Barneys
What is the value of just a name? From the winning bidder, Authentic Brands Group, it appears to be $270 million. Unfortunately, the other bidder who wanted to rethink the entire company including brick and mortar did not win although the ink is not yet dry. The articles written about the downfall always points to the exorbitant rent that killed them. I disagree it is about the rent. It is about a boring selection of merchandise, the lack of innovation and the entire experience.
Barneys deep slide began with the ungodly awful renovation of the 60th Street location including the return to the 18th Street location with absolutely zero excitement and thought to the future. Same old shit, different year. The original store on 18th street was gorgeous and innovative. The last round of Barney’s renovations made the store bland, boring and super shiny.
I happened to be in Barneys on 18th Street having lunch at Fred’s about a month after they opened a few years back. We sat next to the Perrys who own a huge part of Barney’s between his personal assets and his Private Equity Fund. They were critiquing the food. Not exactly sure their knowledge of that but I did wonder if I should tell them how they have missed the boat in the store. That beautiful iconic stair deserved some thoughtful ideas. Remember the original Barneys. That stair made you feel like royalty walking down it.
Today the store and concept look like Bloomingdales 1980. Nobody was thinking out of the box (as in it is 2019) about new concepts and forward-thinking architecture. A huge missed opportunity. Their customer is a high-end user who wants to feel special, elegant and given the opportunity to buy unique items. Not to fill it to the brim with merchandise that you can get anywhere. The Row has half a floor of merchandise with zero thought to curation. Why? There are racks and racks of crap all shoved onto a four-way on the upper floors. Nothing is elegant. It doesn’t take much to look at Colette’s success in Paris or Dover Street to get some ideas.
The blame has been pinned on the ever-growing real estate prices. I agree that real estate prices are absurd and that the greed of the building owners will eventually come back to bite them in the ass but the failure of Barney’s is directly on the shoulders of poor management, uninspiring merchants and most directly the world of Private Equity.
Private Equity buys companies that spit out EBITDA. Sometimes they love the companies and work to make them even better than before. Sometimes they just don’t care that much and then sell them off to another Private Equity firm. It is the exchanging of assets among the PE peeps. Sad but true. Private Equity also destroyed Barneys.
Not sure where this will end up but I do not believe there isn’t any value buying a sweater at Saks that has a Barney’s label. Perry’s legacy will be that they killed Barney’s. Is it worth bringing back from the dead? Perhaps not but the void that has been left in the retail world of this city has been there for some time. To me, that looks like opportunity. Fred Pressman must be rolling in his grave.
Comments (Archived):
So much here to Disqus. I’ve been working on a piece about what it means to the neighborhood. I agree with much of what you said. Primarily the Perry’s and I lump them both in, she wanted a huge showcase for her clothes – I believe. Not sure what opportunity he saw since he took no opportunity to do anything. One asks is it a time gone by? Big dept stores. But Bergdorfs is doing well. The restaurant which is a total throwback to another time is packed all day. And people are in the store. Which has kind of the same stuff as Barney’s. Barney’s was fun. Simon Doonan’s windows and I think his chic, wacky input is missed. I know what you mean by Dover Street and Collette but you can’t pull that off in 270k square feet. It’s just a different type of store. I needed a black for dress recently. Barney’s and Bergdorfs offered the tiniest selection or in the case of Bergdorfs, not right for me. I ended up finding a brand new dress – tags still on. Exactly what I wanted. 1/5th the retail price on Real Real. There I think lies the future and a big part of the problem. But it will be missed. Nothing like lunch at Freds in it’s day, and grabbing a new cool something on the way out.
It will be missed for sure.
Not everything rolls into the future. Barneys may and possibly should go the way of Sears.For many of my West Coast years, Barney’s Beverly Hills was my spot.Come in, buy something, have it tailored while I ate at Green Grass on the roof.A unique pleasure. Great food to boot.As you say, experience is everything.
Bottom line no ‘low hanging fruit’ to pick. For men in particular think of all the money they made just selling suits that they don’t get now. What they end up with is merchandise that is not only less in demand (I have worn dungarees and tshirts for years now) but offered elsewhere and not profitable. And sure the location and the rent and the store design or merchandising but if no demand ‘low hanging fruit’ not much you can do.Here is the thing. Is there anything that they (or similar stores in my area) could do to get me to come in and buy clothing? Nothing at all. I have no interest in wearing that type of clothing. However I have done so in the past. In the 80’s I bought in one day at Boyds (like Barney’s but in Philly) $4000 which would be about $10,000 today. A few suits, accessories and they were working really hard running around to show me things. Really nice stuff. Probably made in the USA.
I agree that real estate prices are absurd and that the greed of the building ownersWhy is this ‘greed’? They own the building. They can decide what rent they want. And if they calculate wrong they take the hit. That’s business. Exploiting an opportunity with knowledgeable sellers is not greed.
Could not agree more with this assessment. As a former Barney’s loyalist, by 2012, I had stopped shopping there. I think former Atrium/Scoop/Kith (investor) had a great chance to bring Barney’s back to life. I am sad that he will not have the opportunity to do just that. My father (80 years old) got his Bar Mitzvah suit at Barney’s downtown – it has been a NYC landmark store for such a long time and I was so sad to see it fall and am even sadder to see it go. I will hold out for the “ink” not yet being signed. I was also greatly disappointed in the new store in the old stomping grounds. It could have been beautifully merchandised with special product and collaborations with brands that had a special connection with Barney’s. Instead they could not decide which direction to go and just stuffed every brand they could think of in a very small space, with no point of view or lifestyle navigation. I will hold out hope for Ben Avraham – don’t think it’s likely – but a girl can dream for justice!
I’m hoping.
In Chicago what we are seeing is the damn real estate taxes are chewing up the rent. I wonder what the commercial real estate taxes in NYC are as a sum part of the total? Chicago home prices are at a 3.5 year low….with more underwater mortgages than anywhere else in the US- in a large part because of property taxes.Chicago has a lot of vacant storefronts because of the taxes—-and because of online competition like Amazon. But, like you say, an enterprising creative entrepreneurial approach to retail can bring foot traffic and Barney’s missed the boat. It doesn’t help that we are losing people of all kinds at a rapid rate-retirees, millennials white, black, hispanic…In Chicago the elites and politicians are chalking the exodus up to weather. In reality, it’s the taxes and lack of opportunity. We have decreased “alpha” compared to places like SF, NYC, LA. When it comes to retail, we can talk about high rents/taxes, but like you say it’s the execution of the management team at the end of the day. The taxes make it more challenging for them to be clear.
Worth a quick read;https://sidewalklabs.com/bl…
Definitely a good read
I find this section the most interesting for a future vision of retail units;”What do you think is going to happen in cities when it comes to retail?”1. “So the landlords could even provide trained retail staff, and incentive structures and systems for what you do with the cash — that’s all stuff the landlords can know how to do. I think the landlords have got to become the retailers. And they need to think of their customers, if you like, as brands.”Are landlords really capable of adapting to this? I can’t see it.2. “What these brands are going to say is, “You know, I can just go on day one, put my products in there, light up the screens, and then at the end of three months I’m going to pack my stuff up and go. And then I’ll supply these customers online until I get some more cash to do another wave.” “What kind of brands (products and services) will work best for this model? Scratching my head, and it’s a bit of a leap of faith for a customer when they know the brand will be leaving the unit in just a few weeks.