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Mike Osorio's RetailWire Blog
June 15, 2009
Neiman Marcus Capitulates on Price
FROM RETAILWIRE:
After reporting a 24 percent decline in third quarter sales, Neiman Marcus Group disclosed plans to offer more lower-priced goods and promotional marketing events. What's the best strategy for Neiman to offer more value in their offerings without impairing its upscale positioning?
MY COMMENTARY:
I find this development disheartening. I have always admired Tansky's firm resolve to remain a true luxury retailer and never succumbing to the lure of lowering their standards due to short term economic difficulties--no matter how severe. In fact it was Tansky who belittled former CEO Terry Lundgren's "much better" strategy in the early 90s when he tried to add moderately-priced product, with disastrous results. The customer for this product can find it in any other department or specialty store, and in Tansky's words, the true Neiman Marcus customer is not interested in buying lower-priced merchandise. Within each luxury brand's assortment, there is the opportunity to lower the average price points through careful product selection and increasing the mix of accessories, etc. It is a monumental mistake to risk the brand of Neiman Marcus by adding moderate product. I fear the real reason for this isn't Tansky changing his tune--but rather the private equity owners forcing his hand in order to deliver short term results. Private equity buyers seldom hold onto their purchases for more than 3-5 years. Could a sale of NM be in the cards in the next 24 months? |
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