Barneys New York Was Known As A Brand Builder. With Its Liquidation, What Retailers Will Assume The Brand-Building Role?

In this edition of Beauty Independent’s ongoing series posing questions pertinent to beauty entrepreneurs, we ask 12 beauty industry experts: Barneys New York, which has been taken over out of bankruptcy by Authentic Brands Group, was known as a brand builder. What retailers or e-tailers do you think will be beauty brand builders going forward?

Ruth Williams-Madeja Beauty Industry Consultant and Co-Founder, Diamonds in the Dirt

Barneys holds a very special place within beauty and, while they will never be replaced, we can look at what it takes for a retailer to be a brand builder. Brand building by large influencers provides smaller, emerging brands with insight and clout they can’t achieve on their own. These large retailers/e-tailers provide strategic opportunities for emerging brands to gain awareness, distribution and feedback for growth. They are also a resource for finding what’s new in the industry: new trends, new technologies, new categories and new points of view about beauty.

Neiman Marcus is one example of a retailer that is providing great support to indie beauty both online and in stores. By curating a unique selection of brands, they provide an important opportunity for brands to test products and receive feedback from customers and sales staff. This can be beneficial for the brands in understanding how products are perceived, used and how they may evolve. It also gives customers a reason to visit the beauty department more often to see what's new.

Credo is defining itself as the authority on clean beauty and provides distribution and support for emerging brands on a national scale. They are an excellent resource for both customers and brands on the definition of clean beauty, and which ingredients are effective and which ones to avoid. While they are still growing, they provide a wonderful space for brands to grow along with them.

There are so many wonderful new brands that need support and distribution and, at the same time, retailers that need new brands to stay current. I anticipate more opportunities for partnerships and growth as the category evolves and shifts to adapt to consumers’ changing demands.

Jodi Katz Founder and Owner, Base Beauty Creative Agency

My honest answer to this is Amazon. It’s the total opposite of Barneys and Bendel’s, both which launched hundreds of brands. But Amazon’s algorithm pulls from the outside digital space to be able to reward brands that are active and aggressive in their digital marketing. Consumers are now trusting that, if a product sells well on Amazon and has great reviews, then it is "worthy."

Laura Chisholm Founder, LTC Beauty Consulting

I believe that any retailer or e-tailer with a national reach has the potential to be a beauty brand builder. The key to success is to have a clear, differentiated proposition and knowing exactly who your client is. From there, seek retail partners that align with your audience and make sure that promotional opportunities are negotiated beyond launch. Clean brands have a great opportunity to connect with their audience at retailers such as Credo, Follain or Detox Market. Influencer-inspired brands will work well with a digitally native audience on e-tailers such as Beautylish or Revolve. Understanding where and how your client likes to shop coupled with consistent promotion, retailer commitment and a compelling story all help to build awareness, market share and long term growth.

Liz Scott President, EC Scott Group

We partner with quite the breadth of independent retailers, and there are definitely some that we see as brand builders, and some that rely on being in the right place at the right time to capture consumer demand and replenishment. The retailers that we see as brand builders have a few things in common. They value and prioritize serving over selling when it comes to in-store service, careful curation of brands and even assortments within brands, which cultivates genuine trust, and the creation of a multi-branded, but cohesive in-store experiences that not only value storytelling and education, but also interaction with customers.

We often make the distinction of brand building versus revenue growth in the luxury beauty space since sometimes these two things can be at odds. Yes, getting shelf space in a specific retailer is crucial for credibility and reach when you are building a brand, but, now, more than ever, the onus is on the brands themselves since the line of communication between brands and consumers has never been so immediate and intimate.

Jonina Skaggs Managing Partner, Skaggs Creative

Credo: They are writing the bible of clean ingredients so necessary now. Consumers are more concerned about what is in the products that they put on their faces and bodies. Bluemercury: They got bought by Macy’s, which means they'll have capital to go global and be at the forefront of beauty e-tail and retail. Clean Market: A wellness boutique with an inside-out approach could easily expand into beauty/skincare and should be on one's watch list. Space NK: The retailer continues to be a forward-thinking and innovative for boutique and luxury brands.

Tamara Brown Strategic Growth Advisor and Founder, Tamara Brown Consulting

Sephora has had brand building in their DNA since their initial launch in the U.S. market in 1999. At the time of Sephora’s U.S. launch, the larger, well-known prestige/luxury beauty brands primarily had a department store business model and were not willing to open Sephora. Sephora seized the opportunity and pursued indie brands. By doing so, both Sephora and these brands grew together.

This partnership business model is still in existence today with Sephora, although, of course, with larger sales velocity and turn expectations as online and shelf space has become more crowded and competitive. Sephora stays grounded in respecting the life cycle of each brand partner and helps guide and support the brands appropriately, often launching online initially before expanding into stores. The balance they have achieved is giving brands the access to highly engaged beauty enthusiasts as well as giving the brands the focus and support they need at any particular time in their lifecycle.

Other beauty retail chains now delivering and aiding indie brands with brand building by process management are Ulta and Douglas in Europe. Both retailers have dedicated new brand strategy teams that not only identify the next big brands for the retailers, but also provide the brands with retailing onboarding in addition to opportunities for exposure to their customers. It has been exciting to see Ulta champion indie beauty brands through their Sparked program, where they are bringing indie brands to life in store as well as online.

Other retailers strong in brand building are the clean beauty chains like Credo and Follain. Like Sephora in 1999, they are building their business along with their brands. The clean beauty brands these retailers partner with are mostly in the early stages of a lifecycle. The retailers provide guidance, merchandising/marketing support and access via in-store events that reach the consumers looking for clean beauty.

As we have seen the resurgence of indie beauty brand movement in recent years, we are also seeing the increase of upstart beauty boutiques like Violet Grey and Shen Beauty. These retailers service their customers with a curated selection in a more customized, personal experience that can get easily be difficult to find at a beauty retail chain. These retailers are very involved with brand founders to customize a brand-building marketing approach that services their customers and is on-brand for both partners. These retailers pride themselves on finding and curating the unique and new that their customers did not know they needed or wanted.

Dermstore, always a strong beauty e-tailer, shows great brand partnership in co-creating content that serves its customer base and builds awareness for the brand. Dermstore has recently upgraded company branding and is leaning into deeper relationships with select brand partners, which should be exciting to see the evolution of both the content-driven online platform and brand partners.

International e-tailers such as U.K.-based Cult Beauty and Germany-based Niche Beauty offer imported brands great brand-building platforms and partnerships, not only providing the merchandising and marketing platforms, but also assisting with PR and influencer programs to build brand awareness in their home markets.

Indie brands need to be coddled, supported and showcased through a strong partnership that includes the building blocks of concept and vision coupled with a smart business plan, specifically in relationship to a consumer engagement platform and the continual retooling necessary in today’s competitive environment. There is nothing cookie-cutter about bringing indie brands to the public. Success is hard-won and is not for the faint of heart.

Ameann DeJohn Founder, Ameann Beauty

The two retailers that strike me as winners are Ulta and Nordstrom. The Ulta team knows their consumer and constantly strives for the innovation that considers how and where the consumer wants to shop. When walking into an Ulta, we can find mass brands and prestige brands all in one place. It saves time for the shoppers. Nordstrom has designed an interactive fun user experience with their New York store. The experience combines self-service retail and salon services all with expert advice and Instagrammable moments. Both of these retailers are forward-thinking, not reinventing the wheel, but thinking ahead of what the consumer wants. The other winner will be the indie local shop that focuses on unique brands that are not sold in these major retailers. Uniqueness never gets old. As far as e-tailers, if it’s not on Amazon, it may not be purchased online. Every brand should have an Amazon presence.

Mariam White Founder and President, The Principle Brands

The places where people still gather together present the greatest opportunity for beauty brands. These include salons, spas, wellness studios and highly curated boutiques because they offer a truly consultative selling experience. One of the intangible characteristics of a great beauty brand is the ability to develop trust with their consumer and the larger retailers are too crowded with merchandise and product lines to convey that. These specialized professional outlets spend the time to learn the product and, most importantly, their customers to create a truly personalized experience. For a brand, this means increased loyalty and larger spend per transaction.

Jeffrey Ten President, Global Brand Management

Obviously, Barneys was at the very high end of the brand-building spectrum. I would say that you have less out there, but Sephora still has an incubator platform and looks at a lot of new brands. There’s also Neiman Marcus and Bergdorf Goodman, but they are a bit more conservative than Barney’s was in the past. There’s a new head of beauty at Neiman Marcus, [Michelle Gill], that came over from apparel, and there’s a possibility that it might step up to the plate now that Barneys could be out of the picture.

Keep in mind, though, that Barneys isn’t completely gone. Saks Fifth Avenue is setting up Barneys' pop-up shops and what may go into those pop-up shops is new edgy brands because Saks has the other brands. It may be a healthy environment for Barneys because it doesn’t carry the real estate rents, and Saks has more stores than Barneys ever had. Barney’s isn’t disappearing off the face of the earth. We will see what Authentic Brands Group will do, but Barneys has been a home for edgy startup brands, and that may continue.

Aggie Burnett Founder, AB Creative and Nomaterra

For emerging brands, retailers like Follain and The Detox Market are brand builders because they provide a curated experience to the end-user, which means they have a stringent vetting process and take the time to learn and understand the deeper workings of a brand and how they can parlay that to the end customer through their sales teams.

Rohit Banota Founder, StorySaves

Barneys built the image of premium brands, helping them become aspirational, which then led to awareness and, ultimately, to sales and profits of brands it introduced. There are five types of retailers and e-tailers which would be brand builders going forward, helping both with awareness and image. One, luxury retailers like Neiman Marcus, Nordstrom and Saks, which are not dedicated to beauty, but would be a fit for high-performance, clinically-proven luxury beauty brands with marketing resources that seek to benefit from personalized and prestige experience, which is what a prestige consumer desires.

Second, there are retailers dedicated to beauty like Sephora, Ulta Beauty and Bluemercury. They are not very big in store size, but distribution gives them an edge. Indie beauty brands would be of particular interest to these retailers. Along with prestige, their consumer is discerning about ingredients and the story.

Third, and this is where I see innovation starting to happen, would be niche online and brick-and-mortar beauty stores that offer highly differentiated and innovative products targeting a niche or a set of niches. For example, a beauty retailer that sells brands targeted at different cultures, gender, age groups or only clean beauty brands, only indie beauty brands for a particular skin issue like acne, demographic, etc. Any indie beauty brand whose story aligns with them will benefit greatly from awareness. These stores will take share away from retailers like Sephora along with increasing the size of indie beauty category. Pink Moon is one such emerging retailer that plans to sell clean beauty brands only.

Fourth, highly differentiated and innovative retailers creating new market spaces and experiences combining beauty with other categories. Story, a theme-based store in New York did so by combining beauty with content inside a brick-and-mortar store. Goop combines online content with lifestyle and beauty. It’s absolutely fantastic for image, if not numbers.

Fifth, there are disruptors: artificial intelligence-powered online beauty stores. An online portal with artificial intelligence that sells high-performance, personalized treatments, which are easy to apply by one’s self and cost a fraction [of treatments at physical locations] as there is no service and overhead involved. They will disrupt the professional skincare spa brands when the quality of treatments and their personalized effectiveness matches those of spas, especially when enough and rich before-and-after data is available [via] artificial intelligence. They are likely to sell in-house brands.

Ben Bennett CEO, The Center
Barneys has always played an important role for giving exposure to emerging prestige beauty brands. However, I’ve always believed launching at Shen in Brooklyn. Jessica Richard’s beauty outpost gives brands the ultimate credibility boost. Jessica’s seal of approval speaks volumes to other retailers, who watch what she buys. She has always been a pioneer in the space and, since she founded Shen, she has been responsible for launching some of the industry’s most exciting brands. Also, I think Violet Grey is becoming a real launch platform for luxury brands. They are becoming a place to see newness in luxury.

If you have a question you’d like Beauty Independent to ask beauty entrepreneurs and industry experts, please send it to [email protected].