Bloomingdale’s, the outlet stores

Late to the game, but worth waiting for!

Industry veteran Arnie Orlick (who started his career at A&S as Mike Gould’s assistant buyer) has tried several times to retire. The first was when Macy’s took over Rich’s, where he’d been president and then CEO (“I spent nine wonderful months playing golf in Atlanta but my wife wanted to move to NYC—and it’s tough to be retired in NYC…”); the next was after becoming CEO of Fortunoffs right before it closed. In January 2010, when Macy’s Inc. announced plans to launch the new Bloomingdale’s Outlet store concept, Bloomingdale’s chairman Mike Gould coaxed his colleague and friend out of his second retirement to head up the new division. “It was a challenge,” Orlick confides. “I came on board in January, nothing was in place (no system to transfer goods from the stores to the outlets, no system for putting two prices on the tickets…), and we needed to open four stores that year, two by August. In addition to logistical challenges, we needed to find exceptional merchants and planners. After all, we’re still Bloomingdale’s: our focus is always on better brands and forward fashion, even in the outlets.”

Mark Cechini, OVP regional director of outlets; Elizabeth Axberg, general manager Westbury;
Arnie Orlick, SVP outlets; Stephen Gatsik, VP/DMM outlets

After much scrambling, Orlick had his buying/planning organization in place by mid-June and things have been moving forward since. To date, there are 11 outlets, the newest in Westbury, Long Island opened in September. The 12th will open in Livermore, California this month. Here, we speak with Orlick to for a closer look at Bloomingdale’s The Outlet Stores.

Why did Bloomingdale’s go into this business?
Because customers today are looking for value! Outlets are the fastest-growing venue at retail these days; several other upscale stores now have more outlets than regular stores. As a corporation, we were late to the game.

What’s your concept? How are you different from the competition?
A major differentiator is that while most stores have product made for their outlets and are heavily into private label, we use virtually no vendors outside of our matrix. And where we use them (less than a handful), it’s only to fill a specific void in our mix. Our stores average 25,000 square feet and while they’re not adjacent to our regular stores, they’re sometimes close (in Bergen County, N.J., they’re 1.5 miles apart; in Westbury, they’re within half a mile).

So you, like Nordstrom, don’t worry about your regular customers trading down?
No. There are already a good percentage of customers who shop both venues and some statistics claim that an outlet near the regular store actually helps business in both. (On the other hand, we have a successful outlet in Dallas but no regular store.) For us, it’s more about finding the “right” space. There’s a huge difference in performance based on various factors. We analyze total traffic, conversion rates, sales per square foot, etc. so we know what works. Unfortunately, many top malls are fully occupied.

Could you further describe the stores?
They’re all one floor, about 22,000 square feet of selling space with a central cash register. The fixturing is consistent and totally mobile so we have the flexibility to move things around according to what’s hot. (We’re getting tremendous compliments on ease of shopping.) We have greeters at the door, price checkers and helpful sales associates. Our goal is to make the shopping experience as easy and pleasurable as possible. Interestingly, we’ve found that men make more self-purchases in outlet stores than in regular stores. They’re looking for deals, and perhaps a more simplified experience.

What’s hot right now?
The same trends that are hot in the regular stores. In men’s: outerwear, knits, sweaters and denim; in women’s: colored denim, cashmere, printed denim and fur accessories. We don’t always get the hot trends at the same time but they’re always the same trends. Of course each store is different in terms of how trendy or conservative, the ethnic and demographic breakdowns, the penetration of men’s or kids.

Could you describe how your buyers operate?
Our buyers and planners work the same way as the regular store buyers, they just have more responsibility. For example, we have one buyer (with two senior assistants) to cover all of ready-to-wear. In total, we use about 450 vendors; merchants need everything at a minimum 35 percent off the ticket price (and up to 80 percent off with our markdowns, BOGOs and weekly promotions…). It’s not an easy job because the buying process is different. With outlets, the first deal is the final deal. Our buyers have to understand value, know how to build relationships, and they have to be really smart.

How do you advertise markdowns and weekly promotions?
As with most lower-margin businesses, it’s mostly e-mail marketing (even though our outlets don’t sell product online). We don’t do social media yet; we don’t do TV. We use ROP only for store openings and big holidays.

Is there a loyalty program?
Yes. Bloomingdale’s has one program for everything: full-line, e-commerce and outlets. Customers can pick up reward gift cards anywhere and spend them anywhere.

What do you consider your biggest challenges?
Growing comp store sales and picking the right real estate.

Are your comp store sales growing?
While Macy’s does not break out Bloomingdale’s figures, we’re confident we’ll end the year with comp store gains.

What one thing do you most need from the market?
Prestige brands. There are never enough!

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