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MOA plans life after Bloomingdale’s

This news story was published on January 5, 2012.
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Thomas Lee and Janet Moore, Star Tribune, Minneapolis –

The Mall of America said Wednesday it is negotiating leases with at least five retailers to replace the iconic Bloomingdale’s store, which is closing after 20 years at the location. The mall also said it will spend $30 million to $50 million on renovations and convert a sub-level storage area into retail and restaurant space.

“We think this is a new, exciting approach,” said Mall of America spokesman Dan Jasper.

Bloomingdale’s, an upscale department store that has operated at the mall since the property opened in 1992, will close in early March and lay off about 127 workers. The pullout was part of a larger move by parent company Macy’s Inc. to eliminate stores nationwide that were not performing well.

“This requires us to make some difficult decisions to close stores that no longer meet our performance requirements, as well as open stores where we see opportunity,” Macy’s CEO Terry Lundgren said in a statement.

In addition to the Mall of America location, Macy’s plans to shut Bloomingdale’s stores in three other cities, Atlanta, Oak Brook, Ill., and North Bethesda, Md. Bloomingdale’s will launch its closeout sales Jan. 8.

With 210,000 square feet spread over three floors, Bloomingdale’s occupied an enormous and costly footprint at the Mall of America at a time when retailers like Best Buy Co. Inc. and Target Corp. are reducing their store counts and experimenting with smaller formats.

Richfield-based Best Buy has been rolling out its Best Buy Mobile stores, which focus on selling smartphones and tablets and the digital plans that power them. This year, Minneapolis-based Target will roll out its CityTarget format, 60,000- to 100,000-square-foot urban stores in cities like San Francisco, Chicago and New York.

Macy’s is well aware of this trend. The company said Wednesday it will open a 120,000-square-foot Bloomingdale’s to replace an existing 229,000-square-foot store in Palo Alto, Calif.

Experts say these moves are necessary as more customers flock to the Internet. In the 1990s, department store chains like Macy’s would flood markets with stores on long-term leases, said Carol Spieckerman, president of newmarketbuilders, a retail management strategy firm based in Bentonville, Ark. Today, as those leases expire, retailers are trying to eliminate unproductive locations, she said.

Macy’s decision to close the Bloomingdale’s store at the Mall of America “was not only inevitable but probably overdue,” Spieckerman said.

In some ways, Bloomingdale’s struggles there were surprising. Last year, the mall, the nation’s largest, reported record traffic and sales, thanks largely to the strength of luxury consumers. In fact, high-end department stores like Macy’s, Saks Fifth Avenue and Nordstrom enjoyed an exceptionally strong 2011.

“I would have thought with the traffic at MOA, 1/8Bloomingdale’s3/8 would be doing enough business to justify the location,” said George Whalin, founding partner of Retail Management Consultants in Carlsbad, Calif. “Successful malls that have great traffic have seen increasing rents over the last year. It’s very possible the cost of operating that store is simply prohibitive.”

But one local expert thinks Twin Cities shoppers and luxury retailing don’t mix. Local consumers are not as fashion-forward and don’t spend as much on clothing as shoppers on the coasts, said Dave Brennan, professor of marketing and co-director of the Institute for Retailing Excellence at the University of St. Thomas.

“If you look at Twin Cities retailing, there has been a fallback from upscale stores,” Brennan said.

For example, Saks Fifth Avenue converted its downtown Minneapolis location into its lower-cost Off 5th format. Neiman Marcus has also struggled in downtown Minneapolis and doesn’t open on the weekends.

Given this environment, finding one retailer to occupy 210,000 square feet, even at a retail property as prominent as the Mall of America, would be a tough sell. That’s why the mall opted to recruit five smaller retailers to occupy the space, including four “fashion-forward” retailers that will be new to the region on levels one and two and a “destination value-priced” store on level three.

“The Mall of America has always been a trendsetter, this is another opportunity to do that,” said Jasper, the Mall of America spokesperson. “This is a blank canvas for us.”

The mall is also hoping to convert nearby sub-level storage space into a shopping area that will host a two-floor, 90,000-square-foot retailer and an upscale restaurant.

Despite the store additions and renovations, Bloomingdale’s will be missed, shoppers say.

“This is so sad, I can’t believe it,” said Jasmine Plank of Eagan. A regular Bloomingdale’s shopper, Plank said she favors its Ralph Lauren Polo men’s selection and Chanel merchandise.

Paul and Terry Gottwaldt of Andover said they were disappointed but not surprised.

“I just tried to buy a Burberry purse and I couldn’t find a soul to help me so I walked out,” Terry said. “They can’t hold a candle to Nordstrom.”

“Lately, the merchandise looks the same as Macy’s,” Paul Gottwaldt said.

James Tidwell, store manager of Ultra Diamonds on the first floor outside Bloomingdale’s, said the department store’s closing was rumored for several months. He wondered how the closing would affect his business.

“It’s scary. We get a lot of traffic coming in through Bloomingdale’s,” Tidwell said.

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