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How Barneys Is Using Experiential Retail to Court Young Shoppers

Barneys New York is redefining luxury to court millennials and Gen Z, offering inspired experiences like The Drop, which mimics the ultra-popular streetwear-style product launches that peddle scarcity, ephemerality and exclusivity.

Speaking at the Fast Company Innovation Festival in New York City on Oct. 23, Barneys CEO Daniella Vitale blamed much of retail’s recent troubles on a failure to identify — and serve — new audiences. Many high-end retailers like the New York City-based department store have been so preoccupied with their core customers, who skew older and have their own sets of entrenched buying behaviors, that they “did not worry about that younger consumer coming up the ranks,” she explained.

Barneys, she continued, needed to experiment with new ideas and novel ways of attracting young shoppers — and The Drop was the solution. The retailer reached back into the 1990s for one of its first forays into millennial-friendly merchandising and experiential retailing. Across a summer weekend in Beverly Hills earlier this year and in partnership with entertainment powerhouse Live Nation, thedropLA@Barneys brought together art and media installations, panel discussions, designer appearances, exclusive product capsules — and a surprise guest performance by Wu-Tang Clan, the legendary Staten Island hip-hop group known for hits like “C.R.E.A.M.” and “Protect Ya Neck.”

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Though the Live Nation partnership started around Wu Wear clothing, it evolved into something special and unique for Los Angeles, Vitale said, and it solidified the importance of working with like-minded partners to bring new concepts to retail. Russell Wallach, president of media and sponsorship for Live Nation, echoed those sentiments. “Brands need to invest in new ideas,” he explained. “Brands need to invest in culture.”

The Drop homes in on the premium millennials and Gen Z place on one-of-a-kind experiences, and Barneys initial effort worked on two fronts. It attracted fans who enjoyed Wu-Tang Clan’s music back in the ’90s and beyond, yet it also resonated with an audience who probably never heard the group’s music but found that their love of Wu Wear was a conduit to groupie fandom. “I think you need the live component to get that message across,” Vitale explained, “and we’re trying to reinforce that with The Drop.” With an eye to keeping the experience fresh, Barneys plans to evolve The Drop into something different next year, she added.

Barneys wasn’t sure whether The Drop would drop a ton of cash onto its bottom line but chose to roll the dice anyway, hoping the risk would generate reward. “We were willing to forfeit profitability and sales for creating an absolutely incredible experience,” Vitale said. The retailer walked away with plenty of feel-good results. One-fifth of people who stopped by The Drop had never previously patronized Barneys, but when offered a lineup of brand collabs and entertainment that catered to their interests, “they felt welcome,” Vitale noted.

High-end retailers sometimes make the mistake of defining luxury in a very narrow, very specific way, she continued, but “a $300 T-shirt is someone’s luxury.” Best of all, 20 percent of new-to-Barneys consumers at the 2017 New York Drop returned to a brick-and-mortar store within a year; for L.A., 30 percent returned within three months. “That’s a huge return on investment,” Vitale said. “We talk about attracting new customers but do we retain them? Not always. These types of things prove you can retain them in the end.”

To some degree, retaining millennials and Gen Z means cultivating a retail presence that carefully balances the physical with the digital. Data from e-commerce yields important clues about what shoppers want and how better to serve them. Most visitors to the dot-com first filter not by “new arrivals” or by designer but by “exclusively ours,” the products carried only by Barneys, Vitale explained, confirming that newness and scarcity are what consumers desire above all else. Though the retailer has collaborated with big-name, billion-dollar brands like Moncler — and a Burberry capsule is coming next year, Vitale noted — the projects with smaller, niche, up-and-coming designers are what “our customer really seeks out.”

Just as important as developing digital savvy, Barneys real-world presence feeds young consumers’ obsession with their social-media lives — because as “virtual” as it seems, Instagram and its ilk still rely on the power of physicality. No one’s “photographing someone buying something online,” per Vitale, but you might snap a photo of your meal at Barneys’ restaurant Fred’s or pose for a picture by the store’s Madison Avenue sign.

“That’s really important and a big generational thing, and we need to feed into that much, much more,” Vitale explained, adding that an “authentic” experience like The Drop “has legs” with young shoppers. She said offering the best of digital coupled with brick-and-mortar is the “definition of Barneys and is the paradigm of retail today.”

Editor’s Note: This story was reported by FN’s sister magazine, Sourcing Journal. For more, visit Sourcingjournal.com.

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