Neiman Marcus Tests Discount Concept

Neiman Marcus is aiming to lure aspirational shoppers who fled the luxury chain when the financial crisis hit in 2008 with discount retail store.

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Neiman Marcus is testing a discount retail concept for aspirational shoppers who fled the luxury chain when the financial crisis hit in 2008.

This story first appeared in the April 19, 2010 issue of WWD.  Subscribe Today.

The 11,000-square-foot test store, part of the retail company’s Last Call clearance division, opened April 2 at Inwood Village, a popular outdoor shopping complex next to the wealthy University Park section of Dallas. It presents brand-name fashion and accessories, including Michael Kors, Badgley Mischka and Diane von Furstenberg, in an environment that looks like a hybrid of a boutique and an outlet. The emphasis is on contemporary apparel, handbags and shoes, and most prices fall between $45 and $300.

The sign out front reads “Last Call,” but the store will be renamed with a new brand soon, said Ginger Reeder, a Neiman’s vice president and spokeswoman.

“We are testing a number of different things — a freestanding location versus an outlet mall, assortment, product sourcing, fixtures, layout and signage,” she said. “That one store is really a laboratory.”

Neiman’s has been “pleased with the customer response,” Reeder added.

The store features track lighting, mannequin displays and cohesive merchandise groupings on polished concrete floors with color-blocked area rugs that give it a more upscale look than the Last Call stores. But there is little service.

All merchandise at the Inwood Village unit was purchased specifically for the store, unlike the 26 Last Call Clearance Centers, which carry an equal split of purchased goods and liquidation from the full-line stores. Tags for the new concept list the discount price with a “compared to” full price retail sticker that is typically 30 to 40 percent higher. In contrast, the 26 Last Call Clearance Centers carry an equal split of purchased goods and liquidation from the full-line stores.

The company is not ready to discuss its strategy, Reeder said. However, she did say some exclusive products will land in the store for fall, and future units would be big enough to stock men’s merchandise, as well.

“It’s is a question of, ‘How do we grow this business and what do we do next?’” Reeder said.

The project is headed by Tom Lind, senior vice president and managing director of Last Call, who reports to Burt Tansky, chairman and chief executive officer of Neiman Marcus Group.

During a March 9 conference call with analysts to discuss Neiman’s second-quarter performance, Tansky acknowledged that “aspirational customers really got hit hard [in the economic downturn]. We felt they vacated our stores last year.”

He added, “We are trying to bring our Last Call stores more in line with what should be available to that customer base. We are enthused by an opportunity to increase our share for the growing off-price mode.”

The retailer’s approach is “smart,” said Alan Shor, president of the Retail Connection brokerage and consulting firm based in Dallas. “They’re slowly testing the appetite before they do a brand because if it doesn’t work, then they don’t have to do any damage control. The concept is consistent with the new mentality of the consumer — to buy trendy fashion-forward goods at a value price. If the customer thinks he or she is getting a good value, then the pocketbook opens up. I’m seeing that across the board and across the country.”

Many of the labels on the floor are also represented in Neiman’s stores or on its Web site.

Dresses by Tracy Reese and Reese’s Plenty label, along with colorful Leifsdottir tops were displayed by the front door of the Inwood Village store. A contemporary sportswear area featured jeans from Seven For All Mankind, Joe’s Jeans, William Rast and Rock & Republic, along with tops by Splendid, Ella Moss, Current/Elliott and Dirtee Hollywood, plus $35 leggings by Romeo & Juliet.

Michael Kors studded leather bags were at the forefront of a spacious handbag shop featuring colorful leather and suede styles from Badgley Mischka, Kate Spade, Cole Haan, Kooba, Carlos Falchi and Hype, among others.

An adjacent jewelry department housed gold, silver, diamond and semiprecious jewelry from Ippolita, David Yurman, Charriol and Judith Ripka, as well as fashion styles by Stephen Dweck. Dresses by Marc by Andrew Marc, BCBG and Laundry hung nearby.

Office-worthy clothing by Lafayette 148, Pink Tartan and Magaschoni was clustered in a corner by the dressing rooms, with sportswear from Michael Michael Kors, Christopher Blue and Joan Vass.

The shoe department spreads across the rear of the store displaying stacks of platforms, flats, evening shoes and boots from L.A.M.B., Badgley Mischka, Taryn Rose, Sesto Meucci, Diane von Furstenberg, Frye, BCBG and others. Many of the styles by premium labels, like Badgley Mischka, were priced around $200. Casual sandals by Sam Edelman lined the back wall.

An off-price Web site is planned for the fall.

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