Monday, February 25, 2008


A department store need not start downtown to be successful. Anyone from Erie, Pa., knows that the Boston Store was the heart of downtown and is still a landmark building today; yet the Boston Store started blocks from downtown on Peach Street. Bartel's Hoosier Store moved to downtown Richmond, Ind., from its original location opposite the railroad station.

And many successful stores, generally aimed at a blue-collar market, never did go downtown. Skydel's in Bridgeport, Szold's in Peoria, Sattler's in Buffalo operated successfully for decades as major department stores at some remove from downtown. Madigan's in Chicago was the equal of any medium-size city's department store, but was located five miles from the Loop.

But I can only think of one U.S. department store that started outside the main shopping area, watched the city move toward it, and became a dominant upscale retailer. That would be Bloomingdale's.

When the Bloomingdale brothers decided to open for business, "downtown" New York was around Union Square on 14th Street. Stores were moving into the "Ladies' Mile" on Sixth Avenue, which eventually would reach to Herald Square. The Bloomingdales considered a downtown location, Maxine Brady wrote in "Bloomingdale's," but decided against it. They opened where the story is now, at 59th Street and Third Avenue; the store was known as the Upper East Side Bazaar.

For its first 70 years, Bloomie's went after a mid- to downscale trade, like most off-Main Street department stores. The people who lived on Fifth Avenue didn't buy there; their maids did. But after World War II, astute leaders of the store noted that the traditional client base was not going to expand, and the most fashion-conscious high income market in the country was basically within walking distance. If you could sell more expensive merchandise in the same place, profits would go up.

So through promotions, shows, and dropping items like toasters, by moving its ads from the Daily News and the Mirror to the Times and the Herald Tribune, Bloomingdale's went in 15 years from being a downmarket retailer to an upmarket one. In essence, Bloomingdale's decided who it wanted its customers to be, rather than who its customers were.

The 1970s was the era of Bloomingdale's -- the Big Brown Bag, the visits by European royalty. The department store as theater, as a collection of boutiques. The emphasis on fashion for which people would pay a premium. Across the country, department stores large and small tried to follow suit. Bloomingdale's had shown the way! Out with the commodity items, in with exclusives. Out with the Tea Room, in with Le Train Bleu. And Bloomingdale's itself moved into other markets -- Boston, Washington, Chicago, Los Angeles.

But in other cities as the local Marks and Sparks tried to parrot the Bloomie's formula, customers voted with their feet, going out the door. Established customers didn't like the new, upscale feel to what had been their store. And there weren't enough new customers to make up the difference. The Bloomie's formula was based partly on the unique circumstances of New York City and exported, one store at a time, to other major cities with urban neighborhoods of intense wealth. Once you got past Houston and Atlanta, you were in trouble. There weren't enough Bloomie's people in Kansas City for a Bloomie's, let alone for a Jones Store as a Bloomie's wanna-be. But many of the people who worked at the Jones Store would have felt at home at Bloomie's. And heck, the customer is just like us, isn't she?

It's sort of a like a newspaper trying to pick its customers and not appeal to those it doesn't want. Back when we had a much larger circulation, an editor I greatly respect once said: If we just could put out a paper for the 50,000 subscribers who understand and appreciate what we're doing and forget about the 500,000 who don't and who buy the paper for the comics and the weather and the sports agate, think what we could do.

Well, we're on our way.

It can work for the New York Times because in New York there's enough upscale to support anything. It can work for the New York Times nationally because it can take a small niche off any market. The Minneapolis Star Tribune can't afford to start slicing and dicing its customer base similarly. It has to appeal to the market it has, not the market it wants to have. But it's very easy to think that the market you have looks a lot like you.

Knight Ridder used to do market research for us, and would send its research director around every couple of years. I looked forward to the point in her presentation when she would present the circulations of competing papers in our market. She would note that the New York Times (and this is pre-Internet) had 3 or 4 percent penetration in our market. Hands would raise! That cannot be! Yes, she said, this is the circulation of the Times. Next to you guys, they're nothing here. They're not even as big as the largest suburban paper.

And one brave soul would always venture: But that must be wrong! Your figures are bogus. Everyone I know reads the Times.

To which she would say: Yes, everyone you know reads the Times. As does 3 to 4 percent of the market.

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