Broadway Sale May Be Good Deal for O.C. : Mall Operators Covet Cachet of Federated Stores

By GREG JOHNSON and DAN MARGOLIS

Aug. 16, 1995 12 AM PT

TIMES STAFF WRITERS

Amid the sorrow that another department store is closing, shoppers and retail industry experts Tuesday speculated that Federated Department Stores Inc.’s acquisition of the struggling Broadway Stores Inc. portends good things for Orange County, where shopping long has been considered something of an art form.

“Since emerging from bankruptcy in 1992, Broadway never knew what it wanted to be when it grew up,” said Jan Wohlwend, general manager of Anaheim Plaza. “But Federated, with Macy’s, Bullock’s and Bloomies, has a real focused vision and a solid merchandising plan.”

New York-based retailing industry analyst Alan G. Millstein is betting that the deal announced late Monday will spark an intense marketing war as Federated slugs it out with Robinsons-May for dominance in Southern California.

“There’s never been any love lost between these two colossuses of retailing,” said Millstein, editor of the Fashion Network Report. “And there will soon be hand-to-hand combat between Federated and May Co. for the hearts, minds and pocketbooks of Orange County consumers.”

It’s too early to determine the fate of the six Broadway stores in Orange County as Federated moves to complete its acquisition of the struggling chain. Federated intends to convert some of the Broadways to Bullock’s and Bloomingdale’s stores, while an undetermined number evidently will be closed.

Some longtime Broadway patrons are bemoaning the loss of a chain that opened its doors in 1896.

“I grew up with Broadway, and there’s nothing like it,” said Wendy Wolff, a Huntington Beach junior high school history teacher who made it a point to shop at the Broadway store at Fashion Island Newport Beach on Tuesday. “I like it because it’s venerable and you don’t get radical trends.”

“By and large, it means California ready-to-wear,” Wolff said while sipping a soft drink at a lounge table outside the Broadway on a quintessential summer day.

But several other shoppers said they were ready to forget the Broadway and order new credit cards for the Federated stores.

“I think all the department stores out here are lousy,” said Yen Woo, a 31-year-old native New Yorker who has lived in Laguna Beach for the past six years. “I prefer to shop in New York. At least with a Bloomingdale’s or Macy’s here I can find what I want.”

“I always thought both the interior and exterior [of the Broadway] were very dated,” she said.

Kandy Neale, 42, of Costa Mesa said, “I think a Bloomingdale’s or Macy’s will fit in nicely. It’s time to move on.”

Neale said that it has been increasingly difficult to find suitable gifts at the Broadway: “I think other stores have superior quality. You get what you pay for.”

Federated hopes to conclude its deal to buy Broadway Stores Inc. by October, but shoppers probably will not notice any changes until sometime next year. Federated operates four Bullock’s stores in Orange County, including two specialty stores. Broadway has six full-service department stores in the county.

Federated has yet to tell local mall operators which Broadway stores will survive, but several operators are drooling at the prospect of well-heeled Federated using its deep pockets to revitalize aging Broadway stores and reopen them under the Macy’s, Bullock’s and Bloomingdale’s nameplates.

“If Federated wants to expand our Broadway, we’ve got plenty of room,” said Brea Mall executive Dennis Denaut. “At 150,000 square feet, it’s one of the smaller anchor stores here. We see [a conversion and an expansion] as a win-win situation for everyone.”

Similarly, Harry Newman Jr., chairman of Long Beach-based Newman Properties, which operates the Mall of Orange, would be “thrilled with any one of these operations--Bullock’s, Macy’s or Bloomingdale’s. . . . We’re located directly across from one of the most affluent areas of Orange County, and one of these [Federated] stores would give us a tremendous advantage.”

A Macy’s, Bullock’s or Bloomingdale’s store would have “wide appeal to our customers,” said Jonathon Alpert, general manager of the Laguna Hills Mall, which is anchored by JCPenney, Sears and Broadway stores.

“We’re very satisfied with what Broadway did for us, but it’s a very old store and it’s not been remodeled very much,” Alpert said. “Stores have to be changed occasionally. They have to be fresh, exciting and create an atmosphere that’s conducive to shopping.”

Savvy shoppers do notice when stores are not regularly renovated.

“I always thought the exterior was very dated,” said Nancy Duesenberg, a 39-year-old interior designer from Newport Beach, who lunched Tuesday with Neale at a table outside the Fashion Island Broadway. “I don’t see any negative. I say bye-bye, Broadway.”

Les Clemmer, a 51-year-old Palm Desert resident who drives to Newport Beach several times each month to shop and beat the heat, compared the Fashion Island Broadway to a time warp.

“It’s like walking back into the ‘60s or ‘70s, and they have paid the price. I’ve noticed [during] the last five years that the store hasn’t modernized,” Clemmer said.

Regional mall operators are hoping that Federated’s upbeat brand of retailing will help them to better define their role during an ongoing retail revolution that has included the recent arrival of powerful competitors such as Wal-Mart, which recently opened two Orange County stores.

“The mall business is tougher than it ever has been, especially in South Orange County, where there’s so much new retail space,” Alpert said. “We’re looking to have a better mix than anyone else, and [a Federated store] with our existing Sears and JCPenney stores would be a positive move.”

Mall operators agree that Federated’s arrival will not help regional malls compete against Wal-Mart, Target, Kmart and low-cost warehouse operators such as Price-Costco.

“If price is the major consideration, then Price-Costco will make sense,” Newman said. “But if the shopper is looking for service and quality, then the Nordstrom, Macy’s and Bloomies names make sense.”

Wohlwend described Federated’s planned acquisition as a logical progression in the tough Southern California retail market, where only the strongest chains and shopping centers will survive. Wohlwend recently helped oversee the transformation of Anaheim Plaza--Orange County’s first enclosed mall--into a value-oriented center with Wal-Mart as its anchor tenant.

“A development like this makes us glad we beat everyone else to the punch,” Wohlwend said. “The market is getting extremely fragmented.”

Nicole Belcore, 17, a senior at Foothill High School in Santa Ana, illustrates that fragmentation.

“I don’t think [the Broadway] fits in Fashion Island,” Belcore said. “I don’t think it fits the standard.”

Belcore and Leeann Paquette, 17, a senior at Santa Margarita High School in Rancho Santa Margarita, said that they prefer to shop Bloomingdale’s and Macy’s through their catalogue services.

Paquette said that she has not bought clothes at the Broadway in years: “They don’t carry [high-] caliber brand names, such as Gucci or Escada.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Chains’ Stores in Orange County

Broadway Stores

Huntington Beach Mall

Fashion Island Newport Beach

South Coast Plaza, Costa Mesa

Mall of Orange

Brea Mall

Laguna Hills Mall

Bullock’s Department Stores

South Coast Plaza (Bullock’s Men’s Store), Costa Mesa