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Barneys’ digital arrogance was the catalyst of its demise

Barney, as children of the nineties will recall, is a chirpy purple dinosaur. Barneys, the luxury department store and spiritual home of the New York glitterati, it transpires, is something of a dinosaur itself. In that, seven stores aside, it’s soon to be extinct.

As the century-old Manhattan stalwart files for bankruptcy, its competitors – Saks, Nordstrom and Bloomingdales in particular – will not be celebrating its fall from grace. Without serious upheaval and fast, their cards are just as marked.

The glories of old luxury are not safe in the digital world. Barneys blamed high rents for its undoing, but its problems were well-known to be rooted in its failure to adapt. Or, ‘its reputation for shrugging off convention with an air of arrogance,’ as the New York Times sniped in a near-obituary on Wednesday.

The presumed untouchability of prestige and heritage could well be perceived as arrogant. For Barneys, digital was seen as an add-on, rather than central to its overall growth strategy. That simply doesn’t cut it any longer. US consumers spent $513.6 billion shopping online last year, up 14.2% on the year prior. In the same breath, online sales of luxury items are predicted to grow at twice the market rate over the next four years.

Barneys has been under a rock while the rest of us explored the Amazon. Its digital presence hasn’t ever reflected its physical brand in any meaningful way. Barneys was the pinnacle of luxury, an exclusive club, a place to see and be seen. The vast, limestone-draped flagship store, its ostentatious window displays; grandiosity juxtaposed with eccentricity. Everything the brand is known for – its heritage and design; its story – was missing from its digital property.

Physical and digital commerce are one and the same in 2019, a seamless, complementary merging where one is an extension of the other and vice versa. The experience consumers have grown used to in-store – which in Barneys case was of the highest calibre – needs to be reflected in their experience online.  

As footfall decreases so too does loyalty, especially for retailers like Barneys which sell exclusively other brands. Walk through SoHo in New York and you’ll see these very brands opening beautiful, immersive stores that offer a real experience of the brand itself, rather than an identity diluted through third-party retailers.

The attention that Barneys lost through refusing to engage meaningfully with digital was poached by brands selling directly to consumers. These D2C brands are better at telling a story about who they are, where they have come from, and how they fit into a consumer’s own story and identity.

This has led to a sea change in the way luxury items are distributed and purchased worldwide, forcing retailers to experiment with different strategies. Of all the American department stores, Nordstrom is perhaps most ahead of the pack, its digital and physical experiences offering something close to parity. 

Nordstrom pivoted its offering, experimenting with new ideas and services, like in-store pick up for online purchases, or utilising its reams of data to better understand its customers and personalise their experience (for example, encouraging customers to try on items recommended by Nordstrom’s online personal shopping assistant). Further, the firm now has ‘Local’ stores across the States that don’t have any inventory, instead featuring juice bars, nail salons, seamstresses, and fitting rooms for online orders.

Nordstrom realised early enough that incorporating digital to physical is not a nice-to-have but the thing that will guarantee survival. There is no magic formula, of course. But through failing to properly experiment beyond ‘having a website’, Barneys dug its own grave. Let’s hope otherwise, but this could be a real Lehman Brothers moment; Barneys a harbinger for the demise of its industry peers. The world is changing, and it turns out, appearing in a few episodes of Will and Grace 20 years ago won’t save you.