In its simplest form, retail cycles can be traced directly back to the economy.When things are booming, price becomes less of an issue for consumers. When things aren’t going so well, consumers look for corners to cut. While things are improving on the economic front, the reminders of the last downturn seem to be sticking around. Being cost conscious is not just a passing fad for many consumers. That’s a great thing for discount retailers, but it leads to challenges for those in the luxury sector.
As Fortune shares, Barneys New York falls into that category. The iconic luxury retailer is not exactly the kind of place that will attract bargain hunters. CEO Daniella Vitale notes that’s a challenge, but that won’t leed the company down the discount path.
"It's a really hard thing to fight," she says, later adding that "you cannot do it well and it is absolutely not sustainable."
Quite simply, quality is quality, and items that can’t easily be replicated continue to come with a hefty price tag. Those in the market for that kind of goods know exactly what they’re looking for, and that limits the desire to haggle over prices.
"If it's exclusive and rare and doesn't exist anywhere else, we are not forced to mark it down," Vitale adds.
Barneys has been gaining traction in the online world as well, and the company notes that more than 20% of its sales come from online transactions. Vitale has brought on former Facebook executive Martin Gilliard to serve as chief information officer, and the company is striving to learn all that it can from its treasure trove of data.
"We don't use it to help us drive business, or acquire customers or reward customers and that needs to be a big part of what we're going to be doing," Vitale continued. "Ultimately that is how we're going to understand our consumer."
As for the luxury market as a whole, Vitale acknowledges that the forecast is less than sunny, but Barneys has been able to weather the storm. She notes that the company enjoyed a solid first half of 2017, and she expects the second half to produce even better results for the iconic retailer.
"It's definitely a complicated moment. There is no one thing to pin it on," she said. "That's always a hard thing to manage to."