NEWS ANALYSIS : Shoppers Recognize Bloomingdale’s, but Will They Flock to California Stores?

What’s in a name? Federated Department Stores Inc. is about to find out.

With its selection Wednesday of four California shopping malls to be the first to play host to its Bloomingdale’s chain, Cincinnati-based Federated is betting that the venerable department store’s aura will lure the state’s savvy but recession-battered shoppers.

“There’s something different about Bloomingdale’s, some kind of cachet that makes it not just ordinary, but special and unique,” said Bloomingdale’s President Jeff Sherman, who predicted that name recognition alone would draw customers to the new stores in Century City, Sherman Oaks, Newport Beach and Stanford, to be converted from existing Broadway or Emporium stores.

But observers warn that relying on the Bloomingdale’s name will not be enough to make the chain successful on the West Coast. Bloomingdale’s competitors have taken away some of its luster as the leader in upscale shopping. To keep customers coming back, analysts say, Bloomie’s must focus on basics such as high-quality unique merchandise, reasonable prices, attentive customer service and shopper-friendly store designs.

The Bloomingdale’s name is certainly strong enough to draw the curious to the California stores for a honeymoon period, analysts say.

“I am sure that people will come out of curiosity to see what Bloomingdale’s is all about,” said Jeffrey Stein, managing director of McDonald & Co., a Cleveland-based investment firm.

“It all goes back to the flagship store in New York,” he said. “They were really light-years ahead of their time in terms of projecting an image of retailing as theater and as entertainment. That mystique has enabled them to replicate that success in more suburban types of locations.”

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But after enjoying years as a crown jewel of upscale retailing, hipper, avant-garde competitors such as Barneys New York and Bergdorf Goodman have overtaken Bloomingdale’s venerable flagship store, on the corner of 59th Street and Lexington Avenue in Manhattan, as purveyors of fashion trends, said Alan Millstein, editor of the New York-based Fashion Network Report, a monthly newsletter for retailers. The allure of other Bloomingdale’s outlets has been dimmed accordingly, so Bloomingdale’s now must actively compete with upscale rivals such as Nordstrom, Saks Fifth Avenue and Neiman Marcus.

The chain has worked hard to restore its former mystique with store modernizations and other improvements, said Linda Kristiansen, a retail analyst with Schroder Wertheim & Co. in New York.

Indeed, Federated has a fair track record of opening successful satellite stores, Kristiansen said. Federated did a particularly good job with a Bloomie’s that opened on Labor Day in the Chicago suburb of Skokie, she said.

The California Bloomingdale’s will be based on the new Skokie store design, which features wider aisles, better lighting and a higher level of customer service, Bloomingdale’s’ Sherman said.

“The environment of Bloomingdale’s will be uniquely different,” he said. “This is more than a face lift. It’s a recognition that the ‘90s are not the ‘80s. Customers have a very high set of expectations, and if you meet them, they will be loyal to you.”

But without unique merchandise and reasonable prices, Bloomingdale’s won’t stand out from competitors like Nordstrom and Saks, analysts said. It will take a customized mix of merchandise and perhaps more frequent sales to lure shoppers to return to the California stores, said analyst Stein.

Although the California economy is still weaker than those of the rest of the country, Sherman said, Bloomingdale’s does not intend to lower its prices in order to remain competitive. Some say the store doesn’t have to.

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“This format is aimed at a more upscale, less price-sensitive customer,” Kristiansen said. “Price is important, but it is going to be secondary compared to, say, Macy’s,” Federated’s mid-scale department store chain.

What will count is whether Bloomingdale’s can convince customers that the stores sell attractive merchandise that cannot be had elsewhere. Like most department stores, it sells private-label goods available only at its stores.

“There will be enough of those kinds of items so the customer will know that there are things that are important to them that they can only get at Bloomingdale’s,” Sherman said.

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Federated Stores in O.C.

The decision to change the Fashion Island Newport Beach Broadway into a Bloomingdale’s store brings Federated Stores’ plans for Orange County properties more clearly into focus. Here’s what is happening to the Broadway and Bullock’s stores:

BROADWAY STORES

* Conversion to Bloomingdale’s: Fashion Island Newport Beach

* Conversion to Macy’s: Brea Mall, South Coast Plaza (Crystal Court, Costa Mesa), Laguna Hills Mall

* Closure: Mall of Orange

* Decision pending: Huntington Beach Mall

BULLOCK’S DEPARTMENT STORES

* Conversion to Macy’s department store: South Coast Plaza, MainPlace/Santa Ana, Mission Viejo Mall

* Conversion to Macy’s Men’s Store: South Coast Plaza Bullock’s Men’s Store

* Conversion to Macy’s Women’s Store: Fashion Island Bullock’s Women’s Store

Source: Federated Department Stores