Why the Shuttering of Fifth Avenue Mainstay Henri Bendel Is a Warning Sign to Luxury Brands

This holiday season will be the last for a New York retail institution. Henri Bendel, one of Fifth Avenue's most iconic storefronts, will close in early 2019, parent company L Brands announced on Friday. The store's website, New York flagship and 22 other locations across America will all go out of business after the 2018 holiday season. L Brands said the decision stemmed from not only slowing sales, but a desire to focus on its other brands, which include Victoria's Secret and Bath and Body Works. "We have decided to stop operating Bendel to improve company profitability and focus on our larger brands that have greater growth potential," said Leslie Wexner, chairman and CEO of L Brands, the Wall Street Journal reports. Retail closures may be relatively common nowadays, but this one is decidedly different. Bendel is one of New York's best-known stores, perhaps most commonly associated with its brown-and-white striped bags, which founder Henri Willis Bendel himself first introduced in 1907. Its history stretches back over a century: In 1895, the founder opened his first store a bit further downtown in Greenwich Village. After a move in 1912, the brand spent 74 years at 10 West 57th Street, just off Fifth Avenue, before moving to its current flagship location in 1991. Today, Bendel almost exclusively sells handbags, accessories, jewelry and other trinkets—think candles and mugs—that are designed in-house and carry a Henri Bendel label. But for much of the 20th century, it was one of New York's most groundbreaking department stores; it was the first American store to carry Coco Chanel's designs stateside. Geraldine Stutz, who served as president of Bendel from the '60s through the first half of the '80s, brought now-iconic American designers like Perry Ellis and Ralph Lauren to the store. Andy Warhol also worked as the illustrator of Bendel in the '60s, while the Duke of Windsor (King Edward VIII before his 1936 abdication of the throne) was a frequent customer, even using the store's fur vault for storage. [kickout id="1"] The beginning of the Bendel transformation to its current state—and current product offerings—came when L Brands, then known as The Limited Brands, acquired the store in 1985. Under its ownership, Bendel ceased selling apparel and ramped up in-house designs, expanding throughout the country. But in these most recent decades, it's lost much of its past luster. As Jared Tomlinson, founder and ECD of Standard Black, said: "It’s sad for New York to lose an icon, but besides that, it's not a huge loss, because its influence on the industry has been gone for a while. It was a brand that didn’t have a clear sense of purpose past its history." These changes may have been part of its downfall, according to Bob Phibbs, CEO of New York-based consultancy The Retail Doctor. Phibbs argued that Bendel failed to capture the luxury in-store experience in recent years—perhaps because L Brands was lacking experience in the space. "They certainly put on a beautiful display of product, but I don't think they committed the sales force to personal customer service," said Phibbs. "Luxury is different. It's not Victoria's Secret. It's exclusive, it's about pampering, and I don't think you felt that at Bendel." [kickout id="2"] L Brands's explanation for Bendel's closure—off-loading one brand to focus on others in its portfolio—is one they've used before. The company previously owned stores like Abercrombie & Fitch, Lane Bryant and Express, all of which it sold or spun off. A move like this shouldn't come as a massive shock, as the company had a tough year financially: According to CNN Money, its stock is down 55 percent for the year. However, Allen Adamson, co-founder of brand consultancy Metaforce, said that any changes that would have truly given Bendel a chance at growth would have been high-effort—and likely not worth it for a company like L Brands, which has much larger businesses in its arsenal. This is particularly true considering the fact that even its bigger brands, like Victoria's Secret and Bath and Body Works, are facing declines of their own. "There's just no easy way to turn this around," said Adamson. "To survive in retail today is incredibly challenging. If they're going to succeed at turning any of these brands around, picking one or two, versus trying to do all of them, is a good strategy." For Bendel in particular, the real estate the stores occupy—on New York's high-traffic Fifth Avenue and in luxury shopping centers across the country—could be seen as the store's biggest asset. "They're probably going to get more selling the 23 stores and repurposing them than they are selling more handbags," said Adamson. [kickout id="3"] Phibbs pointed out that these decisions likely led L Brands to take the drastic step of shuttering the brand completely, rather than simply focusing on the flagship and shuttering the other storefronts, or eliminating brick-and-mortar while maintaining the ecommerce business. He said L Brands's decision essentially equates to the company saying they're stumped. "It's admitting defeat, saying 'we don't know what to do with it,'" he said. "This is a lesson to luxury retailers: You can't sit on your laurels and think everyone gets your brand." Adamson agreed, adding that it's a sign that not even a century-plus of business is enough to keep a brand safe anymore. "When big companies with plenty of resources are throwing the towel on iconic brands, it accentuates the extent of the problem," he said. Though L Brands's announcement may mark the end of Bendel as consumers know it, it may not mean the end forever. Phibbs points to the pending revival of another iconic Fifth Avenue store, iconic toy retailer FAO Schwartz, as a sign that someone could snatch up the Henri Bendel name in hopes of relaunching it. "Upscale young women saw this brand in their malls," he said. "That customer is still out there for somebody."

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Why the Shuttering of Fifth Avenue Mainstay Henri Bendel Is a Warning Sign to Luxury Brands

L Brands plans to focus more on its other stores, like Victoria's Secret

Diana Pearl

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Diana Pearl