There have been many questions about what the future holds for Barneys New York in the wake of its bankruptcy filing and decision to close 15 of its 22 stores. During a session at eTail Boston, the luxury retailer’s EVP and Chief Digital and Technology Officer Katherine Bahamonde Monasebian shared insight into the current state of Barneys, and how the company plans to reemerge with a healthier operating structure by doubling down on its remaining flagship stores and offering new experiences that tout food, events and entertainment.
Early in the conversation with Bloomberg News reporter Kim Bhasin, Monasebian reiterated that Barneys is actively seeking a “digitally focused” acquirer to guide its future. Additionally, while the luxury retailer will cut its store count by more than 50%, it will keep its Madison Avenue flagship store in New York City open; a surprising move with its hefty rent of approximately $30 million per year.
“Our rents there increased over twofold,” said Monasebian. “It was challenging for us to absorb, yet we are keeping it. That flagship is actually the DNA of the brand. Those New Yorkers know, it’s a New York institution. It’s the place where we exercise the most creativity, it’s the truest to the heritage of the brand. Despite the rent increase, it actually is profitable, and a productive store for us.”
Monasebian pointed out some of the macro-level factors within retail that led to the bankruptcy, including changing Millennial shopping preferences, the evolving definition of luxury, digital startup retailers, heavy debt loads, the continued focus on promotions as a marketing tactic, as well as newer preferred shopper business models such as rental and consignment services. The convergence of these factors has essentially forced multi-brand luxury retailers to reinvent themselves, according to Monasebian.
“I don’t think the fundamentals of what a luxury consumer is looking for have changed,” Monasebian said. “I think that in the interim, the advent of online has changed some of those purchasing habits. Expectations have definitely risen. It’s table stakes that I can pick something up or return it in a store or get free shipping. A lot of these expectations have been formed by some of the direct-to-consumerplayers — people want to do business with companies where sustainability and values are important. Give me a reason to shop you. That mindset shift has penetrated into luxury.”
Despite rising shopper expectations, Monasebian believes Barneys is “very well positioned to compete in what’s an increasingly competitive environment,” even as retailers such as Neiman Marcus and Nordstrom break ground in New York City.
Specifically, Monasebian noted that Barneys is willing to take risks to be at the forefront of cultural shifts and deliver experiences that matter to modern consumers. For example, the company is seeking to build on its brand image by fortifying the experience side of the business with its Freds at Barneys New York restaurants, with the sixth opening in Boston during fall 2019. Additionally, Barneys will host more of its “The Drop” events in its stores, whichfeature the release of a 20-plus designer item capsule collection and live-streamed entertainment panels.
“We don’t see ourselves in the retail game anymore,” said Monasebian. “We see ourselves as a venue and a place for hospitality. If you look at the way values have shifted from products to experiences, food is at the center of that. Food is definitely a key part of our go-forward strategy. ‘The Drop’ was very successful for us from an acquisition perspective and from a repeat customer perspective. Some of you might have seen we recently entered the cannabis economy with our ‘High End’ store in Beverly Hills and online, and soon-to-be in Madison Ave.”
Cross-Channel Data, ‘Pulse-Takers’ And Testing Enable Retailers To Keep Up With Modern Shoppers
Barneys isn’t the only brand trying to figure out its place in consumers’ lives as their shopping behaviors and expectations evolve. In a keynote panel discussion, executives from three retailers, a protein bar seller and an AI-powered search solution discussed what steps they are taking to optimize their brands across all channels. Panelists included:
- Michele Parzianello, Senior VP of e-Commerce at J.Jill;
- Parinda Muley, VP, Innovation & Business Development at Macy’s;
- Jason Williams, VP Customer Technology at DICK’S Sporting Goods;
- Victor Lee, CMO at RXBAR; and
- Diane Burley, VP of Content Marketing at Lucidworks.
Williams emphasized the importance of equally analyzing online data and offline data to determine what channels shoppers are interested in. He emphasized his point with an example in which DICK’s Sporting Goods sought to understand why sales from its self-service mobile checkout in stores had declined.
“We sent our in-store customer experience team to experiment,” Williams said. “They offered a mobile device that was basically our mobile app, but it looked at our store inventory or expanded to some of our e-Commerce inventory. We walked around with our customers in three or four stores, and we found that 95% of our customers did not want that. They wanted to be able to find the right assortment, the right product or a similar product either in that store or a local store because they wanted the product now.”
Retailers’ ability to keep pace with new shopping trends and technologies is only as good as their ability to educate and empower their associates — especially if the business is built in traditional roots. At Macy’s, keeping the rest of the company abreast of the retail landscape is a full-time job for the innovation team, Muley explained.
“Having a dedicated team focused on keeping the pulse of the market is very helpful for our organization,” Muley said. “We have a lot of partners, both internal and external, that help support us on that front. We have a good pipeline with our VC partners and our banks. We’re partnered with incubators and accelerators, and we’re going to demo days and conferences like this. That pipeline is very rich, and it’s really on the team to help organize and continue to synthesize a lot of what we see out there.”
This knowledge serves to benefit retailers, especially as they determine when to implement a specific technology across all retail channels. For example, constant testing enabled J.Jill to re-platform its e-Commerce site entirely. At each stage of the development process, the team acquired insights into what made certain features and updates successful and whether they should be adjusted in the future.
“We recently did an entire re-platforming of our site, the front end and back end,” Parzianello said. “In prior attempts when we did re-platforms, it was a ‘burn the ship’ moment: flip the switch and you held your breath and crossed your fingers. This time, after going through a couple battles, the information systems team and I sat down and said, ‘let’s test this.’ We had 90% of traffic on the legacy site and 10% on the new platform. We slowly scaled it up and learned a lot about what was working and what wasn’t, and it really helped us mitigate risk and understand the customer’s preferences. That milestone of ‘press and go’ didn’t come until we had a lot of data and understanding about whether this was worth it or not.”