Filene's Basement

**Filene's Basement**, also called **The Basement**, is a Massachusetts-based chain of discount department stores which is owned by Retail Ventures, Inc.

The oldest off-price retailer in the United States, Filene's Basement focused on high-end goods and was known for its distinctive, low-technology automatic markdown system. As of late 2006, the company operated stores in metropolitan areas in eight U.S. states and Washington, D.C. and used a 470,000-square-foot (44,000 m2) distribution center in Auburn, Massachusetts. The store's name was 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 had been set to reopen following the conclusion of the construction.

## History

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, William Filene, 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, 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 purchased and 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.

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. 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.

In 2006, Macy's Department Stores purchased the original Filene's chain. 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 (which sat across the street from an existing Macy's store) was not. Macy's shuttered the Filene's in Boston's Downtown Crossing, 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.

At the time, plans were announced to reopen Filene's Basement in the same location in 2009 (although the announcement also claimed there was 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." However, Filene's Basement had already opened a second Boston store in 2006, one mile away from the flagship store, on Boylston Street near Copley Square. Due to a number of factors, renovations on the Downtown Crossing site came to a halt during late 2008, leaving the building partially gutted; as 2009 came to a close, Filene's Basement had not moved back into their former space, as originally planned.

## 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."

Ninety percent of goods sold in the basement were purchased within the first 12 days of sale.

In January 2004, the automatic markdown system was changed to require 14 days between each mark-down.

The markdown system was only in effect at the Downtown Crossing store and was not extended to any of the chain's other stores, even after the Downtown Crossing store closed in 2007.

### Running of the Brides

Starting in 1947, the Boston flagship store 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, subsequently published in an article in *Developments in Marketing Science*.

In 2008, after the flagship store had closed, the event moved to the Hynes Convention Center. Filene's Basement stores in other cities have also held these events.