Fashion Island Snares Coveted Bloomingdale’s

Federated Department Stores ended nearly two years of intense speculation Wednesday by selecting the open-air Fashion Island Newport Beach shopping center as home for Orange County’s only Bloomingdale’s department store.

The decision was seen as a coup for the Irvine Co.’s shopping center and a bitter defeat for the Segerstrom family’s South Coast Plaza, Federated’s first choice for the premiere Bloomingdale’s location in Orange County.

The new Bloomingdale’s will open next fall in a soon-to-close Broadway store at Fashion Island. Nearly 200 jobs will be eliminated when the Broadway closes, but Federated said it is offering severance pay to employees and inviting them to apply for work at the new Bloomingdale’s.

Shoppers at Fashion Island on Wednesday welcomed word that Bloomingdale’s was extending its retail reach into Orange County from its flagship store at 59th Street and Lexington Avenue in downtown Manhattan.

“Bloomingdale’s has a lot better style and more to offer than any of the other stores here,” said Michel Rochel, 38, a Newport Beach-based cosmetics distributor who shops at the chain’s flagship store during East Coast trips. “Nobody goes there,” Rochel sniffed while gesturing toward the nearby Broadway that will close in March to make way for Bloomingdale’s Fashion Island location.

The Bloomingdale’s store at Fashion Island is one of four locations planned in California. Federated also will open Bloomingdale’s stores in Century City, Sherman Oaks Fashion Square in the San Fernando Valley and in Stanford in the Bay Area.

The California stores are part of a complex plan that Cincinnati-based Federated is developing following the October acquisition of the financially troubled, 82-unit Broadway department store chain.

Federated, with $15 billion in annual sales and 440 locations nationwide, will eliminate the Broadway name early in 1996 and convert most of the chain’s locations into Macy’s stores, including a Broadway at South Coast Plaza.

Federated earlier announced plans to turn Broadway stores at Brea Mall, Laguna Hills Mall into Macy’s locations. Ten more Broadway locations, including the Mall of Orange store, will be closed. The fate of several stores, including the Broadway at Huntington Beach Mall, isn’t yet known.

Fashion Island and South Coast Plaza have been fighting for nearly two years for bragging rights to the Bloomingdale’s name. Federated has said several times that it wanted to be at South Coast Plaza.

The Segerstrom family and South Coast Plaza appeared to have won in November when Federated announced that the Broadway store at Fashion Island would be converted into a Macy’s location. That seemed to clear the way for the Segerstrom family to celebrate its 100th anniversary in Orange County during 1996 by opening the county’s only Bloomingdale’s.

But Bloomingdale’s shifted its focus to Fashion Island in recent weeks when it became apparent that negotiations with South Coast Plaza had stalled. Bloomingdale’s executives said Wednesday that their corporate plan called for a store to open in 1996--and that negotiations with South Coast Plaza couldn’t meet that tight schedule.

“It was just that we couldn’t get into South Coast Plaza when we needed,” Bloomingdale’s President Jeffrey Sherman said. “And there was an opportunity to be in Newport Beach within the desired time frame.”

While Sherman said that there “was no one factor” behind the breakdown in negotiations with South Coast Plaza, shopping center observers suggested that several barriers could have surfaced: A major tenant at South Coast Plaza might have balked at Bloomingdale’s arrival or Federated might face a less-costly renovation at Fashion Island.

Retail industry observers described Bloomingdale’s as a huge addition for Fashion Island. And, while South Coast Plaza’s corporate ego undoubtedly has been bruised, most observers said that the massive center will continue to thrive.

“South Coast Plaza is such an institution that it can pretty much pick out which stores it wants,” said Tony Cherbak, a retail industry expert with Deloitte & Touche in Costa Mesa. “I don’t think this will hurt them.”

While Fashion Island has snared the coveted Bloomingdale’s location in Orange County, massive South Coast Plaza also will sport a heavy East Coast accent when Federated completes its make-over.

A Broadway store at South Coast Plaza’s Crystal Court will reopen next year as a Macy’s furniture store, Federated said Wednesday. Earlier, the retailer said that two Bullock’s stores at South Coast Plaza--a full department store and a men’s store--also would carry the Macy’s name.

Sherman cautioned Orange County shoppers not to expect a carbon copy of the chain’s flagship store when the Fashion Island store opens in the fall.

Rather, Sherman said, the store will feature modern designs tested in newer Bloomingdale’s locations that opened recently in Long Island and Chicago. Those stores incorporate wide aisles, bright lighting, subdued decorations and an increased emphasis on customer service.

Sherman also pledged that the Fashion Island store would meet Orange County’s sometimes-unique fashion demands: “If there are things that are important in Orange County that aren’t as important in Los Angeles or New York, then customers should and will see that reflected in the store.”

Orange County residents who have shopped the Bloomingdale’s flagship store in New York or ordered from the company’s extensive catalog suspect that they’ll like what they see when the store reopens next fall.

“I think it will be a good department store to have,” said Laguna Beach homemaker Sylvia Waimrin, who regularly purchases perfume and cosmetics from Bloomingdale’s catalog. “Their products are a little more sophisticated and original” than Macy’s lines.

“Bloomie’s is a little more upscale than Robinsons-May but not as expensive as Neiman Marcus,” said Jan Schwartz, a homemaker from Corona del Mar who was shopping Wednesday at Fashion Island.

“I’ve never heard of anyone who didn’t like them,” said Schwartz, who regularly shops Bloomie’s while staying in New York City. “I’m looking forward to them.”

Retail industry analysts described the hot bidding war for Bloomingdale’s as one more sign of the consolidation reshaping the retailing industry.

“Finding new, exciting tenants is the most difficult task in the industry today,” said Mark Schoifet, spokesman for the New York-based International Council of Shopping Centers. “We live in an age where we’re witnessing the ‘nationalization’ of retailers. The local department store is for the most part a thing of the past, so there’s a struggle in malls to find new, exciting retailers.”

Most retail industry observers agree that Bloomingdale’s name will draw sophisticated Southern California shoppers like moths to a flame. But they caution that the much-ballyhooed Bloomingdale’s mystique isn’t enough to carry the company in California’s hotly competitive retail market.

“You can bet that Nordstrom isn’t simply going to roll over because Bloomie’s is in town,” said Alan G. Millstein, editor of the New York-based Fashion Network Report.

Millstein also questioned whether Bloomingdale’s has the firepower to compete with high-fashion leaders, including Barneys New York and Bergdorf Goodman.

“To fashion-conscious New Yorkers, Bloomie’s is just another ho-hum department store,” Millstein said. “They’re no longer seen as the cutting edge of fashion. Barneys took that mantle away some time ago.”

Other retail analysts suspect that Bloomingdale’s has a good chance of carving out market share. Linda Kristiansen, a retail analyst with Shroder Wertheim & Co. in New York, said that Bloomingdale’s chances of succeeding are stronger given Federated’s backing.

Federated already has shaken up Orange County’s retailing mix with plans to convert its Bullock’s department stores and four Broadway stores to the Macy’s name.

“We’re very happy to have the Macy’s name in place of Broadway,” said Brea Mall marketing manager Dennis De Naut. “Macy’s already has indicated that they plan to increase the size of the existing Broadway store by 30,000 square feet to 180,000 square feet.”

Retail industry observers also say that Federated is positioning itself to fight a long war with Robinsons-May, the other dominant department store operator in Southern California. Federated hopes to go one-on-one with Robinsons-May by consolidating most of its California holdings under the Macy’s name.

“Macy’s, like Saks and Bloomie’s, has a certain mystique,” said Cherbak, with Deloitte & Touche. “It promises a different kind of shopping experience for Orange County.”

While 775 jobs will be eliminated at the Broadway stores that are being converted to Bloomingdale’s, Federated spokeswoman Carol Sanger said that 10,800 Broadway employees will continue to work at Macy’s stores.

And, Sanger said, the four new Bloomingdale’s stores will hire about 1,000 employees by November 1996. Federated also expects to invest more than $525 million refurbishing the stores that it continues to run.

Times staff writer Stuart Silverstein and correspondent Dan Margolis contributed to this story.

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