When Laura Baker operated her own showroom for independent brands like Remi Relief, Han Kjobenhavn and Editions MR in the late 2000s, Barneys was often their biggest champion, placing large orders on young designers who had yet to prove they could turn buzz into sales.

It was in that spirit that Baker opened her own boutique, ESSX, in New York last year with co-founders Yoel Zagelbaum and Abe Pines. But she’ll be the first to tell you, aside from embracing homegrown talent, her store is nothing like Barneys, which closed its doors in 2019.

At 7,000 square feet, ESSX is a fraction of the size of Barneys’ Madison Avenue flagship. And where the department store maintained men’s and women’s departments as separate selling floors, ESSX’s assortment is unisex.

ESSX did however take one other cue from Barneys: though it was founded well into the e-commerce era, the store comes first, Baker said. That might have been seen as a risky bet even a few years ago, when Barneys’ decision to prioritise brick and mortar was cited as a major factor in its downfall, which was soon followed by the shuttering of beloved multi-brand retailers Opening Ceremony and Totokaelo. But today, it’s looking like the right move.

Once seen as a potent way to take the highly localised business of luxury retail global, major e-commerce platforms, along with the online arms of Nordstrom, Saks and other department stores, have proven difficult businesses to run. While consumers welcome the bevy of online options, they’ve also been trained to expect retailers to carry massive assortments, at the lowest possible price.

“Everything is starting to look the same,” said designer Michelle Ochs, now creative director of Hervé Léger.

Several big luxury e-commerce sites have changed owners or been shut down over the last year, and US department stores that invested heavily in online shopping are seeing declining sales, mounting losses, or both. But their struggles have created an opening for a new wave of retailers looking to build a healthier, more sustainable model for luxury retail.

This new landscape includes survivors like The Webster, Dover Street Market, Kirna Zabête and Elyse Walker, all of which were founded before e-commerce truly disrupted luxury fashion, and have expanded in recent years. They’re joined by newcomers like ESSX and Café Forgot in New York, Antidote in Atlanta, Just One Eye in Los Angeles, and Jamestown in Hudson, New York, which former casting director James Scully and his partner Tom Mendenhall opened in May. Elsewhere, standalone boutiques with their own cult followings include Sportivo in Madrid, LN-CC in London, The Broken Arm in Paris and ENG in Shanghai.

While some, including Dover Street Market, have outposts around the world, most have abandoned dreams of reaching a global customer base from their small storefronts, if they ever had those aspirations in the first place. Instead, they convince hyper-digital consumers to browse IRL by providing an in-store experience that cannot be found on Instagram, TikTok or Ssense. That means taking risks on emerging, if not obscure fashion labels and catering to local tastes, and offering, as Baker puts it, “something that feels unique and offers one-on-one service.”

“The decline in the large department stores has in part been replaced by specialty stores,” said Julie Gilhart, a business consultant and former long-time fashion director at Barneys. “Right now, there is a space for good curation, good customer service, interesting activations, playfulness, humour, thinking outside the box … and the hardest thing to create, intimacy.”

Opting Out of the Online Rat Race

Bella Gerard should be a department store’s ideal customer. A freelance fashion editor and influencer, she fondly remembers her time as a “Barneys girl,” roaming the Madison Avenue flagship after work and learning style cues from fellow shoppers.

But Gerard says she now does the bulk of her shopping online, and makes a habit of scouring the web for lower prices and alternative styles, even when she’s browsing in a store. Whether it’s a summer dress or ballet flats, she’s driven by a “sense of shopping FOMO” — fear of missing out.

“When I’m shopping, I’m looking at every website and seeing who has the best dress,” she said. “And then I can hop over to Tiktok to see if someone has reviewed it.”

For specialty stores, competing for Gerard’s attention may be tempting — but it’s ultimately a trap, experts say.

“You can have an incredible store and an incredible buy that resonates with your local community and make incredible editorial content, but you’re never going to have the SEO budget of an SSENSE or Mr. Porter,” said Joseph Keefer, a menswear designer, fashion advisor and former design director at SSENSE. “As an indie retailer how are you going to break through the noise online?”

Some don’t even try.

Elyse Walker, a chain of boutiques based in Southern California, was founded in 1999 and only launched e-commerce last year. While ESSX recently launched an online store, it’s rudimentary compared to the in-person activations and refreshed merchandise at the shop (each product page online features only one photo, for instance). Jamestown doesn’t even have a website, though Scully said he’s reluctantly planning to launch one.

“If we could just be a very successful store, I’d be happy to not do e-commerce at all,” Scully said. “But half of our customers have asked about online and we’re getting responses on Instagram about e-commerce too.”

The Anti-Department Stores

In recent seasons, department stores and e-commerce giants have struggled with excess inventory. As a result, buyers are taking fewer risks on new designers or novel styles, according to brand operators and showroom managers.

“Most buyers will buy two things from a collection, and they’ll put quantity behind them rather than taking a chance on the whole package,” said Sara Ouadnouni, founder of brand consultancy Bélier, which counts Conner Ives, Esse Studios, Nodaleto and Louisa Ballou as clients.

“At the same time, they’re not allocating enough [marketing] budget for young brands to perform,” she added.

This presents an opportunity for specialty stores to offer avant-garde fashion and indie labels that shoppers can’t find anywhere else, and are unlikely to stumble upon online.

“There’s something so special about seeing a small run of pieces or a one-of-a-kind piece and there’s something so special about seeing it in-person,” said Lucy Weisner, who co-founded Lower East Side pop-up Café Forgot with Vita Haas in 2017. The concept store stocks emerging labels such as Judy Turner and Sherris, which are displayed on a single, giant rack that rotates.

The sales floor is another point of differentiation. Unlike department stores with their categories separated by floor — luxury, contemporary, shoes and accessories — boutiques can organise their racks, shelves and open space with creative abandon. That can appeal to brands; Maj-La Pizzelli, co-founder of Stockholm-based shoe line ATP Atelier, said she likes how small boutiques will intersperse her footwear with luxury brands, to show shoppers how to style high-end clothes with more affordable accessories.

“These stores are so special when they’re merchandised intuitively, mixing brands and product categories based on how people actually want to shop,” she said.

The strategy works: ATP’s most successful specialty partners can drive sales at a level on par with large department stores, she said.

Think Small, Think Local

At the time of its bankruptcy, Barneys had more than 20 locations, including outlets and multiple outposts in New York and Los Angeles. Before its stores shuttered, Opening Ceremony had plans for national expansion with private equity investor Berkshire Partners.

Today’s specialty retailers are approaching the prospect of scaling at a slower pace, and with a more exacting approach. It took Elyse Walker more than two decades to open a location outside of its native Southern California, and had only done so after it tested the market with multiple pop-up events.

Even as some have expanded their footprints — The Webster plans to open four new stores this year, on top of its current eight — every new outpost still adheres to a strict curation and aesthetic codes. Dover Street Market, for instance, opts for a radically different build-out for all of its stores. Designed by Rei Kawakubo of Comme des Garçons, its new location in Paris has a maze-like format and two basement spaces reserved for community events.

Rather than vying to have something for everyone, the new mantra is to serve their respective communities of buyers, however small or niche. Scully and Mendenhall chose Hudson rather than New York City as the location for Jamestown, for instance, because they knew the store would be something special for the local residents as well as for weekend visitors from the big city.

“Being able to communicate with your local community is super important, and it’s a new framework for retail,” said Keefer. “These independent retailers are doing art openings in addition to the store, they’ll have a DJ or a coffee component, and they’re being community clubhouses.”

Looking beyond that local customer can be tricky because customer acquisition has grown so costly in recent years, Keefer added. Instead, he recommends growing sales slow and steady, and creating a private label to help boost margins and spread brand awareness.

Café Forgot is in the process of developing its private label, for instance, while Baker of ESSX sees her concept as replicable in other cities, but stocking their respective local designers and perhaps as a shop–in-shop within large retailers.

“You have to stay in your lane,” Keefer said. “It sounds demeaning but it’s not. It’s about knowing your strength and knowing your community.”