Target More Chic Than Cheap in Neiman Marcus Deal
Yesterday’s announcement from Target and Neiman Marcus was something of shocker. The two retailers are teaming up to produce a limited collection of more than 50 items from 24 American designers for sale in both chains this holiday season. While the deal is clearly a winner for Target as it further brandishes its design and fashion cred, there are real risks that Neiman Marcus may tarnish its upscale image cooperating with its cheap chic partner.
"We’ve set the stage for a redefining moment in retail," said Gregg Steinhafel, chairman, president and CEO, Target, in a statement. "This collaboration is unlike anything Target has done before, and we are confident our guests will be thrilled with this extraordinary collection that features some of America’s most preeminent designers."
Among the designers are Alice + Olivia, Tory Burch, Diane Von Furstenberg, Marc Jacobs and Jason Wu. Items in the collection will average around $60, with the lowest priced item around $8 and the highest at $500. Labels on the goods sold will include both Target’s bullseye and the Neiman Marcus logo. The items are expected to be in stores on Dec. 1 and be available for purchase for three weeks.
Both chains maintain that the partnership is not that unusual for a very basic reason. They share many of the same customers.
"The way people shop in the last decade, they mix and match," Wanda Gierhart, Neiman’s chief marketing officer, told The Wall Street Journal. "A lot of Target shoppers shop in our stores."
A Star Tribune article said the partnership will also give Target the opportunity to redeem itself for past missteps. Last year when the retailer launched its limited edition Missoni line, stores were overrun and merchandise quickly cleared out. The company’s website crashed. This go around, Target will limit the number of items shoppers can buy at its stores.
Discussion Questions
Discussion Questions: What do you think of the Target/Neiman Marcus deal? Which retailer do you believe will benefit most?
Hmm, it clearly is a win for Target but will NM shoppers be open to buying merch with a Target logo in it? Would Tiffany customers be willing to buy a bracelet with a Zales sticker on the back?
Does it validate the crass references to the tony retailer as “Needless markup”? Odd couple indeed….
I can understand why Target would want this partnership, but what was Neiman Marcus thinking? Target has not shown that they can handle this type of event, either in-store or online. Not only does NM yield a good deal of brand cachet, it also may get tarred with the brush of bad publicity, if Target cannot successfully manage consumer demand.
I respect NM’s Wanda Gierhart for recognizing that people mix and match where they shop. Not every Neiman Marcus customer shops only at high-end prestige stores in exclusive shopping districts, and not everyone inside a Target store shops only at discount stores. That said, I don’t know that this experiment will be successful but it will be an interesting experimentation to say the least. I’m watching with interest!
I love this deal. It provides Neiman a place for its aspirational shopper (while reinforcing a ‘coolness’ factor that the company has been sometimes missing) and it gives Target a new customer target (that aspirational Neiman shopper).
Win-win.
Target, as it will receive cache benefits from its association with Neiman Marcus. Only risk to Target is confusing its target market in terms of its positioning. Neiman Marcus, on the other hand, will suffer the consequences of attempting to talk out of both sides of its mouth. It reminds me of the expression, “You can make it with class or make it for the masses, but you can’t do both.”
There is more to luxury shopping than the merchandise itself. There’s the luxury purchase experience, which no matter how hard they try will not happen on the Target side. But maybe it doesn’t matter. The 24 designers that are involved will be the stars of this show no matter in which store they are displayed.
Tagging the items with both retailers’ logos is evenhanded, but the result may be that it causes the shopper at Neiman’s to question the quality and the Target customer to question the price.
The Target/NM partnership is quite an imaginative leap. There is little doubt that the goods will sell out quickly in Target stores and online, and will burnish its reputation. (It’s hard to conceive of a similar partnership between, say, Saks and Walmart.) Whether the move is good for Target’s value equation is a different matter.
Looking at the other side of the coin, this experiment is a way for Neiman Marcus to combat its own reputation (“Needless Markup”) in a very limited way, and without driving enough sales to disrupt the rest of its business.
Target is right on target with this one. Zero risk and full upside potential. Once the tag comes off, who cares? The wearer makes the outfit, not the label or how it’s sourced. For psychology of satisfaction and price/value putting the NM cachet on your rack and bragging to friends will perhaps give NM a small bump. Joint co-branded advertising? Time will tell.
Strange bedfellows? Perhaps, but I think this is workable. Both retailers are held in high regard by their respective consumer/shopper. Although the demographics are miles apart, they are each perceived as a “step up” by their loyal base. Will the Nieman Marcus shopper buy a product in Target? I believe that the folks who are working this partnership will use their good style sense and hopefully common sense to pick products and categories that could be natural crossovers.
Last year, Target sold limited runs of Jason Wu and Missoni luxury brands, which are usually sold through Neiman Marcus.
The Missoni response was overwhelming and there are plenty of YouTube videos showing Target stores packed with crazed shoppers for Missoni brands. The Target NYC flagship pop-up store sold out in hours.
I do not know for sure, but I believe Missoni brands at Neiman Marcus also may see a positive impact from the Target limited run. I believe this deal may be a result of the positive impact of the Missoni/Target arrangement last year.
Target is the clear winner.
The good news?
Some brand consultant is going to make millions fixing this one for Neiman Marcus. A huge branding mistake which may attract some shoppers in the short run (and not the kind Neiman Marcus wants) and lose even more in the mid and long terms.
Like most commentators, I see the value for Target, but I am having a hard time finding the benefit for Neiman Marcus. Does NM think that having its logo viewed by the Target customers who don’t already shop in NM will create aspirational buying at their locations? Perhaps, but when they see the typical NM price tag I think they will quickly run back to Target. I am looking forward to reading the post event articles and comments.
One benefit for Neiman Marcus may be offering “Affordable Luxury” those small indulgences everyone likes from time to time without breaking the bank. This new offering may entice shoppers to visit Neiman Marcus that previously “discounted” the idea of ever entering a Neiman Marcus store. In this economy that may not be all bad.
Creative collaborations have become essential to luxury brands.
The upside for Target may be obvious. There is little downside for Neiman Marcus either. The affluent customer’s values have been recalibrated. It is no longer appropriate, and in fact it is detrimental, for luxury brands to pretend that Target (or other brands that affluent consumers shop) exist. According to Harrison Group/American Express, Target is the favorite store of affluent female consumers.
The Target label on products in NM will serve as a reminder that the product is ‘promotional’ in quality. Don’t you wish all retailers were that honest? In a transparent world this promotion makes perfect sense.
The world has changed and marketing to the affluent has changed too. Congratulations to NM for this innovative approach to the holiday season.
Target will benefit the most, as the customer can grab some food and HBA, when they leave the store. If the price for the clothes is the same, than I would go to Nieman Marcus for the experience, but some folks will still prefer Target for the convenience factor. I think both companies will win.
Looking at the cars in their respective parking lots proves out Wanda’s claim about overlapping customers. Clearly Target wins here. As to NM, I think Paula nails it — as current customers’ financial situation improves, they have a taste of whee to fill their more aspirational needs. Will be interesting to watch.
Looks like Target just did what one would have expected from JCPenney!
I live in a metroplex with several NMs, so they are top of mind. Most people don’t, however. This move gives NM much broader visibility and accessibility. It should help their online business as well as make them a destination to visitors in locations where they are represented.
Execution is everything, but it looks like a bold move and win-win from my seat.
I think the deal is good for consumers and has the potential to benefit both retailers. The benefits to Target have been well described.
What about the benefits to Neiman Marcus? Their shoppers must shop at general merchandise stores for staples and such like all of us do. So the co-branding exercise becomes a question of identifying which general merch/discount retailer should NM have as a partner?
This may be a surprise to some, but Neiman’s shoppers are 39% more likely than general population to shop at Target (24% less likely than general population to shop at Walmart). Here in DFW, 89% of folks who’ve shopped Neiman’s in past season (3 months) have also shopped at Target. In that regard a target partnership would seem to be more easily digested by NM shoppers and offer the least amount of risk. Additionally there are some 3 million Target shoppers locally who don’t shop at Neiman’s and that offers great potential for new shoppers at NM. If they convert half of a percent of those potentials to shop at their store, they’ll nearly double their base of shoppers.
Now, converting them to buyers is a different story.
Stanley Marcus just did a spin in his grave. The man who counseled sales consultants (not clerks) that a man who came in for a new shirt was done a disservice if he didn’t leave with a new tie and socks to go with it (and even a suit if you were good) couldn’t have foreseen this downward spiral.
Oh! My God! First the weather is disastrous and now for the world’s oddest pairing. Customers decide when they shop across channels and the stores should not! Does this mean a his/her extraordinary choice at Target too? I think not. Questions remain about designer collaborations and additions of secondary and more less costly lines. This will add to the confusion. And with 95% of the goods even at luxury prices being made in China, another reason for many customers to go bespoke — quality these days and consistent sizing do not exist — no matter how costly the items! My personal example is the most coveted luxury purchase of my HERMES BIRKIN bag in the dark purple colour already showing wearing at the seems and sides from improperly tanned/dyed leather and this bag is not even 3 years old and alternates with many other of my handbags. It certainly will not make it to its 20th anniversary as has my gold colour Kelly.
Not a great idea for anyone!
They share the same consumers?
Target will benefit the most. Assuming that they do not share consumers, maybe some Target consumers will think they can now afford to shop at Niemen and will enter a Niemen store. Does Niemen really want consumers to think that if they shop at Target they can shop at Niemen? Where is the value added for the Niemen brand?
This is a collaboration of several prominent and popular designers providing exclusive merchandise (for those of you with showroom anxiety) to these two non competitive stores. Done properly it will be a fresh and interesting collection in manageable amounts that will create new business and some buzz for both stores. Not all fashion needs to be expensive and not all discount store merchandise needs to be basics … it has the potential to benefit both stores.
Hey it’s happened before: remember when Bentley and Gatorade…no, of course not; some crazy ideas are brilliant, but many — most? — are just that…crazy. I’m not sure where this falls on the scale, but I’m leaning toward the latter. NM has already made concessions to reality — e.g. accepting Visa and MC — that probably have Mr. Marcus leaning to the side, but I agree with “Stanaggie” that this should result in a full pirouette.
I think this concept has a real chance to be win-win if you look at it from the complete merchandising aspect. The NM customer can pick up a cool NM/Target piece and then pair it with up scale NM pieces while the Target customer can do the same, but pair with lower scale items. Viola! great outfits that suit the buyer and at a good price.
Target customers shop in NM? NM customers shop in Target? Really? Really???
Target clearly is reaching to be something they’re not. But NM? I can’t even imagine what NM hopes to get out this.
I’ve long maintained that Target is caught in a squeeze between Walmart and Kohl’s. This suggests the path they’d like to take to get out of that bind. It feels an awful lot like a Hail Mary, however. I think NM will be repairing the damage for a while.
It’s one thing to attempt to extend and expand customer’s expectations. It’s quite another thing to flip them on their heads.
For the most part it IS the same customer, especially in the suburbs. But NM’s old school customers will probably not respond very well, especially in cities.
It also depends A LOT on what merchandise Target devotes to the effort. Some of their inventory fits right in.
In any case, I think it’s a good try … good for customers, good for retail.
Certainly an interesting combo. Today shoppers are mixing t-shirts with tuxedo jackets, so mixing Target and Neiman Marcus can actually work. Target certainly gets the better end of the deal, but NM maybe able to leverage that to gain customer insights (remember NM has a loyalty program) to acquire new shoppers.
Absolutely, Target and NM share customers and it is a wonderful, if a bit unusual, promotion. Target obviously gains from connection to the panache of NM, further solidifying its place as the choice for everyday shopping for the chic and chic-minded. NM gains too as they have been seeking ways to connect with younger consumers and this will get their logo across to millions they wouldn’t ordinarily see. If anyone’s branding is at risk, it is the designers themselves. But most of these brands do their consumer research ahead of such decisions, so I am confident they will be OK as well.
Just because something seems odd doesn’t mean it won’t be successful. I’ll be watching with great interest.
Great partnership — the new reality of retail calls for new innovative thinking and partnerships!
While this is a bigger win for Target because it extends their streak of offering upscale designer products at value prices, I also think it helps NM be more relevant in the marketplace. Maybe this will cause Target shoppers who also shop at Nordstrom to consider NM on their next shopping trip. This is a WIN-win.
This can expose the NM brand to many consumers in medium size or more middle class markets that have a TGT presence but lack a NM presence. But will presenting a limited assortment of these goods to consumers who are not familiar with NM give people the correct impression of NM? Not to mention the service that goes along with the NM product and the fact that TGT Stores have no service at all when it comes to selling the product (fast checkout and throwing it into a plastic bag on top of your detergent doesn’t count).