MINNEAPOLIS (WCCO) -- Neiman Marcus is the latest luxury retailer saying goodbye to Minnesota, and it might have a lot to do with how much Minnesotans are able to spend these days.
A close look at the economic conditions from the federal government shows that the average income for all American households fell 12 percent from 2007 to 2009. But what's more significant in the case of luxury buying is the fact that households in the top one percent saw their income fall by 36 percent.
"And these kinds of stores are the ones that these individuals buy at," said Dr. Dave Vang with the University of St. Thomas.
It all comes down to simple economics, he says, to understand why Neiman Marcus will be closing within a year.
Minnesota holds a good number of high income earners. In fact, it's in the top 15 percent of states when it comes to median income. If they can't spend, retailers will hurt.
Neiman Marcus made a name for itself selling upscale apparel, accessories and more. But it hasn't been able to make it in Minnesota. Talking to Renee Bugbee gives you a good idea as to why Neiman Marcus is closing.
"I sometimes don't go back because of price, so I look for sales," she said.
The company's management says the store wasn't meeting long-term operational goals. In other words, economists say it just wasn't profitable.
"It's not a surprising situation. It's part of a national trend," said Vang.
Just last spring, Bloomingdale's decided to close at Mall of America. It wasn't performing to the company's expectations, according to a spokesperson.
Bloomingdale's was one of mall's original tenants when it opened 20 years ago.
"Yeah, we in Minnesota tend to be thriftier than most," said Vang.
Neiman Marcus has 107 employees at its store on Nicollet Mall. They'll be offered jobs at other stores or severance package.
"It's just sad to see a business that's been around for so many years to leave a city," said Bugbee.
Neiman Marcus will close the store within a year. It's just another business blaming a bad economy for ending its run in Minnesota.
for more features.