Leading Toward A Green Christmas
On any given day, Dr. Spock might be glimpsed there selecting towels, Walter Matthau trying on suits. Jacqueline Kennedy Onassis recently passed through to order presents to be sent to Caroline in London. Singer Diana Ross outfits herself and her children there -by long distance from California. Basketball Star Earl Monroe may drop in to pick up some after-shave lotion -and, he says, to "see how people with money act."
What is this emporium? It is Bloomingdale's, the flashy department store on Manhattan's East Side. Now, as Christmas approaches, more than 300,000 shoppers weekly -some 60,000 on Saturday alone -surge through the store's eleven floors. While ogling the merchandise, they also eye each other. For Bloomingdale's is both a neighborhood center and celebrity hangout, a place where the next person a shopper bumps into (literally) may be either an acquaintance or someone familiar from a thousand newspaper photographs.
But the big attraction is the merchandise -thousands upon thousands of items chosen in part for high style and displayed with show business flair. Shoppers swarm about high-fashion boutiques, fondling designs by Anne Klein and Yves Saint Laurent. They taste fruitcake samples in the lavishly stocked Delicacies Shop, which among its 7,000 items has 146 varieties of bread and 300 kinds of cheese. Coos Lee Radziwill, Jackie Onassis' sister: "It's the obvious place to go for everything. Oh gosh, it's the most fantastic and exhausting store in the world."
During the next four weeks, the pace will become even more exhausting for shoppers at the trendy Manhattan Bloomingdale's, the eleven other Bloomingdale's stores in New York, New Jersey, Connecticut, Massachusetts and Pennsylvania, and the thousands of other department and specialty stores throughout the country. These are the weeks when retailers ring up a quarter to a third of their annual sales, the period that largely determines whether the year goes into merchants' ledgers as a success, like 1973, or a disaster, like 1974.
This year storekeepers are entering their critical period in an optimistic mood. Retailers are predicting an increase in Christmas sales of around 10% over last year. Even discounting the fact that consumer prices are about 7.5% higher than a year ago, that would leave a real gain. Bloomingdale's President Marvin S. Traub says his store could post about a 15% gain over 1974, when the economy was skidding toward the bottom of its worst slump since the 1930s.
Joseph L. Hudson Jr., chairman of the J.L. Hudson Co., Detroit's biggest department store, believes sales will even be "several percentage points" above the record-breaking pre-recession Christmas of 1973. Meyer Zolkower, regional general manager for New York-based Franklin Simon, a group of specialty shops, forecasts that the sales surge will carry into 1976 as well.
If that happens, the nation's economic recovery will get a much-needed lift. Where previous recoveries have been led by upturns in housing and autos, this one is being paced by over-the-counter sales of everything from high-fashion dresses to pocket calculators. Retail sales have been generally rising since late spring. Last week several major retailers reported third-quarter sales gains over the 1974 period: J.C. Penney Co. was up 8.4%, to $1.9 billion; Allied
Stores Corp. 12%, to $418 million. Carter Hawley Hale Stores Inc., parent of Bergdorf Goodman and Neiman-Marcus, showed an 8.1% increase, to $292 million. Bloomingdale's is a part of Cincinnati-based Federated Department Stores, Inc., the nation's largest department-store chain -and Federated turned in one of the best showings of all. Its sales rose 13.4%, to $883 million, in the third quarter, and its profits leaped 46%, to $34 million.
In striving to maintain the momentum, retailers have one important factor working for them: consumer confidence, as measured by the University of Michigan's quarterly surveys, has rebounded from a 28-year low and is now as high as it was before the recession (see chart page 79). That indicates that the public is swinging back into a buying mood. One reason: about 1.4 million more Americans are working now than six months ago. Their paychecks help swell spending directly, and the rise in employment probably eases the fear of layoff and thus boosts buying confidence among people who held on to their jobs all through the slump. On the other hand, unemployment is still high, and the take-home pay of workers has barely kept ahead of inflation.
So retailers still face the urgent question: What will make consumers keep pouring into the nation's stores to part with their money? For some answers, store managers across the country increasingly are studying the phenomenal success of Federated Department Stores and especially its crown jewel, Bloomingdale's. Not every store, of course, can emulate Bloomingdale's specific techniques: ice cream made from Himalayan mangoes might not sell as well in the suburbs of Spokane as it does on Manhattan's East Side -especially not at $1.75 a pint. But any store can follow Bloomingdale's essential formula: first, know your customer, his age, affluence, customs, habits, tastes. Then set out to woo him with distinctive merchandise, flashy displays and a general aura of showmanship, all calculated to make shopping an adventure -in fact, fun. Bloomingdale's puts it on the unicorn-bedecked Christmas shopping bags it is handing out to customers this year, "Come, let us believe in magic again."
It is a formula that gets full support from Federated headquarters. Federated is an amalgam of 19 store chains, including, besides Bloomingdale's, Filene's in Boston, I. Magnin & Co. in San Francisco, Bullock's in Los Angeles, Foley's in Houston, Burdine's in Miami and Abraham & Straus in Brooklyn; Federated had total sales of $3.3 billion in the fiscal year ending last January. Like any company of that size, Federated has an organization chart -only its chart has been turned upside down. In the box at the top where any other company would put the chairman, Federated's chart shows "the customer." From him, the lines run through layers of buyers, store managers, division heads to the box representing Chairman Ralph Lazarus -at the bottom.
Of course, Lazarus, 61, the son of Fred Lazarus Jr., who helped found Federated 46 years ago, and Federated's President Harold Krensky, a former newspaperman, exercise far more authority than the chart shows. Still, Federated has kept its headquarters staff to 450 -out of a corporate total of about 80,000 employees.
Headquarters' job is largely to advise the division managers: Lazarus and Krensky constantly tour the Federated circuit. In the spring of 1974, for example, they reported that Federated's staff of 40 forecasters and market researchers saw a severe recession coming, and warned all the stores to hold down inventory. Result: not only did Federated's branches avoid the glut of unsold goods that plagued competitors last Christmas, but they had the money and warehouse space to start buying again in early 1975. While other stores were holding distress sales, says Lazarus, "we were able to get back into the market and buy desirable merchandise at desirable prices." A further result: inventory problems sank first-quarter 1975 profits of Sears, Roebuck & Co. and J.C. Penney Co. by an average of 74% below the 1974 period, but Federated bobbed up with a 9% gain.
While thus dispensing general guidance, Federated gives its divisions wide latitude to follow whatever merchandising strategies best cater to widely varying styles, tastes and incomes in each store's territory. In particular, Cincinnati headquarters has allowed Bloomingdale's full rein to exploit what it has long seen as its major market: young, affluent, fashion-conscious, traveled, professional people. They are attuned less to refrigerators and washing machines ("Bloomies" sells neither), more to clothes of fashion and quality, stereo equipment and wacky gadgetry for the compact Manhattan society of small apartments, crowded schedules and casual relationships. These consumers, to Bloomingdale's profit, go for such baubles as yogurt makers, $30 peanut-butter-making machines, "male chauvinist pig" neckties (30,000 sold so far) and even "Pet Rocks" that, at $4 each, roll over and play dead, sleep and stay in place -all on command. This market, Bloomingdale's has learned, enjoys tasting but does not stand still long enough to savor. It thrives on variety and excitement.
Thus Bloomingdale's does not merely display merchandise; it showcases it, turning the store into an adult Disneyland. Last week it was belts. In the men's store, hundreds of belts -leather, wool, seersucker, macrame, metal -bedeck rack upon rack.
Furniture exhibits plunge into the realm of fantasy. Private Worlds is a series of lavishly decorated model rooms, some with tapestries, another ("Chateau en Espagne," or castle in Spain) with a floor of cobblestones.
Behind the glitter lies a coolly calculated merchandising strategy. The flashy goods are a kind of patina on a store that also stocks many basic items: the customer -not necessarily young or particularly fashionable -who is willing to settle for a $15 lamp can find one, but is more likely to come in to look at the latest in $250 lamps. So Bloomingdale's seeks to make itself a trendsetter, sensing the farthest-out ideas its market is ready for (or might be persuaded to accept), then moving in with appropriate goods and heavy promotion.
The method is not unique. All stores promote themselves, but Bloomingdale's does it louder, more frequently, and in unusual ways. It was the first to use eyecatching shopping bags, created by professional designers, starting in 1961; some, like one of this year's bags (a woman's face), do not even bear the store's name. Bloomingdale's uses almost anything to promote itself, even peanuts: 5 Ibs. of them in a burlap sack labeled "Bloomies" sells for $8. The "Pet Rock" was not a Bloomingdale exclusive, but the store was the novelty's first advertiser -and made it a good traffic generator.
A generation ago, Bloomingdale's became the first store to promote housewares as more than pots and pans, selling such items as French souffle molds, crepe pans and fish poachers. Since then, Bloomingdale's has racked up a number of other merchandising firsts. It researched American quilt designs from the 18th century, took them to fabric makers and came up with an entire line of quilt-design wall coverings and bedspreads that soon were copied by others. About three years ago, it sent buyers to U.S. Indian reservations and New York's Museum of the American Indian, lined up manufacturers -not in the U.S. but in India -and soon began selling pillows, rugs, comforters, even stationery, with Indian-inspired designs.
Along the way, there have been costly mistakes. The attempt to promote a line of Bloomingdale's label cosmetics flopped. But the trendsetting successes have outnumbered the failures. The model rooms for displaying furniture in particular are powerful influences on home decorating. Through them, Bloomingdale's has popularized, if not originated, several "looks," at least parts of which have found their way into countless homes. Among them: fabric wall coverings, up-to-the-minute glass-and-chrome furniture mixed with 18th century traditional, and the concept of "wall hangings," wherein walls are used not just to hang pictures but also masks, baskets, statues and planters.
The creative processes behind Bloomingdale's push to be different are frequently marked by fierce debate. In the same way that stylists and engineers do battle in auto companies, fashion coordinators and buyers are sometimes at odds with each other at Bloomingdale's. Barbara D'Arcy, the store's director of design, wanted a newly styled shoe department in Bloomingdale's new White Plains branch. She called for putting shoes on a kind of stage, accessible by steps. Buyers balked, saying the design would turn off customers. Traub intervened, sided with D'Arcy, and fortunately so. The White Plains store is doing a booming shoe business.
However the approach might be categorized, it works. In the past seven years, Bloomingdale's Manhattan store alone has increased sales by more than 50%, to about $160 million, v. the same for Macy's Herald Square store (with twice the selling space) and $85 million for Gimbel's 33rd Street store. By the retail accountant's measurement, Bloomingdale's gets $350 of sales this year out of each square foot of floor space -about four times the average for all U.S. department stores. Profits are not reported separately, but Federated has consistently kept as after-tax profit about 3.60 of each sales dollar, or as much as a third more than average. It is no secret that Bloomingdale's is one of the most profitable parts of Federated.
Such success has attracted attention far beyond the ranks of celebrities. Wall Street analysts have made Federated's stock one of their recommended buys, partly because of Bloomingdale's consistent appeal to upper-income shoppers. New York Advertising Executive Stephen Baker, in his forthcoming book A Systematic Approach to Creative Advertising (McGraw-Hill), suggests that ad copywriters drop into Bloomingdale's to "soak up inspiration."
Other retailers look on Bloomingdale's as the store to watch. Margaret Dadian, chief buyer for Kay Campbell Stores in Evanston, Ill., says of her frequent trips to New York: "I'd miss seeing my grandchildren, but I'd never miss seeing Bloomingdale's." Nordstrom, a company that operates 17 stores in Washington, Oregon and Alaska, makes a point of sending buyers on pilgrimages to Bloomingdale's. "It is a very flexible store," says Merchandiser Jack McMillan. "It's quick to see and develop new lines." In Boston, once-staid Jordan Marsh has patterned part of itself after Bloomingdale's by introducing modern paintings and rock music into a section of its men's store.
Like other famous New York attractions, Bloomingdale's has been visited by millions of tourists from all over the country. Now it is moving to sell to them in their home towns too. Current issues of McCall's, Town & Country and Glamour magazines carry four-page abbreviated Bloomingdale's catalogues offering 29 selections that can be ordered by mail from the store's "Christmas in New York Collection." Among them: a "Wonder Wok" for $28, Aramis "executive" soaps for "your favorite male chauvinist," an electronic calculator in a silver Tiffany case for $150 and Rudi Gernreich-styled underwear.
The catalogue is a striking illustration of Bloomingdale's willingness to try new ideas. It was suggested by Marketing Vice President Arthur Cohen exactly two days after he joined the company (from a top executive post at General Foods Corp.), with the mission to promote Bloomingdale's as a brand name for merchandise, rather than just the name of a store, and won instant approval from Traub. "He agreed right away to put the store's reputation on the line on a national basis," reports Cohen. He calculates that the minicatalogue will produce $100,000 to $250,000 in additional sales this Christmas; that will be exceptionally profitable volume, since Bloomingdale's got suppliers to pay nearly all the advertising cost. Already orders are flowing in from Rapid City, S. Dak.; Mitchell, Ind.; Beaver, Okla.; and Saginaw, Mich., among other places far from New York.
Bloomingdale's has been trying to snare customers in new ways almost from the day in 1872 when the store was founded by the brothers Bloomingdale -Lyman and Joseph. As an early lure, the store touted a "sky carriage," which was simply a trip in an elevator; nonetheless, Bloomingdale's was the first department store in New York to install that contraption.
Until after the end of World War II, Bloomingdale's was a fairly conventional store. Then I.E. Davidson, the store's boss from 1947 to 1967, began the big move. He dropped major appliances. Later Traub dropped other items that most competing stores carried: drugs, cameras, records. They sold well but did not earn much profit. In their place went goods aimed at people who had money to spend on more than boring necessities. The result in microcosm: Bloomingdale's sells no men's razors, but it does sell bloc of duck liver with green pepper.
For the past dozen years, the prime mover behind Bloomingdale's has been Marvin Traub, 50, co-leader with Chairman Lawrence Lachman of what has become known throughout U.S. retailing as "the Bloomingdale's gang." Traub, the son of a corsetmaker, was wounded in World War II and came back with one leg shorter than the other; he wears a built-up shoe yet walks briskly and jogs ten minutes daily before leaving his Tudor-style home in Scarsdale. After graduating from Harvard Business School in 1949, he went to work briefly for Alexander's at $100 a week as an assistant to George Farkas, the chief executive. In 1950 he switched to Bloomingdale's and moved through seven jobs in seven years. In 1962, at age 36, Traub was made merchandise manager; six years ago, he was named president.
In line with Bloomingdale's theme that the store is a "neverending party," Traub has played host to some genuine after-or before-hours parties. This month alone he has presided over a wine-tasting held to mark publication of a book, The Joys of Wine, which Bloomingdale's will sell for $45, and a breakfast at which a mime helped celebrate the store's introduction of French-made watches to the U.S.
Traub has been especially aggressive in dispatching Bloomingdale's officials -first himself, later subordinates -to visit foreign manufacturers and persuade them to design goods specifically for Bloomingdale's. The store was the first to feature merchandise from Communist China (see box previous page). Bloomingdale's two years ago persuaded Philippine craftsmen to design rattan furniture to its specifications, but other retailers began selling copies. So this year the store requested a cinnabar finish or a glass-rattan combination.
At first Bloomingdale's had difficulty persuading foreign suppliers to go along with its ideas. About 15 years ago, Davidson, a discriminating gourmet, complained that the Roquefort cheese then being sold by Bloomingdale's was too salty. He sent Bob Gumport, head of the Delicacies Shop, to the Roquefort caves in France to see what could be done. Nothing could be; an official of one of the leading producers asked, "Why should we change the taste for Bloomingdale's?" By 1965, though, Bloomingdale's muscle was being felt. Traub wanted the colors changed on Droste's chocolate packaging, and he sent the redoubtable Gumport to Holland to get it done. Droste officials balked at first, then yielded.
Now suppliers, foreign or domestic, are eager to sell to Bloomingdale's on an exclusive basis, if only for a limited time. "There is no better store to start marketing a French product than Bloomingdale's," declares Michel Garcin, president of Lip Time, Inc., a U.S. subsidiary of the French watchmaker.
In fashion, the source of much of Bloomingdale's allure and a lot of its money, Traub and others among the Bloomingdale's gang -particularly the late Katie Murphy -helped make some of the biggest designers. When Murphy, who died unexpectedly last spring at 58, joined Bloomingdale's in 1967, one of her first moves was to introduce the designer shop -an enclave where the works of only one designer would be shown. The first such shop, opened in 1968, was for Michel and Chantal Faure of St.-Tropez, then barely known even in France. Bloomingdale's sold hundreds of maxicoats under their MicMac label. The Faures now have 500 other clients, among them some of Bloomingdale's biggest competitors: Saks, Bonwit Teller and Lord & Taylor.
Halston, once Bergdorf Goodman's millinery designer, got his Bloomingdale's shop in 1969 and was there exclusively until about three years ago. Murphy persuaded Yves Saint Laurent to make clothes in the U.S., and Bloomingdale's opened a Saint Laurent shop before its competitors; it grosses about $ 1 million a year. In Ralph Lauren, Bloomies developed a designer from scratch. When Lauren was an unknown salesman of his own tie designs, Traub and Murphy encouraged him to do more ties, then men's suits and shoes, then women's blouses, skirts, pants and sleepwear. His boutiques now sell $4 million annually, and Lauren has his own company.
Bloomingdale's is not without its detractors. Says a Sears official somewhat lefthandedly: "We are in for the long pull. We aim for a broad middle market, which militates against jumping quickly in and out with new merchandise. Bloomingdale's is clearly one of a kind." Among customers there are carpings about high prices, crowds and service. Heiress-Actress Dina Merrill likes the store's ice cream and housewares but buys no furniture there; she says the prices are too high. Sniffs Ilene Barth, editor of a Manhattan weekly newspaper: "People who go to Bloomingdale's don't trust their own taste."
But Traub is convinced that Bloomingdale's has found the formula for winning customers and boosting sales, even during times of economic uncertainty -and not only in the New York area. In the next two years Bloomingdale's will open two stores near Washington, D.C., its first major geographic expansion. But its influence is already felt coast-to-coast. Says an executive of one department-store chain at the other end of the continent from Bloomingdale's, "What is happening there will be happening in Middle America six months to a year from now." Considering Bloomingdale's aggressiveness, he might not even have that long to wait.
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