Like other retailers, Nordstrom, Saks Fifth Avenue, Nieman Marcus, Bergdorf Goodman, Barneys New York and Bloomingdale's have shopper loyalty programs. But, that is where the similarities apparently stop as these luxury retailers have pumped up the perks to get the attention of their well-heeled clientele.
Yesterday, Nordstrom announced it had restructured its Fashion Rewards with a tiered program that offers greater incentives to buy as customers spend more in its stores or online at Nordstrom.com.
"Our Rewards program is an important part of building relationships with our customers," said Kevin Knight, president of Nordstrom Credit, Inc. "We know that customers who participate in our program shop more with us, and Fashion Rewards is a way for Nordstrom to provide additional benefits to those loyal customers."
The added benefits Mr. Knight referred to include the retailer's previous program of offering Nordstrom Notes certificates that go against the cost of purchases. In addition, depending on the level of the program achieved, customers can also receive complimentary standard shipping and alterations, invitations to private events, access to purchase exclusive merchandise, tickets to Nordstrom fashion shows and the opportunity to pre-select merchandise for the chain's Anniversary Sale.
At the very highest level, according to Nordstrom, customers can design private shopping parties and buy shopping packages such as trips to new store openings or holiday shopping in cities such as Chicago and San Francisco. Other perks include Nordstrom spa-and-shop getaways and the opportunity to purchase special red carpet packages including travel and accommodations as well their very own personal wardrobe stylist to help them get ready for the event.
Nordstrom's new program is, in part, an attempt to keep up with Saks, Nieman Marcus and other luxury retailers. More fundamentally, it is the retailer's strategy for taking away any reason its top shoppers might have to go somewhere else to spend their money.
Those top shoppers, according to a Wall Street Journal report, mean serious top and bottom line dollars for luxury retailers. The top 100,000 customers at Neiman Marcus, for example, spend more than $12,000 a year with the retailer. All told, the top 100,000 spent $1.3 billion with the department store last year. As a point of a comparison, all the other shoppers at Neiman Marcus stores spend an average of $600 a year.
"The firepower of these customers is incredible," Neiman Marcus CEO Burt Tansky told The Journal.
The Neiman Marcus program, known as InCircle, is vastly more complicated than many others with a total of 20 tiers. Shoppers get one point for every dollar spent in the store. Rewards can include complimentary gift-wrapping, designer clothing, trips -- and the top perk is a Lexus 2008 L. Nieman Marcus customers can also receive rewards at the InCircle program by shopping at Bergdorf Goodman.
Discussion Questions: Do the loyalty card programs at luxury retailers demonstrate these merchants have a better understanding of what motivates their shoppers to spend versus merchants targeting different groups of customers? Are luxury consumers more drawn to reward/loyalty programs than those in other economic groups? What do you see as the strength or weaknesses of programs such as Nordstrom's Fashion Rewards or InCircle at Neiman Marcus/Bergdorf Goodman?