In last week’s Wall Street Journal article, Neiman Enlists Designers in Cost-Cutting Plan: Luxury Retailer Pushes Suppliers to Use Fabric in Place of Leather to Lure Middle-Income Shoppers , Vanessa O’Connell and Peter Lattman covered Neiman Marcus’s move to work with luxury designers to create a new tier of merchandise targeted to middle-income shoppers, stating consumers may find “a simple pair of $395 Manolo Blahnik flats” and “classic Manolo napa leather flats that sell for about $675.”
The Neiman Marcus brand has always represented premium merchandise with best-in-class customer service. I know that the shift in the economy requires a shift in strategy. But is pushing designers to create merchandise for the middle-income shopper the right strategy for the retailer? Because I don’t know many middle-income consumers willing to pay $400 for a pair of shoes – even as a splurge.
And does Neimans really want to base their future on a customer segment that doesn’t have a regular need for the products they sell? What happens when they’re offering merchandise that the middle income consumer still can’t afford and the higher income consumer won’t buy?
But certainly this isn’t a new trend for designers. Over the past 18-months, many designers such as Michael Kors and Marc Jacobs have done a great job of expanding their lower tier lines while protecting the integrity of their premium products and their brand.
However, as the article poignantly articulates, not all premium designers have the flexibility in their design and pricing to churn out a lower-end line of products to meet Neiman’s requests, creating the possibility for a rift between supplier and the retailer and the risk that they may take their products direct to consumers.
Will Neimans lose the loyalty of their core customers and the suppliers who have helped them build their brand thus far? This strategy just adds to the argument I’ve been making over the past few months that Neiman Marcus is making decisions that may seem good for the short term, but I think (and this is simply my opinion) prove they are out of touch with their core customer base as well as the middle-income consumer and are at risk to erode the brand they’ve built for over 100 years.
The Future Of Retail Is Here 