On Friday, Barneys New York opened a new chapter as a license-able brand with global aspirations, rather than the edgy department store it once was.
Its fate, and its iconic status, is now at the mercy of Authentic Brands Group, a licensing conglomerate that controls 50 brands, including Nine West, Sports Illustrated and Elvis Presley. As a bankruptcy judge on Friday slammed her final gavel to give ABG its $270 million prize — after competing bids from a consortium led by entrepreneur Sam Ben-Avraham failed to materialize — the brand conglomerate sent out its vision for the retailer. In a release, ABG said it's "committed to preserving the legacy of Barneys New York while positioning it for long term growth through key partnerships that will expand its global presence as a lifestyle brand and luxury retail experience."
The company already has a key partnership, if not the key one, in Saks Fifth Avenue, the most successful retail enterprise in the portfolio of Hudson's Bay Co., which has moved to update the department store concept with a $250 million renovation of the Saks New York City flagship.
Saks Fifth Avenue is officially the exclusive Barneys New York retail and e-commerce partner in the U.S. and Canada, ABG said on Friday. And "the first order of business will be to reboot Barneys New York on the fifth floor" of that Saks flagship, along with Barneys New York shop-in-shops in Saks stores in both countries.
Things have already moved quickly: Also on Friday, Barneys landlord Ashkenazy Acquisition Corporation and ABG said they'd reached an agreement to keep the Madison Avenue location open for at least 12 months. It won't quite be the same — the footprint will shrink and host some sort of rotating pop-up concept — but that move bodes well and is a sign that ABG may very well be, as it says it is, intent on preserving Barneys' legacy.
"[ABG CEO] Jamie Salter's openness to evaluate a strategy that had not been in consideration just a week ago shows he brings promise with a business model that otherwise could have meant that the Barneys brand as we know it would die a slow death," Thomai Serdari, professor of luxury marketing and branding at New York University's Stern School of Business, said in an email to Retail Dive.
Serdari had previously been skeptical of ABG's plans to partner with Saks, telling Retail Dive last month that it would be capitalizing "on the ghost of the creative brand that Barneys used to be by transforming it into a series of soul-less, licensed merchandise for mass consumption."
But the willingness "to create a blueprint of a flexible, experiential, and highly innovative space that maintains the essence of Barneys as a powerhouse of creativity and then expand it internationally are propitious," she said Monday. "As with every other initiative in the luxury market, a space that links merchandise to artistic aspirations, it will all boil down to how this model will be executed and, most importantly, how it will be adapted to other cultures abroad."
Others aren't so sure about the global expansion or the Saks tie-up, however, no matter how it's executed.
"The whole thing that makes me scratch my head is Saks is a department store — why the heck do they need Barneys?" Bob Phibbs, CEO of the consulting firm The Retail Doctor, told Retail Dive in an interview. "Barneys was a snooty place to shop, it was a collection of small up-and-coming brands. Saks does that better."
In fact, both Saks and Nordstrom, which in recent weeks opened its first Manhattan flagship on the other side of Central Park from Barneys, do a better job curating a spectrum of brands to appeal to a wide swath of customers, he said.
"Nordstrom has L.A. and now in New York City — they have high and low price together, different areas of discovery and can do a lot more than a Barneys would because they have such a lot more depth of product," he said. "And Saks has done a remarkable job in Manhattan. Why would Saks give money to another company when they could go directly to the brands? Saks has a great point of view already."
Presumably that is the question that Saks and ABG are working to answer, and may have already, at least for themselves. Barneys retains a strong following in both Los Angeles and New York, according to Ray Hartjen, marketing director of RetailNext. Ashkenazy also owns the property where Barneys' Beverly Hills store sits, and that may need to stay open as well, in light of the brand's popularity there. (ABG didn't immediately respond to Retail Dive's request for comment on that store's prospects; Ashkenazy declined to comment.)
"The core customer in Los Angeles will still be there for a Beverly Hills-area store, and it's driven to the brand and its fashions by show business and stylists," Hartjen told Retail Dive in an email. "What looks good on screen gets noticed and copied by those who watch and aspire for that same look. I think that store could be a perfect re-launching point for the brand, if it's chosen to survive."
Even if that store does ultimately shutter for good (as plans seem to be now), the area, with New York, will be key to the brand's reinvention because it's well established there, with "a strong emotional connection with its most loyal customers," Hartjen said. But Barneys can hardly stop there: The challenge before it now is not to just maintain such loyalty, but to add to it. Whether or not ABG or Saks are ideal partners, the company has struggled without one.
"Barneys has, and still has, a lot of brand cache among its core customers and target demographics," he said. "While Authentic Brands will have to be careful on how it moves forward, it should be able to protect the brand's identity and strong following. The key to success, of course, is going to be whether it can build the brand, rather than survive as a smaller, stagnant niche. It's where Barneys failed on its own."
