Filene's Basement is moving from its heritage of offering steep discounts on designer merchandise. It is, as a Boston Globe report points out, looking to broaden its horizons by offering more upscale designer fashions at deeply discounted prices.
Filene's move out of the basement, so-to-speak, is reflected in the chain's decision to seek more upscale digs for its stores. A case in point is the announcement that the newest Filene's Basement will set up shop on Boston's Newbury Street.
Although the company's origin lies in Boston as the creation of the Filene's department store (another chain being converted to Macy's by Federated Department Stores), the independent Basement stores have not opened a new store in the city over the past 100 years. Filene's Basement was founded in 1908 by Edward Filene to sell off excess merchandise from the Filene's Department Store business.
Heywood Wilansky, chief executive of Retail Ventures Inc., the parent company of Filene's Basement, said, "We're healthier than we've been in a long time. We're expanding more rapidly, and we're opening our first Boston store in about 100 years. It just gives me a kick whenever I say Filene's Basement and Newbury Street. Never in my wildest dreams did I expect to open a store there."
In recent years, Filene's Basement has been able to drive up the average cost of merchandise sold in its stores by focusing on more upscale fashions. Stores, for example, that previously sold men's designer suits for $99 are selling more prestigious brands starting at $199.
The retailer is also upgrading its look in-stores to reflect its newly modified image. According to the Globe report, the company's Union Square store in Manhattan has flat-screen televisions on the walls and private dressing rooms.
Michael Silverstein, a senior vice president at The Boston Consulting Group and author of the new book, Treasure Hunt: Inside the Mind of the New Global Consumer, believes Filene's Basement has found a niche with fashion conscious middle-class consumers.
"She knows the price of the goods at original retail. She knows something about quality, materials, and style," Silverstein said. "She is like a missile looking for a perfect bargain -- great price, great brand, fashion right."
Marshal Cohen, chief retail analyst at NPD Group, sees the rationale behind Filene's Basement's shift but offers this caution. "Fashion isn't a science. There's a lot of opportunity for risk when you buy more upfront and rely more on fashion. They are trying to compete in high-fashion -- an extremely competitive arena that is only getting more intense."
Discussion Question: Is Filene's Basement on the right path to carve out a profitable and growing niche for itself?