale’s is the biggest party in town,” Traub told the New York Times on the store’s 100th anniversary, “It is a place where the young make dates for the night. We are proud that more and more people call us ’Bloomie’s.’ “Bloomingdale’s capitalized on this close relationship with the young and trendy by stamping the name “Bloomie’s” on ladies’ panties as part of its launch for intimate apparel in 1973. As word of the store’s incredible atmosphere spread, Blooming-dale’s became a major tourist destination, and anything stamped with the name “Bloomie’s” was considered a hot souvenir. The store’s cachet was secured when the Queen of England visited the store in 1976.

Sales continued to grow in the late 1970s, fueled in part by the 1978 launch of the Bloomingdale’s By Mail catalog. In its first decade of operation, annual catalog sales grew at a rate of 25 percent by catering to high-income households across the United States where no Bloomingdale’s stores existed. The Bloomingdale’s chain continued to expand, however, and by 1981 12 stores had been built along the East Coast, in Florida, and in California. Sales volume was $566 million in 1981, and leapt to $647 million in 1982.

The retail market boomed in the early 1980s, growing 31 percent between 1980 and 1985. During that time, Blooming-dale’s sales increased a 48 percent, as new branch stores opened in Florida, Texas, and Pennsylvania. In the mid-1980s Bloomingdale’s By Mail sales grew so quickly that the catalog ran into severe inventory problems. But Bloomingdale’s image in the public eye remained untarnished. It held exclusive distribution rights to the Giorgio Beverly Hills fragrance line, the best-selling fragrance of the decade, and continued to dazzle customers with its merchandising. As the Los Angeles Times said, “If you wanted to be really with it, you had to go to Bloomingdale’s.”

In 1987, the Campeau Corporation paid $6.6 billion in a much publicized hostile takeover of Federated Department Stores. Allegedly Campeau’s chairman Robert Campeau and his family were shopping at Bloomingdale’s Boca Raton store and, as the story goes, ’ They liked it. They liked it so much, in fact, that Campeau bought Federated, thereby acquiring … Bloomingdale’s.” Total takeover costs were $8.8 billion, a figure which caused some Wall Street analysts to question the new company’s financial health. Campeau immediately streamlined operations throughout Federated, eliminating upper management positions in a move to cut $50 to $60 million from operating expenses. A large portion of the cuts were from Bloomingdale’s operating budget, including the elimination of 245 jobs. Campeau then announced plans to open 17 to 18 new Bloomingdale’s branches in the United States and his native Canada by 1993.

The following years were tumultuous for Bloomingdale’s. According to Traub’s book, Like No Other Store, Campeau projected Bloomingdale’s earnings to grow from $128 million to $178 million in two years. Traub described those projections as “wild,” and added, “No banker, ever, and I repeat, ever came to Bloomingdale’s to ask if I thought we could deliver those numbers.” The new budget cuts overburdened the store, and while it was still considered a posh place to shop, Blooming-dale’s atmosphere began to reflect the tensions in upper management. A new branch which opened in Chicago experienced slow growth. Both the Bloomingdale’s catalog and its stores had inventory problems. Customer service, which had been notoriously poor to begin with, began to lessen.

In an attempt to improve inventory levels, Bloomingdale’s By Mail’s order fulfillment center was moved from Virginia to Connecticut. According to Catalog Age, the transition was difficult. Customer satisfaction was low and sales were slipping. The company mailed 27 different books per year, and in the years between 1987 and 1989 experienced a 100 percent employee turnover.

In 1989, Campeau decided to put Bloomingdale’s up for sale, and Traub attempted unsuccessfully to buy the store. In January 1990, Federated filed for Chapter 11 bankruptcy protection from its creditors. Federated’s management, believing that Campeau “drove the company” into bankruptcy, ousted him from his position. At Bloomingdale’s, Traub was asked to find a replacement for himself. In early 1991, after many disputes and discussions, Traub resigned and was replaced by Michael Gould, former president and chief executive of Giorgio Beverly Hills and Robinson’s Department Stores in Los Angeles. Perhaps in honor of Traub, Bloomingdale’s staged “Tempo d’Italia,” its largest international promotion ever, complete with gala party and an award-winning documentary that is now at the Metropolitan Museum of Art.

The story of Traub’s departure and Gould’s commencement as chairman is perhaps illustrative of the transformation Bloomingdale’s was about to undergo. On that day in New York City, pom pom girls and a marching band bid farewell to Traub as he exited the first floor, while the new chairman and chief executive officer quietly escorted designer Calvin Klein through the store’s third floor bridge apparel department, discussing proposed changes in sportswear merchandising and the Calvin Klein boutique.

Under Gould, Bloomingdale’s atmosphere was more subdued, or as the Los Angeles Times put it, “more comfortable and less arrogant.” Gould’s proposed changes included less glamorous merchandising and more attention to customer service. He redesigned elements of the flagship store, creating wider aisles, grouping departments with related goods together, and improving inventory levels. All stores offered a wider array of “bridge” products and moderately priced designer brands. To maintain Bloomingdale’s exclusive image, Gould established an “Only at Bloomingdale’s” fashion collection.

In 1992, after two years in court, Federated pulled itself out of bankruptcy. In August of that year, Bloomingdale’s opened its 15th store at the Mall of America in Bloomington, Minnesota, and announced its plans to open four stores in southern California. Catalog operations improved and began to show a small profit. 1992 sales increased five percent over the previous year to $1.201 billion, with earnings of $54 million.

As it neared its 125th anniversary, Bloomingdale’s was once again undergoing a major transformation. As Gould said, “We’re in a transition from being a merchandising organization, which focuses just on the merchandise, to being a marketing organization, which focuses on the customer.” This attention to customer service was perhaps also a reflection of changing customer demands. As the retail boom of the 1980s settled into leaner years, customer interests settled too. 1993 sales increased slightly over 1992 to $1.216 billion, a sign that change was slow, but coming. Gould’s management style attracted less publicity than his predecessor’s, but given the economic conditions of the 1990s, that style might be the ticket to keep Bloomingdale’s at the forefront of the retail industry.