Filene's Basement

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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 owned by Retail Ventures, Inc. The oldest off-price retailer in the United States, The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. As of late 2006, the company operated 31 stores in metropolitan areas of eight U.S. states and Washington, D.C.. The chain also uses a 470,000 square foot 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. On September 3, 2007, that outlet closed for two years to accommodate a major redevelopment of the building above.^[1]

1 History
2 The automatic markdown system
3 Filene's Basement Bridal Gown Sale
4 References
5 See also
6 External links

[edit] History

As one might expect, the history of The 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 Stores, 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 acquistion 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. The fortunes of the stores diverged. The 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. The 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, 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 shut following the purchase of The Basement by Value City Department Stores Inc. (later Retail Ventures, Inc.) in March 2000. Soon afterward, three 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 Basement had once been a part, was dissolved by its arch-rival Macy's. Because the stores were not under common ownership, most Basement locations were spared, but the flagship location was not. Macy's shuttered the Filene's location directly above the flagship Basement location and sold the building for redevelopment. The original Basement location was shut on September 3, 2007, to accommodate a massive redevelopment project. The Basement 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]

[edit] 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."^[6]

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 is 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.

[edit] Filene's Basement Bridal Gown Sale

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: Running of the Brides