Luxury department store Barneys announced early on Tuesday that it has filed for bankruptcy after securing $75 million to put toward its debts. The announcement came as no surprise, as many retail stores are struggling to stay afloat in an age where most consumers would prefer to shop online. Barneys says that the bankruptcy filing will impact all but seven stores worldwide. The company will take this time to look into how it can streamline operations to create a brighter future.
Changing Retail Environments
It doesn’t take an expert to notice that consumer shopping habits are changing. Dozens of brick and mortar businesses are shutting down in the wake of the digital age—starting with brands most commonly found in shopping malls. Companies that used to sell children’s clothing and odd gadgets are finding that they can no longer make ends meet now that Amazon offers an easy shopping experience that delivers its product straight to your door in as little as a day. The world of luxury retail is no different. Businesses are finding that they must change their services to meet the needs of their customers or suffer the consequences.
Nordstrom, the massive luxury department store chain with 379 stores worldwide, noticed that much of its customer base was moving into the online market. To accommodate this change, Nordstrom looked into ways that it could define the luxury shopping experience in the online sphere. It began focusing on enhancing the online shopping experience by investing resources into personal shopping services, customer service, and in-store accommodations for its pick-up customers.
In October 2018, the brand opened the first Nordstrom Local in Los Angeles. The pick-up only location allows customers to collect their online orders, make returns, get fitted for custom items, or simply try on items that were suggested by Nordstrom’s online personal shopping assistants. Enhanced online experiences combined with Nordstrom Rack, the company’s line of discount stores, means that Nordstrom has the potential to come out on top in the digital age.
Inside The Barneys Bankruptcy
Barneys announced on Monday that it was considering filing for bankruptcy but that it was looking for last minute funding before it made an official decision. By Tuesday morning, the luxury retailer announced that it had procured around $75 million in last minute funding from Hilco Global and an investment company called the Gordon Brothers Group. Also on Tuesday morning, Barneys announced that it has filed for chapter 11 bankruptcy.
“Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand,” said the CEO, Daniella Vitale, in a statement. The company will take this time to re-evaluate where its priorities lie and make adjustments to survive.
Right now, the company has 2,300 employees across its 22 locations worldwide. Barneys plans to close all but seven of its 22 stores in the wake of the bankruptcy filing. The company will keep only its flagship locations such as New York City’s Fifth Avenue and Beverly Hills.