Why Neiman Marcus's New Downmarket Concept is a Perfect Fit
The news that Neiman Marcus plans to roll out its new Last Call Studio store to small, suburban mall stores couldn't be better timed. While some chains suffer from dilution of their core upscale brand when they try this, Neiman is perfectly positioned to capture a whole new audience with discount-fashion stores and rake in the profits.
Here's why this is a great idea now:
- Cheap real estate. Malls have gaping empty spaces Neiman can snap up and lock into long-term leases for cheap right now, so that'll keep operating expenses low.
- Diversification. More importantly, the new Last Call will help Neiman diversify its store base so that the next downturn doesn't hit it so hard. Certainly, Neiman managers don't ever want to experience 18 months of continuously plummeting sales again. A lower-priced chain would help balance the scales when luxury tanks.
- Big expansion potential. Unlike the Last Call outlet stores -- where you can only have so many since there is only so much castoff merchandise left unsold at the main Neiman Marcus stores -- Last Call Studio could become a large chain. Plenty of suburban malls could use a new apparel boutique about now to spice up their merchant mix.
- Building brand awareness. Last Call Studio gives Neiman an opportunity to connect with aspirational fashionistas who don't yet have the lucre for a trip to Neiman Marcus...but maybe they will some day. Once they're trained on Last Call merchandise, as they get a little older and have the wherewithal to shop a luxury department store, Neiman will come to mind first.
- Riding the new frugality trend. The recession has changed some shoppers mindsets about spending permanently. They're all about value now. Last Call Studio allows Neiman to continue connecting with that customer.
- Leveraging the Neiman glamour. For those without the time or budget to drive out to a big outlet mall for apparel purchases that will still be pretty costly, these smaller stores are designed for weekly shopping and fast-fashion turnaround, with that sprinkle of Neiman glitter to make it more exciting than shopping competitors such as Rue La La.
My BNET colleague Lydia Dishman noted that Last Call Studio is off to a rocky start, launching with no Web site, and saddled with nearly the exact same name as Neiman's 27-unit chain of Last Call closeout-mall stores. As you might expect, consumers are a little confused, since Last Call Studio does not feature merchandise previously seen in Neiman stores.
A Dallas Morning News reviewer headlined the story of her visit to the 11,000-square foot Last Call Studio prototype in a Dallas suburb New Neiman Marcus Last Call is not a clearance center. Obviously, when you're getting headlines that have to describe what your store isn't, that's not a good thing.
But having cleared that up for readers, reporter Joy Tipping was enthusiastic about snagging Neiman style at substantially lower price points -- $200 or so for an outfit versus the $1,400 a Neiman dress could set you back. In the story, the reporter raves about prices slashed 65 percent off suggested retail to start, further compounded by additional discount coupon offers. She got a $298 Elliott Lucca handbag for under $110 at the Dallas Last Call Studio and went home happy.
"If you don't spend something here, your Dallas fashion-lover credentials will be seriously in danger," she gushed.
So the concept is great. The name is confusing. Fix it and Neiman Marcus could find itself making serious coin in dozens of malls a full-line Neiman Marcus department store wouldn't be caught dead in.
Photo via Flickr user Criminal Wisdom
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