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Is This Barneys’ Bid Farewell?
Barneys New York is reportedly considering filing for bankruptcy, as it struggles to pay its sky-high rent and adapt with changing consumer tastes.
The department store was founded in 1923 in New York and has often been considered as one of the most elite luxury stores in the US. Famous for its expensive labels and lavish couture, it is considered the store that introduced Giorgio Armani to the American public in 1976.
There are two broad types of bankruptcy in this case – reorganisation and liquidation. Amongst other options, Barneys is considering the latter. In this case, the department store would no longer exist and would close its doors entirely. However, if Barneys New York chooses to replicate the bankruptcy it saw in the ’90s, it opens the door for creditors or a new investor can take over the company, resulting in the old debt to be ‘forgiven’ or repaid.
So, What Now?
Although this may come as a shock to many fans of the luxury New York store, it’s not the first time that it has filed for bankruptcy. In 1996 it filed for Chapter 11 Bankruptcy, a reorganisation that went almost under the radar. As a result, it closed most of its boutiques across the country as well as its stores in Japan and Singapore.
So, what can happen after the bankruptcy of Barneys New York? Although they may not have a physical presence anymore, this doesn’t discount the opportunity to remain online. “Barneys has an opportunity to close down its physical footprint in favour of a renewed push online. There is a trend for pop up stores and micro-format experience centres where the job of the physical outlet is not necessarily to sell but to provide an experience that cannot be delivered in any other channel – think concierge services, curated styling, exclusive lines, personalisation and more. The role of the large format department store doesn’t make sense for the future of retail and a massive rethink is needed,” explained Rob Hango Zada, the Co-Founder of Shippit,
Is the Luxury Retail Space Dying?
Not necessarily. Like with all types of business, brands have to adapt and change with the customer, otherwise, they get left behind. With the changing demographics of shoppers of luxury products, it may be time for Barneys to take a leaf out of Net-a-Porter’s book, who has become a leading luxury space online. “Net-a-Porter is a great example of an online department store that offers many of the benefits that Barneys offers its customers without having to justify rent in high traffic locations like downtown Manhattan,” Mr Hango Zada said.
Barneys New York has not specified what it will do at this stage, but as its 28 stores hang in the balance, there’s a lot on the line. “At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products, and experiences they have come to expect. We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximise value. To that end, our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business,” Barneys New York said in a statement.
Is the end of Barneys New York an absolute shocker? Not really, but it does prove that customers have to tackle the changing and developing customer experience and target audience to keep them afloat and prosperous. Power Retail will keep you updated as the story develops.
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