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Revamping Bergdorf's: Store Steps Up Program To Build Sales to $500M

The ambitious remodeling process at Bergdorf Goodman continues, as it strives to grow revenues to at least $500 million a year.

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Jim Gold on Bergdorfs new fifth floor

Jim Gold on Bergdorf's new fifth floor

Photo By Thomas Iannaccone

Renderings of the third floor.

Photo By WWD Staff

The BG restaurant/bar.

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Stephen Joseph

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Kelly Wearstler

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Michael Gabellini

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Linda Fargo

Photo By WWD Staff

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NEW YORK — It's been an expensive, 10-year, stop-and-go process, but Bergdorf Goodman's overhaul is picking up steam again.

The goal of the project, at an estimated cost of $80 million to $85 million, is to modernize the luxury emporium, retain the classicism while injecting some hipness it's never had before and grow revenues to at least $500 million a year.

And, as Bergdorf's parent, the Neiman Marcus Group, is close to being acquired by Texas Pacific Group and Warburg Pincus for $5.1 billion, such growth will be ever more important. The new owners are expected to drive hard the assets of NMG to justify its price tag while further expanding the company in a world of luxury retailing that it already dominates.

"They're 100 percent behind the remodeling," said Jim Gold, president and chief executive officer of Bergdorf Goodman. "We are confident that our renovation will allow us to build on our current success and further solidify our position as the ultimate luxury store."

Gold declined to confirm any figures for this story.

Since 2000, the main floor and the beauty floor below, as well as the second, fourth and most of the fifth floors, were remodeled, and some back offices were moved off-site to add selling space. But there are plenty more construction projects in the works, among them:

  • A new loft-like third floor for designer sportswear collections, including Derek Lam, Vera Wang, Zac Posen, Marc Jacobs, Marni, Chloé and Comme des Garçons. Construction starts in October and goes in phases, a quarter of the space at a time.
  • New beauty level shops, including Wolford at the end of September; a larger Jo Malone space at the end of October, and Guerlain's debut in January.
  • The BG restaurant/bar on seven, seen opening in mid-November, seating about 100 in a 2,000-square-foot area and serving classic American cuisine for lunch and cocktails. It will be a stage for wine tastings, visiting chef demonstrations, caviar tastings and book signings.
  • A redesigned personal shopping complex on four, for March.

In addition, a new sixth floor, for modern sportswear collections such as Cuccinelli, Akris Punto, Piazza Sempione and Etro, is on the drawing boards. It's the last full-floor renovation, with a construction schedule to be determined.

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Meanwhile, the fifth floor, called 5F and showcasing contemporary sportswear, shoes, accessories and denim, is 75 percent complete and should be done by December. Key labels are Catherine Malandrino, Tracy Reese and Tory Burch. A Jar fragrance boutique on the beauty floor opened last month, retailing from $300 to $700 a bottle, and in the men's store, a Zegna boutique opened in August and further renovations are planned.

Bergdorf's mission has been to bring individuality and greater merchandising control to the floors, which average 25,000 square feet each, and emphasize categories heretofore underplayed, such as contemporary sportswear.

It's also about elevating already high productivity, attracting new customers without alienating the regulars and improving a tricky layout. Bergdorf's has long been difficult to navigate with its series of rooms, chambers and bends that often concealed what's just ahead.

The 150,000-square-foot women's store, along with the 45,000-square-foot men's store on the opposite side of Fifth Avenue and the direct businesses, generated a combined sales volume that sources estimated at $400 million for the firm's fiscal year ended July 30. The company does not disclose volume, but did say Bergdorf's posted a 14.5 percent sales gain for the year.

While spreading its reach by emphasizing a wider range of categories, Bergdorf's women's store remains well within its comfort zone, maintaining a level of luxury that's unmatched by any big store in the city. Along with the updating, classic elements, Art Deco references and residential touches are retained in many sections. While the remodeled Bergdorf's still showcases established designers such as Oscar de la Renta, Valentino, Chanel and J.Mendel — the store's meat and potatoes for decades — it puts a greater emphasis on newer and avant garde creators such as Vera Wang and Yohji Yamamoto, which the store hasn't historically embraced.

A year ago, Bergdorf's brought in Gold, a former Neiman Marcus senior vice president and general merchandise manager, to head up the store, representing for him a career leap. These latest renovations are his first major impressions on the store, and he's had to sign off on certain aspects, including the third floor, which will be radically altered.

Others joining the team earlier this year were Ed Burstell, former general manager of Henri Bendel, who became senior vice president and gmm for footwear, cosmetics, fine and fashion jewelry, handbags and soft accessories, and former Neiman's executive Ginny Hershey, who serves as Bergdorf's senior vice president for women's.

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With new management ensconced, decisions on the store's rebuilding moved forward, though the company actually decided back in 1997 to remodel the entire store and update its turn-of-the-century town house character. While there have been several management changes since then, and different visions and decisions on how to rebuild, the current team said the protracted nature of the project is more a factor of its scope and magnitude and the complicated character of retail restorations.

"Renovations in a retail environment like this take so long. Each floor has to be done in phases, and takes 16 months to complete," said Gold.

The objectives are multifold, Gold stressed: "To make a different aesthetic impression, change the adjacencies, resize businesses and rethink the layout to ultimately make the floors more productive. It's a very expensive endeavor, but we are getting a return on our investment. We can keep the business going without missing a beat. We have not had decreases on any of the floors.

"From a design standpoint, we want to be very true to the classic heritage of the store, but infuse modern design throughout the building."

Further complicating the project are the various constituencies involved. "It's like riding shotgun with a cattle prod," said Stephen Joseph, Bergdorf's vice president of store design and planning and construction, who must marry the interests of fashion designers, merchants, architects, design consultants and financial and operations executives. "Everybody wants something," he said. "It's like putting together the pieces of a puzzle, to make it all happen. Ultimately, the total vision is achieved."

As far as how much impact fashion designers have in creating their shops, "the rules change depending on the floor," Joseph said. On the second level, for example, the designer signature is very evident. On one, five and eventually three, it's more about Bergdorf's asserting its personality.

Bergdorf's, on Fifth Avenue between 57th and 58th Streets, was originally a mansion built in 1928 and intended to be rented out as seven different shops in the event the economy tanked. Bergdorf's moved into one of the spaces and expanded into the others over the years. Its men's business moved to a separate site on the opposite side of Fifth Avenue in 1990, opening the way for an expanded women's business.

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The store can no longer be expanded, making renovations all the more critical as a primary vehicle for increasing sales. Along the renovation route, Bergdorf's violated some rules. First, in 2000, a beauty floor was created in the lower level, breaking a longstanding retail tradition of housing cosmetics and fragrances on the main level.

Second, vendor shops were removed from the main floor to bring in a wider array of artisan vendors, fine jewelry and accessories, and project a greater Bergdorf's personality. Though many new vendors have been brought in, such as Verdura and Chrome Hearts, such brands as Hermès and Cartier remain on one, but without shop environments.

On the second floor, shops for important multicategory designer brands were created, designated internally as "world of" concept shops featuring accessories and ready-to-wear together. There are "world of" Chanel, Giorgio Armani, Yves Saint Laurent, Gucci, Dolce & Gabbana and Christian Dior, each bearing the signature designer decor, yet they all have black lacquer enframements bringing a sense of continuity to the floor, and again, to cast a Bergdorf's personality.

"We are holding true to our plan," Gold said. "On the main floor, we do not allow vendor designer boutiques."

In addition, a new shoe salon on two was created, which Gold called "the heart and soul of the store," with a price point that can go well above the $550 to $600 Minolo Blahnik's that fly out of the store. "On any given day, even when the rest of the store may be quiet, the shoe salon is buzzing," Gold said.

The fourth floor for luxury collections, including couture and evening, was next. It's the homiest of the floors, with vintage and contemporary furniture and extensive use of shiny, sleek mannequins, inset custom-made carpets and artwork, including a reclining nude mural obtained in a Paris flea market, Clingancourt, and a 10-piece photo mural by Christopher Beane commissioned by the store.

"Each of the floors has a different stylistic point of view and different color palette and different material palette, but one of the things that unifies the store, with the exception of the contemporary floor, is that we try to always reference things that are historical," observed Linda Fargo, vice president of visual merchandising.

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"We are a little bit focused on the Thirties and Forties," she said, with Deco references, residential elements, parchments, Macasa woods and artwork. "Nowadays, modern still means clean white boxes with slick materials. That's not the kind of modern we want to be about."

Fargo, who is designing the third floor, said it will be unlike any other in the store, and hinted that it will be a little less serious in tone. "We want to make it feel almost like a loft, with a [slight] Japanese aesthetic. The whole outer perimeter will be vendor shops in the language of the vendor, some designed by them," Fargo said.

Interior walls will be leveled, and shops will be separated by transparent curtains, or scrims in ivory bouclé yarn that's nubby and textural. A wood floor will run throughout and [will be] finished in a "symphony of whites and textures," Fargo said. "Everything will be very pale. What will really stand out will be the merchandise. This sounds simple, but it's still with luxury materials, without the classic marble.

"I foresee these floor designs really holding up for at least 10 to 12 years," Fargo added. "It used to be pretty much seven years or so. Often, it depends on the validity or appropriateness of the design."

She described the pace of Bergdorf's renovations as "a pretty consistent clip since we started in 1998," while acknowledging "a lot of starts and stops with the first floor." That's the "entry point" which makes the most impression on the customer, with its Beaux Art chandeliers, custom banquettes and Swiss chalet-like parquet floor, and the one the store had been most sensitive about.

The fifth floor is Bergdorf's most conceptual. "This is a very fashion-forward floor, so the designers will be ever-changing. Therefore, the concept had to be very open and flexible," explained Michael Gabellini, architect of the floor and principal of Gabellini Associates.

He called it "a counterpoint to other floors, without the shop-in-shop format." It conveys "an open marketplace with a beehive of activity" not too unlike where you might buy produce, he said. "Metaphorically, you can equate fashion as fresh fruit, so you are always delivering fresh fruit during the season."

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Considering the rapid turnover of the merchandise, Gabellini injected a degree of design flexibility, so, for example, there are sliding wall panels in 5-foot modules, that change the amount of daylight and views from the store. The shoe department on the floor was conceived of as an "open courtyard to invite mingling," not unlike a hotel lobby, with the collections around the perimeter, Gabellini said. The floor also will host special events, such as trunk shows.

The most compelling component, enhancing the fifth floor's atmosphere, is the unusual undulating ceiling, with special floating curved cast plaster ceiling panels, simulating a sunscreen or a courtyard's brise soleils. There's a sensation of a floor drenched in natural lighting and a ceiling open to the sky.

Emanating from the floor out to the street is a ribbon of lavender light from a computerized lighting system. Gabellini called this a "signing device that connects the store with the outside and creates a sense of intrigue."

There's also some mystery about Bergdorf's upcoming restaurant, BG, and whether it will be the hot spot that Fred's, the restaurant in Barneys New York, has become. Bergdorf's officials don't see the restaurant as a profit center, but Gold did say it's expected to make money.

"For BG, I envisioned a setting that epitomizes grace and style, yet feels so fresh and welcoming that one would want to dine or meet for a drink there — several times a week," said Kelly Wearstler, the interior designer for the restaurant. The restaurant, she said, will be parchment-colored and have faux-bois-finished paneling, plank hardwood floors with a foxtail stain, scenic wallpaper with a vintage feel, eight different types of dining chairs and custom-designed chargers based on the store logo.

"The inspiration and vehicle for realizing that vision was already in the space's DNA, so to speak," she said. "The Vanderbilt mansion's residential heritage and frontage on the park called to mind drawing rooms or salons where friends and family might gather, and inspired the restaurant's polished domestic feel. And, of course, Bergdorf's legacy as a showplace for timeless fashion influenced my approach to the overall design and its finer details.

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"In the same way that all of the designers within the store tell a complete Bergdorf's story, I hope that all of the restaurant's motifs and details tell the BG story."