Filene's Basement

Filene's Basement

Type	Private
Founded	1908
Headquarters	Burlington, Massachusetts
Key people	Mark Shulman, President; James Rudd, Executive Vice President
Industry	Retail
Products	Apparel, jewelry, shoes, accessories and home goods.
Net income	$389.3 million [1]
Website	www.filenesbasement.com

Filene's Basement, also called The Basement, is a Massachusetts-based chain of department stores which was owned by Retail Ventures, Inc. until April 2009 when it was sold to Buxbaum Group.

The oldest off-price retailer in the United States, Filene's Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. As of late 2006, the company operated stores in metropolitan areas of eight U.S. states and Washington, D.C. and uses a 470,000-square-foot (44,000 m²) distribution center in Auburn, Massachusetts. The store's name is derived from the subterranean location of its flagship store, in the basement of the former Filene's department store at Downtown Crossing in Boston, Massachusetts. The flagship Downtown Crossing store closed in September 2007 while the building above it underwent construction and is set to reopen following the conclusion of the construction.^[1]

The 2009 economic crisis had an effect on the chain, prompting the closing of many stores and the eventual sale of the chain from Retail Ventures, Inc. to Buxbaum Group. It filed for bankruptcy in May 2009 a sale is pending to keep the stores open.

History

As one might expect, the history of Filene's Basement is intertwined with that of the venerable Filene's chain. In 1908, Edward A. Filene, son of the founder of Filene's, came up with the idea of selling surplus, overstock and closeout merchandise in the basement of his father's store. Filene's "Automatic Bargain Basement", as it was originally called, opened in 1909 beneath the Downtown Crossing location.

Filene's Basement, and its sister company, Filene's Department Store, were wholly-owned by Federated Department Stores of Cincinnati. The two entities shared many operating systems, including payroll, benefits, and a common credit card. Top executives, at the time, included: Sam DiPhillippo (Marketing), Audie Dunham and Kathleen Collman (HR), and others.

Following the ill-fated acquisition of Federated by Campeau Corp. of Canada, Filene's Basement was spun-off. It became a privately-held venture in a LBO arrangement led by then-CEO & President Jim Anathan and Chairman Sam Gerson and other investors. The entity became known as 'Filene's Basement, Inc.', and remained headquartered in Wellesley, Massachusetts.

In April, 1988, Filene's was acquired by May Department Stores and the fortunes of the stores diverged. Filene's Basement, now a separate company, embarked on a massive but ill-advised strategy of expansion that, ten years later, in August 1998, forced the chain to seek Chapter 11 bankruptcy protection; more than 30 outlets were shuttered. Filene's Basement's journey through the bankruptcy process was brief, and expansion soon resumed, albeit more cautiously.^[2]

In March 1999, the company debuted a new weekend warehouse store concept, Aisle 3. The stores, averaging 60,000 square feet (5,600 m²), operated only Friday through Sunday and were located near major metropolitan areas.^[3] Plans were to open at least 10 stores by the end of 1999 and 40 to 50 stores in the following years, but ultimately only eight opened. All Aisle 3 location were closed following the purchase of Filene's Basement by Value City Department Stores Inc. (later Retail Ventures, Inc.) in March 2000. Soon afterward, three Filene's Basement locations reopened in the vicinity of Washington, D.C., and modest efforts at expansion resumed.^[4]

In 2006, the original Filene's chain of which the store had once been a part, was purchased by its rival Macy's Department Stores. Because many store locations between the two chains did not overlap, most Filene's locations were spared and reopened as Macy's, but the flagship location was not. Macy's shuttered the Filene's in downtown Boston directly above the flagship Filene's Basement location and sold the building for redevelopment. That Filene's Basement location was subsequently closed on September 3, 2007, to accommodate the redevelopment project and plans to reopen in the same location in 2009, although it claims to be under no legal obligation to do so. Boston Mayor Tom Menino expressed concern that the chain was not able to find a temporary location for the store during the two-year renovation, saying they "could have found a location in the city if they really wanted to continue the business."^[5] However, another location already exists in Boston, one mile away from the closed store, on Boylston Street near Copley Square. A documentary film titled, "Voices from the Basement" has been in the works since 2004 and is due for release this fall. The film features stories from the people who worked and shopped in The Basement and include, Mike Wallace, Mayor Tom Menino, Estelle Parsons, former Massachusetts Governor Michael Dukakis and congressman Barney Frank. The film is the work of Long Hair Productions founder, Sue Ebdril and filmmaker Michael Bavaro.

Bankruptcy and sale

The economic crisis took its toll on the chain and owner Retail Ventures, Inc announced on January 20, 2009 its plans to close 11 of the chain's 36 stores.^[6] The store closures did not help and on April 22, 2009, Retail Ventures, Inc. announced that it had sold the remaining 25 Filene's Basement stores to the Buxbaum Group, a company that specializes in liquidations. The Buxbaum Group did not indicate what it would do with its acquisition, although Retail Ventures had previously indicated that the company's future was uncertain.^[7] The store officially filed for Chapter 11 bankruptcy protection on May 4, while real estate investors Crown Acquisitions and the Chetrit Group offered $22 million to purchase the name and leases on 17 of Filene's Basement's most profitable stores. They announced that they would keep the stores open and focus on castoffs from luxury-goods makers.^[8] On June 15, 2009 Syms and Vornado were declared the winners of the bankruptcy auction of Filene's Basement's assets when the Syms-Vornado group agreed to pay 62.4 million dollars, subject to bankruptcy court approval. http://www.reuters.com/article/americasDealsNews/idUSTRE55E6F320090615

Store features and events

The automatic markdown system

A description of The Basement's markdown system from a 1982 New York Times article:

"... every article is marked with a tag showing the price and the date the article was first put on sale. Twelve days later, if it has not been sold, it is reduced by 25 percent. Six selling days later, it is cut by 50 percent and after an additional six days, it is offered at 75 percent off the original price. After six more days — or a total of 30 — if it is not sold, it is given to charity."^[9]

Since the 1982 article was published the automatic markdown system was changed, giving more time between the discounts. There are now 14 days between each mark-down.

The markdown system was only in effect at the Downtown Crossing store, and there is a possibility that following its upcoming remodeling, it may no longer be in effect. The company has stated that it plans to preserve the famed Automatic Markdown Plan on re-opening.

Running of the Brides

Since 1947, the Boston flagship store has held an annual one-day bridal gown sale. In 1997, the sale was the subject of a study by two marketing professors at Bentley College and subsequent article published in Developments in Marketing Science.

See also

• "The Filene's Basement Bridal Sale: A Content Analysis of Store-Authored and Media-Authored Communications About a Retail Special Event", by Ellen Foxman and Susan Dobscha, Developments In Marketing Science 20,: 321-326.
• "Aisle 3 joins the weekend pioneers" by Mike Duff, Discount Store News, April 5, 1999.
• "Filene's Basement Announces First Steps in Reorganization Strategy and Closure of 17 Underperforming Stores", press release, September 28, 1999.
• "Aisle 3 Doubles in Size With Grand Opening of Four Chicago Stores", press release, October 6, 1999.
• "Company News; Filene's Basement To Close Almost Half Its Stores", The New York Times, November 13, 1999.
• "Filene's Basement vows to appeal to Nasdaq delisting" Boston Business Journal, November 26, 1999.
• "Company News; Value City Subsidiary Is Acquiring Filene's Basement", The New York Times, February 4, 2000.
• "Gerson on the Basement: `Lots of hard work' ahead" by Donna L. Goodison, Boston Business Journal, May 8, 2000.
• "Basement Revival: Schlesinger leads discounter back to profitability" by Donna L. Goodison, Boston Business Journal, June 17, 2002.
• "Filene's Basement already seeks more locations" by Lisa R. Schoolcraft, Atlanta Business Chronicle, May 22, 2003.
• "Filene's Basement relocates suburban HQ", Boston Business Journal, February 3, 2005.
• "Filene's Basement coming to Hunt Valley", Baltimore Business Journal, May 24, 2006.
• "Summary of Annual Report (SEC Form 10-K) for RETAIL VENTURES INC", filed April 13, 2006.
• "Pioneering Discounter Seeks Court Protection" by Leslie Kaufman, 'The New York Times, August 24, 1998.
• "ITEM 2. PROPERTIES of Annual Report (SEC Form 10-K) for Filene's Basement Corp", filed May 1, 1998 (source for most pre-1998 store opening dates).
• "ITEM 2. PROPERTIES of Annual Report (SEC Form 10-K405) for Filene's Basement Corp", filed January 30, 1999 (source for 1998 and early 1999 store opening dates and many store locations).

References

External links

• Filene's Basement official website
• Retail Ventures, Inc. official website
• Voices from the Basement film website