How should Barneys handle its PR crisis?

Since late October, Barneys has been battling a PR nightmare that hit just in time for the holidays.

The department store chain is facing a discrimination lawsuit from a consumer who says he was wrongly accused of shoplifting in Barneys' Manhattan flagship store because of his race. Since news of the litigation spread, Barneys has been on the receiving end of negative social media posts, evidence of wider consumer outrage.

"Barneys is a great company," said Milton Pedraza, CEO of The Luxury Institute, New York. "A small group of people who are bad apples are not going to ruin your brand.

"I think if they make a concerted effort to really rectify the situation quickly, I don’t think it will have an impact on sales," he said.

Mr. Pedraza is not affiliated with Barneys, but agreed to comment as an industry expert.

Barneys was unable to respond before press deadline.

PR Problem

Barneys was supposed to partner with rapper Jay Z to create a collection to benefit his eponymous Sean Carter Foundation, with a portion of the proceeds going to benefit the nonprofit that gives college scholarships to low-income students. When consumers heard of the lawsuit, they thought the collaboration might be cancelled, assuming Jay Z would pull the plug.

In a statement made Friday, Nov. 15, Barneys said it was going forward with the Jay Z event, with amended details. Instead of the originally promised 25 percent of proceeds from the Sean Carter Collection benefiting the Sean Carter Foundation, it would now be donating 100 percent of the proceeds.

In addition to the donation, Barneys was going to form a council to combat discrimination in the retail industry, which Mr. Carter will head.

The statement got mixed reactions on Barneys’s Facebook page. While some were pleased to see the store taking a “step in the right direction,” others said it was not enough.

A Barneys Facebook post

Now with recent reports saying that Barneys has cancelled its event with Jay Z, the retailer seems to be hiding from its problem, rather than facing it head-on.

Crisis management

This is not the first controversy Barneys has faced.

Last Christmas, the retailer was criticized for altering the bodies of Disney characters – mainly Minnie Mouse – by elongating them to mimic runway models for its store windows. This is part of Barneys’ Electric Holiday moving art exhibit that will be displayed in its Madison Avenue flagship store holiday windows (see story).

In fact, Los Angeles dance teacher and activist Ragen Chastain began a petition onChange.org to raise awareness for her distaste for the program, according toRacked.

There were 136,267 petition signatures as of press deadline. (see story).

Additionally, other brands have made it through court cases, even imprisonment.

Italian designers Domenico Dolce and Stefano Gabbana were sentenced to one year and eight months in prison for tax evasion, but the court’s decision is not likely to damage their brand in the long run.

The Milan court handed down the sentence June 19 to the two designers who are expected to appeal the decision. Even with legal troubles, the label is not likely to suffer since many consumers, especially devoted fans, are likely to continue buying its products (see story).

Barneys has bounced back before. It might just take a bit more work this time.

"I think honesty and transparency is the best approach when you have a public relations problem," Mr. Pedraza said.

"If the allegations are true, then they have to rectify that situation," he said. "You have to own up, apologize and rectify the situation."

Final Take

Sarah Jones, editorial assistant on Luxury Daily, New York