Neiman Marcus' Half-Baked New Discount Strategy

Last Updated Apr 29, 2010 1:41 PM EDT

neiman marcus store san franciscoWhat is Neiman Marcus' management team thinking launching its new discount concept store? Apparently not much. The 11,000 square foot test store opened in Dallas earlier this month under the banner "Last Call," the name of the retailer's current clearance division. That was just the first mistake.

Using an established name would have been fine -- albeit a little uninspired -- but the concept will be rebranded soon, according to Ginger Reeder, a Neiman's vice president and spokeswoman. Trotting a new effort out under an old name seems tentative at best. It's hardly the image the company should put forth as it emerges from the double-digit losses it took over the past two years. Comps just started trending up in December and retail sales overall were up in the first quarter of 2010. It's time for confidence.

Unlike Last Call, all of the test store's stock was purchased exclusively and carries a tag listing a "full price that is around 30 to 40 percent higher than the discounted one," according to WWD. That's it? That's hardly the kind of incentive that would justify the expense of a designer label -â€" especially with so many shoppers heading online to compare prices and others who routinely scour flash sale sites such as Net-a-Porter's TheOutnet, or Gilt Groupe and Rue La La which all offer 60 percent or more off high-end labels for limited times.

And speaking of Web sites, the lack of an online home for this new discount concept makes Neiman look like it's really behind the eight ball. Bad enough that Last Call's site is little more than a landing page and a listing of store locations. A site for the discount store is supposed to debut in the Fall.

That means months of potential sales lost. Neiman's regular Web site attracted over 1 million unique visitors earning six-figure salaries in February. That's more than an ample supply of fashionistas who wouldn't mind getting a discount (even if it was meager by Gilt or Outnet standards). Not to mention that Neiman's comps for direct sales (including online) are performing better than bricks and mortar outlets.

Neiman Marcus needs to think seriously about its next move with this concept. The competition is out there -- teeth bared. Perhaps hiring back some of the hundreds of workers it laid off last year could give Neiman an edge in the customer service department. It will be interesting to watch what Karen Katz, soon to succeed the retiring CEO Burton Tansky, has up her sleeve as she takes the helm in October.

Image via Flickr user Franco Folini CC 2.0

  • Lydia Dishman

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