BARNEYS NEW YORK SETS CO-OP IN FLIGHT, EYES MORE IN REGION

Byline: David Moin

NEW YORK — Barneys New York is back in the old neighborhood, opening its first free-standing Co-op store today in Chelsea, and inaugurating a new expansion drive.
The Co-op store, on 18th Street between 7th and 8th Avenues, could be the beginning of a chain of Co-ops in the metro area.
Believing that the Barneys name still has lots of legs, officials also announced they’re considering a chain of children’s shops, replicating the Chelsea Baby department within the Chelsea Passage area in the flagship, which features a high-end, gift- and apparel-oriented selection from such designers as Lilly Pulitzer and Dries Van Noten. Shortly after the Co-op doors opened on Sunday, about 100 people were shopping in the store, a smaller crowd than at other neighborhood stores like Old Navy and T.J. Maxx. Customers were mostly picking through handbags, Kiehl’s skin care product and summer merchandise like swimsuits.
Barneys has come a long way since going bankrupt in 1996, closing most of its stores, including the famous 17th Street flagship in 1998, where the company was founded over 60 years ago.
The retailer emerged from Chapter 11 in January 1999 with new financial owners who are eager to cash out by going public or selling the chain but must first build sales and profits to do it. Barneys launched the Co-op format in 1986. Among the industry’s most watched concepts, it’s always been considered among the most experimental merchandising platforms for launching new, trendy and often underfinanced designers. Aside from the new Co-op store, Barneys operates seven other regular-priced stores and 13 outlets and is approaching $400 million in annual sales.
Expansion and the construction of the lavish Madison Avenue flagship were what drove Barneys into bankruptcy in the first place. This time around, Barneys, led by Allen Questrom, chairman and chief executive officer, has a different template for growth: smaller shops with narrow merchandise assortments that capitalize on the strength of Barneys’ innovative merchandising, private label and world-famous name, as well as a considerably more “transportable” concept in Co-op.
“We are now focused on looking for space for the Co-op,” declared Questrom during an interview last week.
Reports about future Co-op sites have focused on South Beach, Miami. Barneys has combed that community, but Questrom prefers to initially put Co-ops closer to home. “Quite frankly, we trying to keep them around this area and close at hand so merchants can visit on a regular basis and fine tune. We are looking at more upscale areas — Greenwich or Westport-type communities — where you have shopping along the downtown Main Streets and upscale malls around the general area within driving time.”
In addition to the Chelsea unit, Questrom said, two or three Co-ops could open within the next year. Asked about South Beach, Questrom said, “We’re looking there, though it’s not our first priority. It’s so far away, but we like the area and it’s got the edgy customer we are looking for.”
Questrom cited the potential for Co-ops on the upper West Side north of Columbus Circle and in SoHo, Greenwich and Westport, Conn., and White Plains, N.Y.
“We are looking to open two more this year. Right now, it’s not the easiest time to find space. Everybody is looking [for retail space].
“The 18th Street Co-op is kind of a Rube Goldberg invention,” Questrom observed. “It’s not a pure Co-op. We are looking for [sites to accommodate] pure Co-op concepts.”
Questrom said the company came up with the idea last year for converting the warehouse space and spent less than $1 million doing it. “It’s not a lot for the size of the space, and we have a lot of flexibility,” he said. “We took the warehouse sale area and tried to come up with a way to do business year-round. It’s challenging in the sense that we will continue to do the warehouse sale three weeks in the summer and three weeks in winter. The fixtures we’ve created are very transportable.”
According to Barneys executives, the store could be cleared out of the full-price Co-op goods in a day to make way for the sale goods pulled from the other Barneys stores. The warehouse sale will continue to be on both floors of the building.
Barneys has also been conceiving a strategy for kids, which Questrom thinks will fill a void in retailing — upscale, gift-oriented children’s apparel. In the children’s area in the Madison Avenue flagship, “we do a lot of business there in a relatively small space,” Questrom said. “There may be the ability to transport that concept.” No sites are set yet, but Questrom said areas similar to those sought for Co-op in the metro area are being considered.
The downtown Co-op has 8,000 square feet of selling space. It’s all on the main floor of the two-level Barneys warehouse. The architecture inside and out really hasn’t changed. It’s still got an industrial, bare, loft-like environment, and iron-barred windows which prohibit window displays. “We’ll have more display force inside the store,” said Judith Collinson, Barneys executive vice president and general merchandise manager for women’s.
“The interior is pretty much what it was before,” acknowledged David New, executive vice president of creative services. “But we’ve cleaned it up, put some paint on the walls and brought the Co-op colors here — orange, blue and yellow.”
There’s also unusual low-cost lightweight fixturing, created by the firm of Kramer Hutchinson, designed to take a beating and enable Barneys staff to remove the merchandise quickly before the twice-a-year warehouse sale. There are rolling pipe racks shaped like scaffolding, lightweight display tables made from truck bed plexi, and other rugged elements such as chrome mannequins, corrugated metal cash wrap stations, cosmetic display units that look like tool chests, and fitting rooms wall-papered with Vargas and Petti postcards. Light blue plastic shopping bags with orange lettering were created specifically for the store.
What really stands out is the colorful, trendy assortment of casual sportswear, jeans, accessories, shoes and cosmetics. There are plenty of novelty looks, primarily from small vendors, like the beaded T-shirts, priced $80 to $325, and beaded dresses, $325 to $695, from Argentine designer Trosman-Churba. Or the vintage tie-dyed lingerie and dresses, priced from $700 to $1,500, from Mo Mo Falana, a New York designer, and tie-dyed leathers and suedes, priced $90 to $400, from Patricia Viera of Rio de Janeiro. Collinson said Co-op has been among the fastest growing areas of the store, and last year it grew at twice the rate of the store.
In many cases, the Co-op vendors are new designers, without the financial wherewithal to open their own freestanding boutiques. Often they represent the opening price points for the store, but the price range is wide.
About 20 percent of the downtown assortment is private label, including pants priced from $140 to $180, leather jackets, $390 to $520, and cashmere and wool sweaters in the $120 to $200 range. Other T-shirt labels are Groovy Girls for vintage looks mixed with the Adidas and Coca Cola names on them, as well as 3 Dots, Petit Bateau and Magnum Opus. Other key vendors are Theory, Katayone Adeli and Earl, and in cosmetics, Nars, Stila and Kiehl’s.
“It very much captures the spirit of the uptown Co-op,” said Collinson. Before the Co-op store, the warehouse sat idle for most of the year, only being used for the sale.
As for how many Co-ops could ultimately open, “We don’t really know, since it’s still in the concept stage,” Questrom said. “We’ve got to get the first one to work before we zero in on how many.”
With last year’s opening of Jeffrey, the designer store on 14th Street, as well as numerous showrooms, Chelsea is becoming more fashionable. Asked if the Jeffrey opening motivated Barneys to return to Chelsea, Collinson replied, “I don’t think that was the reason. It’s due to the growth of Co-op.”
She also said that long before Jeffrey opened “there had been so much conversation inside Barneys about wanting to go back downtown.”