Basement may end markdown system

Filene's Basement, the Boston landmark that birthed the bargain, said it will close its original downtown store this year, and it's unclear whether it will retain its famous "automatic markdown" system when it reopens after two years of renovation.

The merchant will begin next month moving upstairs to the first floor of its building, which previously housed Filene's flagship department store in Downtown Crossing. Filene's Basement will consolidate its two basement floors over the spring into one floor and expects to shutter by late summer or early fall. The discounter, which leases its space, expects to reopen in the renovated building in spring 2009.

The century-old basement pioneered the concept of bargains when it devised a system of automatic markdowns, where merchandise is discounted on a set schedule that customers can track. While other Filene's Basement stores have opened selling discounted merchandise from designer clothes to picture frames, only the Downtown Crossing location maintained the automatic markdown system.

But with the store's temporary closing, the automatic markdown policy will not be adopted at another location, and it's unclear whether it will return to the original Filene's Basement when it reopens, a company official said.

Filene's Basement, one of the city's top tourist attractions, also said yesterday it is working with the city to determine the feasibility of a temporary location in downtown Boston. Executives are working with real estate brokers to scout out potential sites.

"As a historic flagship store in Downtown Crossing, we fully understand the importance of our presence in Boston. After exhausting all possible scenarios we have been advised that it is not safe to stay in our current location while a complex redevelopment is underway," Filene's Basement president Mark Shulman said.

"We will be working with the city to explore all options, including a possible temporary location," he said. "We will continue to be open for our loyal customers at our eight other Massachusetts locations."

The Globe first reported Saturday that the basement was closing temporarily, and that city officials and merchants expressed concern about how the closure would create a void in the heart of Boston's downtown shopping district.

Filene's Basement employees were notified yesterday morning. The company could not provide details on the job status of the 220 union employees who work in Downtown Crossing.

Filene's Basement had originally planned to relocate temporarily upstairs during the renovation which is part of a $625 million project to redevelop the former Filene's department store building. The project calls for a 38-story tower, hotel, condominiums, and retail stores. Federated Department Stores Inc., the parent of Macy's, bought the Filene's department store chain, closed it, and sold its flagship building to developers.

Edward A. Filene founded Filene's Basement in 1908 as a way to sell excess merchandise from his father's department store upstairs. Today Filene's Basement operates as a separate company.

Jenn Abelson can be reached at abelson@globe.com.