General / Musings

Advising a Department Store on Its Brand Strategy? Get Creative or Go the Way of Barneys

Alan Behr, Fashion Law Group Chair, Phillips Nizer LLP

Whenever I wanted my grandmother to reveal a deep secret—such as what I was getting for my birthday—she would reply by asking, “Does Gimbels tell Macy’s?” That was when the Gimbels and Macy’s department stores battled for market share like colossi astride Herald Square. Gimbels is long gone from the New York metropolitan area retail market—as are, from all levels of pricing—Alexander’s, B. Altman and Company, Bamberger’s, Bonwit Teller, Galleries Lafayette, E. J. Korvette, the Lord & Taylor flagship on Fifth Avenue, Stern’s, Takashimaya, and Two Guys, among others. And to that list we can now add Barneys.

I know from personal experience how sad that can be. My family owned one of the regional department stores that closed in the same manner as the New York-area stores had done: with much nostalgia dusted over cold business calculation. The long goodbye invariably comes in the form of a going-out-of-business sale. (Barneys has started that process, offering everything-must-go discounts of between 5% and 10%—a markdown that is as well-received by New Yorkers as would be a pub’s invitation to Dubliners to have their Guinness taken in shot glasses).

The reasons for the closings varied. Consolidation of the retailing business into national brands was a factor, and now we have online shopping as the great equalizer, turning what a generation ago might have been deemed warehousing and logistics companies into retailing superheroes.

Finding the Brand Story
As I never tire of advising our clients, trademarks are the awards that the law bestows upon a well-operated brand, and brand—in fashion and luxury, and in retailing of all but the most elemental variety—is about story. That is, the brand has to tell a story that is clear and identifiable to the customer—a story so compelling that he or she will elect to participate in it by making purchases. Enter an Hermès and you are sharing in a gentrified vision of France as authentic to the XVIe arrondissement as to a canter on horseback through the fields of the Loire. Walk down the block to Salvatore Ferragamo and inhabit that world of Florentine grace and worldliness that has guided the West since the Renaissance.

Paradigm Shift
Back in the day (until even after most of us had been born), a department store brand was built upon what later came to be known as private label, upon broad-ranging services from shoe repair to hair dressing, and upon a product line stretching from fine jewelry to bicycles. Except for the high end, all of it was made in the USA. By their size, their seeming permanence and their product range, big stores were comforting, reassuring—the retail equivalent of banks and insurance companies. To give legal protection to the store’s intellectual property, attorneys mainly had to keep an eye on a few key trademark registrations—for retail store services and for major clothing and accessory items. And that worked—until it no longer did.

With a few exceptions, most department stores now feature women’s clothing, accessories and cosmetics shops with smaller departments for men, children, housewares, and gift items. Nearly all brands of merchandise sold there are international in some form or another because nearly everything is made outside the USA. With the exception of private label and a typically small amount of space given to emerging designers, most of what any one store sells are the same brands and merchandise sold by its competitors. And everyone does more and more business online.

It’s All About the Experience
How does a department store compete in that environment and not get its name added to the list that opened this article? It is less and less about what is sold that helps a retailer stand out. It is the services it provides that increasingly make the difference: personal shopping/style consulting, event planning assistance, cooking lessons, a spa for those who relax a certain way, and a Champagne bar for those who relax as I prefer. The story of the retail brand is now the story of what you do and how you feel when you are in the store and on its website and social media pages.

The trademarks of the store will likely brand a broader range of services than before, and IP protection by copyright, trade dress, design patent, and even utility patent, all of which were once of minor importance, if needed at all, should be carefully examined as tools to protect the store’s brand and the goods and services it identifies. Seen another way, time was that the creative person in the retail chain was the designer; those on the business side were the hard-nosed “garmentos.” Today, it is the retailer who sees himself or herself as not merely a merchant but as a creative force in the delivery of experiences to customers who is likely best able to adapt to the new retailing world.

And the lawyers? Creativity is not taught in law schools, but it is just what an attorney needs to bring to retailing clients now.

Maintaining a distinct brand image is often challenging for a manufacturer/design company, especially if it operates its own boutiques. But it can by even more demanding for a large, multi-brand retailer, especially now.

(originally published)

By Fashion Industry Law Blog

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