Bloomie’s Getting Into Outlet Store Biz
Macy’s Inc. announced
Bloomingdale’s is following Nordstrom and a host of other competitors into
the outlet business with plans to open four stores in the summer or fall
of this year.
The first upscale
outlet stores, which will run roughly 25,000 square feet each, will open
in Bergen Town Center in Paramus, NJ; Dolphin Mall in Miami; Potomac Mills
in Woodbridge, VA; and Sawgrass Mills in Sunrise, FL. The chain expects
to roll out further outlets in 2011.
“Bloomingdale’s
Outlet stores are an opportunity to expand our presence in new and existing
markets, as well as to remove clearance from full-line Bloomingdale’s stores
in a timely manner,” said Michael Gould, chairman and chief executive officer
of Bloomingdale’s, in a press release. “The customer experience in these
stores will reflect the Bloomingdale’s brand with a strong value message.”
Bloomie’s
new outlets will sell a range of apparel and accessories reflective of
what the chain offers in its department stores.
The company has
hired Arnold Orlick, the former president of Federated Department Stores’
(later Macy’s) Rich’s/Lazarus/Goldsmith’s division in Atlanta, to run the
outlet store business.
Macy’s Inc. is
not alone in pursuing an outlet store strategy. Nordstrom has been growing
its Rack business and many others are opening outlet locations, as well.
"We
are just seeing a tremendous interest from brands, retailers and developers,"
Lisa Quier Wagner, president of Quier Target Marketing Inc., told Retail
Traffic.
"I’ve been in the industry 21 years, and I’ve never seen an interest in outlets
as acute as it is now."
Success, said Ms. Quier Wagner, “is all
about the brand. The consumer is attracted to the brand and the discount, but
the brand first. The multi-brand and discount stores don’t fare as well because
the consumers look at the store and they don’t understand what it’s selling."
Discussion
Questions: What are your thoughts on the rush by a growing number of retailers
to open outlet stores? What will Bloomingdale’s need to do to succeed in its
outlet store venture?
Bloomingdale’s’ used to be special with their ubiquitous brown bag. The Macysization of the brand into outlets continues to water down what made them great. What’s next Macy’s? Outlet stores named Marshall Field’s?
Outlet retailing has evolved in recent years. What started out as a way to sell seconds and bad buys is now a profitable alternative channel. The expansion of Private Label or own brand has retailers re-thinking the idea of discounting out unwanted merchandise. You want to control the all the way through to a consumer sales rather than let someone degrade your brand image.
Rule number one is to not have the retail outlets compete directly with the primary stores. Rule number two is maintaining the image, even if it means buying merchandise just for sale in outlet stores.
My biggest concern is that the outlet business ends up being a distraction to core business operations. I’ve seen it happen before.
Bloomie’s has managed to stay relatively unique in the middle of an ocean of Macy’s. It would be a shame if, by default, it became all private label of the “good, better, best” variety.
I wonder why Macy’s outlet wouldn’t set up a store-within-a-store for Bloomie’s close-outs. It’s cleaner.
The race into outlet stores is occasioned by those retailers hearing the starter gun go off too soon–and/or not knowing what retail race they want to be in.
Outlet stores aren’t what they pretend to be. They aren’t particularly cheap and they have many sub-standard items.
Once Bloomindale’s becomes part of junking America’s chic they will have to out-shlub all others doing the outlet thing.
Building a successful business can take on many forms. Using Lone Star Steakhouse & Saloon, Inc. as an example, they own and operate 250 Lone Star restaurants, 20 Texas Land & Cattle Steak House restaurants, and 20 upscale steakhouse restaurants, comprising five Del Frisco’s Double Eagle Steak House (Del Frisco’s) restaurants and 15 Sullivan’s Steakhouse. The Sullivans core client my never eat at Lone Star. The core Bloomingdale’s’ client may not shop at the outlet. However if they do as long as there are distinct differences in product, price and selection, it should be another profitable channel. BTW, Del Frisco has an A+ wine list.
Could this move be a reaction to the empty aisles in Bloomingdale’s? Are customers balking at paying $200 for a blouse?
The growth of outlets has represented a logical long-term evolution in department store retailing, leveraging the brand equity of established retailers toward more moderate price points (and higher sales per square foot), as full retail (mall) locations have struggled to retain market share.
What’s interesting is that what starts out as a vehicle for moving off excess goods, as Bloomingdale’s intends, almost always leads to stores with regular assortments and dedicated goods. So far, this hasn’t seemed to directly dilute brand equity, but over the longer term, it’s hard to see how opening more and more outlets doesn’t contribute to the ongoing erosion of share for the department store sector.
I’m watching the outlet world closely, particularly as it goes through its own consolidation process (world’s largest outlet operator, Simon Property Group’s $2.3 billion acquisition of Prime Outlets back in December). Tying this into my comments in the discussion on Target, the formidable Simon, with its international reach, big coffers, and penchant for retailtainment could very well fill the excitement void that exists in mass retail right now.
Back to Bloomie’s, there’ s no reason on earth for them to sit this party out.
In an uncertain economic environment where the consumer rules the game, it makes sense to try this approach, notwithstanding all the comments here to the contrary. A business has got to continue to grow and thrive.
“The consumer is attracted to the brand and the discount, but the brand first.”
Perhaps; but how long does that attraction last when the customer realizes an “outlet” of a store is not the same as the store itself: whereas the original idea behind this concept was to clear out regular merchandise, some outlets now stock themselves with goods that never saw–and never would have seen–the inside of the “real” store. As for Bloomie’s, should they join the crowd? Why not? And an even better idea: free them from their Macy’s shackles and spin them off, outlet or not.
Let’s not forget a valuable retail lesson learned (or re-learned) during last year’s holiday sales: Control inventory while maintaining margins. That lesson will be applied forthwith, hopefully. Outlet stores were created for flushing out excess and sloppily-purchased inventory. So, inventory management must regain its influence in retail marketing. When that happens, gradually, outlet stores will decline.
Unless, of course, retailers intentionally overbuy year-old designs to stock outlet stores. That’s another form of inventory management altogether. More skilled, demanding, and exacting. Good luck.