Can Lower Prices Save Neiman Marcus?

Ginger Reeder, a spokeswoman for Neiman Marcus has officially verified that the newest brand location in Dallas, TX is actually a “laboratory” to test lower priced shoes, handbags and sportswear. {Stylelist} Like we have mentioned so many times before, the negative effect the poor economy has had on the fashion world is leaving most retailers no choice but to close stores or simply cease operation. Online, wealthy shoppers are visiting sites from department store sites like JCPenney.com, Kohls.com and Macys.com at a rate up to 4 times higher than NeimanMarcus.com. While that only takes traffic to online destinations into account, it’s not a stretch to assume the trend of high-income shoppers going for designer discounts and more affordable diffusion lines has made its way into shopping at physical stores.

We think Neiman’s has an interesting approach to surviving the hardship. The new Dallas branch is built in a not-so-wealthy neighborhood, and the company has cut down on staffing to appeal to the broader demographic of middle-class shoppers.

Steven Dennis, a former Vice President of Marketing and Business Development for Neiman Marcus has wondered if there will be enough discount designer merchandise to satisfy the insatiable demand that’s been created by offline discounters as well as online sale sites like Gilt and RueLaLa.

“Industry incumbents suddenly woke up to the fact that there is a large segment of affluent consumers who really like to get a deal and don’t necessarily want to head out to the sticks to the factory outlet mall (Nordstrom–you get a pass because you figured this out a long time ago with your Rack stores).  So Neiman’s and Saks started experimenting with their own “flash” sales (though, shockingly, neither has yet to mount a serious online counter attack) and announce plans to accelerate the opening pace of their clearance stores,” says Dennis. {Steven P. Dennis blog} “The consumer offering is going to look a lot different in the future: fewer unbelievable deals on true designer product and more faux clearance.”

While other luxury retailers wait out the storm, Neiman Marcus will now offer merchandise in a range of $45 to $300 , which is estimated to be priced at a discount of 40%  or more. With Gilt moving into full priced sales, it will be interesting to see who ends up claiming the premium designer discount market. Dennis predicts that more of those $45-300 “deals” will actually be manufactured specifically for that price point, rather than true discounts on $90-600 merchandise.

For those of us who love great fashion and are on a budget (think Michael Kors, Badgley Mischka, DVF, BCBG and more) this still sounds promising. While there have been misses, there have been plenty more hits for stores like Target and H&M who regularly offer designer lines in a more affordable price range (see: Zac Posen’s blowout shopping bash). For stores and designers, becoming a regular source for mid-range collections (even if disguised as designer discounts) could be key to not only surviving tough economic times, but thriving among consumers who want to shop, but still aren’t comfortable making extravagant purchases.