The first Filene's Basement was in Boston's "downtown crossing," opened in 1909, located as the name says, in the basement of Filene's.

The Boston Globe's "History of Filene's Basement" reports that "Edward A. Filene founded Filene’s Basement in Downtown Crossing more than a century ago as a way to sell excess merchandise from his father’s department store upstairs.". One of it's unique aspects was the "automatic markdowns". Already discounted prices of items dropped three times based on how long they were in the store. Items were mostly put tables with about 6 inch edges, causing people to have to dig to find things, also increasing the potential for pushing and shoving.

Along with items from "upstairs" in Filene's, the basement in Boston carried items from many other department stores and local clothing shops. It was one way to get to try on and even just touch designer clothes from upscale boutiques.

A WGBH documentary Voices from the Basement  http://www.wgbh.org/articles/The-Filenes-Basement-Story-From-Those-Who-Knew-It-Best-1109

Notes

1. "History of Filene's Basement" http://archive.boston.com/business/gallery/Filenesbasement?pg=2