A Barney’s Goes to Brooklyn

Yesterday, we told you what luxury retailers are doing to remain relevant and marketable into the future. Namely, high end brands are figuring out how to market to generation Y, which will surpass baby boomers as the largest consumer group in the United States come 2017.

Today, the New York times reports on the hot spot for New York luxury fashion labels to sell their products in years to come – Brooklyn, a.k.a. the “new bastion of cool for many New Yorkers.”

Barney’s Co-op, a younger, more accessible division of Barney’s New York, will open its first store in the Cobble Hill section of the borough, with Swarovski Crystal, North Face and Anthropologie reportedly scouting the scene in Brooklyn.

The question is whether this is a smart move in keeping with the push for high end brands to appeal to a younger crowd.

“Someone needed to be first, and now that Barneys Co-op has done it, others will follow,” said Karen Bellantoni, an executive vice president for the retail brokerage firm Robert K. Futterman & Associates. Executive Director of Retail Services at Cushman & Wakefield Joanne Podell adds, “Brooklyn has the demographics to support this kind of retail, but until now, no national store was willing to take the chance.” {New York Times}

Therein lays the key: demographics. Dawn Brown, vice president of publicity for Barney’s, said the store chose Cobble Hill because surveys showed many of their current customers lived there.

Cobble Hill’s economics compared to that of the wealthy neighborhoods in Manhattan where Co-Ops currently reign, with the average apartment/home price topping $1 million and household incomes well over the $100k mark aren’t extremely far apart. This isn’t as much as the $177,000 and $181,000 HHIs of the Upper West Side and Soho, respectively – the locations for Barney’s current NYC Co-op locations, but definitely a desirable group.

But it would be really innovative if Barney’s pushed the envelope even further in terms of the retail model (a la Neiman Marcus’ new “laboratory” store). With retail just starting to rebound, and location planning taking years to come to fruition, we understand going with the safest new option. However, bringing a Co-op into a neighborhood filled with the same audience that high end retailers have targeted for years could overlook the change in habits of future shoppers. Keep in mind, this is the same audience that declined to shop as regularly at luxury fashion retail stores throughout the troubled economy. Indeed, it is the same audience that may very well have realized it can get on just fine without current season (read: full priced) designer clothes even once the economy has improved. While most of the Co-op brands – Marc by Marc Jacobs, Diane von Furstnberg and Opening Ceremony among others, are already in a more affordable range than the labels at Barney’s flagship, there’s still likely to be a demand from shoppers still bent on getting the best value. Given the popularity of discounters and sale sites among $100,000+ shoppers, would a Barney’s outlet make more sense?

Don’t get us wrong: the Barney’s Co-op in Cobble Hill will probably do just fine, and we hope that it becomes a strong anchor for Brooklyn retail. But in terms of looking ahead and marketing to current and future, younger shoppers, the retailer could have brought in more unique  retail options that reflect the signs of the times.