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Marketing Viewpoint by Ruth Winett
How To Grow Your Most Promising
Market Segment: Lessons from Barneys New York
Barneys New York learned that eighty-five percent of growth in the luxury market is from people under 35, according to an October, 2017 Bain & Co. study.* Consequently, Daniella Vitale, CEO of Barneys New York, developed tactics that would attract this age group. Many of Barney's tactics are applicable to other types of business.
Here are some of the tactics Barneys applied, plus ways you can adapt these tactics:
- Identified the market segment that was growing the fastest in their industry. Commission a market study or use existing company or industry data.
- Stocked items that would bring first-time shoppers ages 18-35 into Barneys' stores. The first purchase millennials make at Barneys is usually footwear or other leather items. Thus, Barneys sought footwear "exclusives, rare finds, and one-offs within the footwear category." Offer products or services that trigger the first sales to your target market to attract similar customers.
- Provided more personalized offerings. Substituting personalized solutions for cookie cutter offerings could help you win new customers. You could tailor product training for different segments, e.g., financial planning for millennials or retirees.
- Provided experiences in addition to products. Barneys staged two days of in-store events, by partnering with tattoo artists, musicians, and a sneaker and a "street-culture" brand. Revenue increased 30% over the same day the previous year. Jordan's Furniture Framingham has a movie theater, which helps attract people to its store.
- Continued to provide existing customers with the products and experiences that they preferred. Strangely, stores such as Lord and Taylor and DSW, bombard customers with loud music that turns off loyal older customers.
- Redefined their business in broader terms. Barneys is now in the "entertainment business...the personalization business...the services business..., [and].the food business,' boasts Vitale. When it makes good business sense, broaden what your business offers.
Some of Barneys' tactics are worth emulating if you want to grow your most promising market segments. These include expanding product categories that attract new customers and personalizing services and sometimes products. If appropriate, add experiences, for example at trade shows and conferences. Use a multi-faceted approach. Most of all, provide excellent service, particularly for longtime loyal customers.
*"The Need to Reinvent Luxury Marketing," Christina Binkley, Wall Street Journal, 2/20/18, p. R8.
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