Luxury Retailer Georg Jensen Tries Old Tricks in Tough Times

(MoneyWatch)  Georg Jensen, a luxury purveyor of Danish silverware, jewelry and gifts has refurbished its Manhattan store using a method that would have been familiar to discount store operators 40 years ago.

In the current economic climate, the retailer decided it wanted to make its store on New York's Madison Avenue seem less like a museum and more like a home. To accomplish that goal, Georg Jensen asked 25 prominent Danish companies to become partners and distribute their products through its store in a barter arrangement. Although the products those companies agreed to provide wouldn't actually be sold at the store, Georg Jensen would showcase the brands and detail how to buy them. Companies that accepted the offer included Bang & Olufsen, which makes sound systems; Fritz Hansen, furniture; and Dinesen Floors, flooring.

The arrangement recalls an earlier generation of discount stores in that it functions as a showcase for outside brands. Before Wal-Mart, Target and Kmart took store assortment into their own hands, discounters leased space to other retailers who operated in specific product areas, such as shoes. A few independents that offered outside retailers space held on during the expansion of the new model discount stores, but most closed up shop.

Then, in 2003, WiseBuys opened in upstate New York and revived the model. A partnership launched between local business people and a former BJ's store manager, WiseBuys stores included departments run by Payless Shoes, Radio Shack and Massey's Furniture Barn, among others. The five-store company was successful enough that, last year, it was able to acquire the Hacketts department store chain. Hacketts also operated five stores in the economically moribund northeastern New York State region. WiseBuys adopted the established Hacketts name but maintained relationships with outside retailers including, today, True Value hardware.

Georg Jensen, which only managed to break even in 2007, faces economic stress even on Madison Avenue. Like the early discounters and Johnny-come-lately WiseBuys, it has introduced new product categories by using outside partners, providing customers with more reasons to shop the store while avoiding inventory risk, a judicious approach in a troubled marketplace.