Barneys New York sees itself sharpening its experimental edge, bolstering a full-price orientation and becoming more data-driven.
That’s a big part of the game plan at the luxury retailer going forward, as expressed by Daniella Vitale, the retailer’s chief executive officer, during her presentation at the WWD Apparel and CEO Summit Wednesday. While Barneys isn’t about to alter its essential designer DNA, it’s far from business as usual, according to the ceo.
“The first step is admitting that we are actually not just in the retail business anymore. We are in the entertainment business. We are in the food business. We are in the services business. Most importantly, we are going to become a much more data-centric company,” Vitale said.
“We have probably gone through more change in the last year than ever before. It certainly has not been easy.”
Vitale said Barneys is undergoing a “cultural shift” and has “to really think about customer-centricity. We have to really think about convergence, constant experimentation and what do we need to do today to have a more sustainable future.”
She acknowledged that Barneys has experienced “a complicated” year, though she disagreed with the general narrative on the retail industry, which has been plagued by doom and gloom headlines. “Retail has gone through a rough patch, but by no means is it as negative as the news makes it to be,” she insisted.
Barneys’ experimental bent will be evident this weekend with the launch of a new two-day format — thedrop@barneys — at the Madison Avenue flagship in Manhattan and online.
“How do we experiment with concepts across multiple disciplines, multiple genres? The Drop really is a convergence of all those things — art, design, product, technology,” Vitale said.
“How do we experiment with things that are beyond the four walls of retail? On Saturday, it’s not only launching exclusive capsules — we have about 30 of them. It’s also about the personal appearances. Food. A DJ. We even have a tattoo artist coming. This is one of those initiatives where every single part of the company really collaborated. It morphed out of something that was called Artisan Day. Some are mourning the loss of Artisan Day, but we have been doing Artisan Day for 20 years and we realized when we looked at the data and the performance of Artisan Day, it was a largely male consumer and it actually didn’t attract any new customers.”
With The Drop@Barneys, about 60 percent of those who have registered already are women; 50 percent are new customers. “It indexed exactly the way we wanted to,” Vitale said.
Last September, in another innovative project, Birkenstock outfitted “a shopping container” outside Barneys, filled with Birkenstock product that was exclusive to Barneys, and other brand exclusives. “It was great brand equity,” Vitale said. “It gave us international exposure and it attracted a new customer. We want to do more of this experimentation. We hope our vendor community will be more and more willing to do these types of things, and the exclusive piece of it is obviously a big driver.”
“Exclusive products at Barneys represent almost 25 percent of our business and is the most profitable part” of the business, Vitale said.
During her presentation, she emphasized stepping up services. “Ultimately that connection with the customer beyond just product we know drives retention.” Offering beauty services in nontraditional ways, including the Blind Barber at the Chelsea store, “really has been a major traffic driver for us.” The beauty business is “a big entry point for us in terms of attracting a new consumer and we do need to be doing that.”
“Personalization is really the paradigm of service,” Vitale added. “That is really where service is moving. A couple of years ago, we identified that online and it now is 12 to 15 percent of our business online and it’s growing 45 percent year-over-year.
“How do we take personalization into the store? We developed in-house the ‘recommend app’ and it actually takes purchasing history and browsing history and allows the sales associate to see what the customer has purchased, what store they purchased it in, and gives the associate product recommendations” for customers.
Vitale said Barneys’ enlightened approach to data (after long ignoring much of it) is “the biggest change we have undergone in the last 12 months. I think the company felt we would be less creative, or too rigid, or we wouldn’t be as experimental if we became data-centric. It actually is the exact opposite. It allows us to make much more informed decisions. It’s about what is best for the customer, not what is best for us. We need to build things around our customer, not necessarily around the brand.” Barneys recently invested in a robust CRM platform and clienteling solutions and last spring hired a chief information officer for the first time in its history, Martin Gilliard.
Barneys is also partnering with social media “to really personalize and customize the way we market to the consumers, not just the existing consumer. We need to be much more personalized, much more customized when we are prospecting.…Where does social media happen? It happens in our stores, in our restaurants, in the beauty salon, on the floor. It doesn’t happen sitting at the desk by the computer.”
Vitale wants Barneys to stay clear of the industry’s markdown mania. “This incessant, incessant discounting. This incessant being on sale seven months out of a year — we know that is not a sustainable model, particularly in the business that we are in. In the department store sector, that is absolutely the reason why things are not moving the way they need to be. We are going to run our business largely as a regular-priced business. This incessant discounting dilutes the brands, the message of the designers that we carry, and it makes it literally impossible to launch any new brands or cultivate these nascent businesses. We are focused on gross margin, running our business profitably and really trying not to just drive the top line with discounting.”
To increase full-price selling, “There has to be a conversation with brands constantly,” Vitale said. The mind-set of the consumer, who has been trained for decades to buy on sale only, has to change, and Vitale said that can be accomplished by providing exclusivity and “smaller more niche brands that we are good at cultivating.”
Barneys like other stores pushes brands to provide exclusives. “Everybody thinks we are just this big pain-in-the-you-know-what for having this conversation, that we need it exclusively. This is part of our business model,” Vitale said. “This is how we stay out of discounting. It’s not easy but it does work and the exclusive part is growing faster and is more profitable.”
Vitale called for “a greater spirit of partnership with our landlords, vendors and media partners…that spirit of partnership is really going to be the basis of success for all of us.”
“Our future at Barneys absolutely means we are going to be in the store business,” Vitale said. “Of course e-commerce is growing faster. That is not new news. But 55 percent of our 34-year-old-and-under customer shops in the physical stores. This notion that physical stores are going away is really not correct.”
Barneys is in rent talks with the landlord of the Madison Avenue flagship, and faces the prospect of a precipitous rent increase, which would affect its profitability. There are rumblings that Barneys is considering vacating the site and taking a smaller one on Madison Avenue, or downsizing the existing flagship by consolidating the men’s side into the women’s side of the store. It’s believed Barneys wants to stay where it is. Asked about the future of the site, Vitale said, “It’s a work in progress. We’re talking. When we have something to announce, we will let everyone know.”