How Barneys Is Navigating Luxury’s Slowdown
Barneys New York is hardly a retailer one associates with discounting and deals, and recently appointed CEO Daniella Vitale likes it that way. The iconic Manhattan-based retailer, known for selling things like $20,000 silk gowns and $8,000 sport jackets, has not been spared from the storm buffeting the world of U.S. luxury, with international tourism spending still weak and the proliferation of new shopping options, from the Rent the Runway rental service to online retailer Net-A-Porter, upending the traditional way of selling high-end products. Bain & Co earlier this years forecast a likely small contraction in luxury spending the Americas, compared to big gains in markets like China and Europe, citing a strong U.S. dollar and weak department store traffic.
Even as many retailers and brands give into the temptation to offer deals galore, Vitale sees going too far down that road as potential lethal. Rivals like Nordstrom, HBC’s Saks Fifth Avenue and Macy’s Inc’s Bloomingdale’s are all seeing pressure in their full price department stores and in recent years, have doubled down on their “off-price” discount outlet chains to get a lift. But seeing discounting as an unwinnable war, the much smaller Barneys (annual sales don’t quite reach $1 billion according to some estimates) decided a few years ago to get out of most of its outlet business, keeping enough stores to be able to clear merchandise in the normal course of the retail business, and eschewing many rivals’ practice of making merchandise just for outlets. Read more at Fortune.
