Target, Neiman Marcus join forces
NEW YORK (MarketWatch) -- In a high-stakes gamble for consumers' discerning dollars, an unusual partnership between discounter
The collection, to be unveiled Dec. 1, will feature more than 50 limited-edition gifts by 24 designers including Diane von Furstenberg, Carolina Herrera, Derek Lam and Jason Wu. The products will sell at prices from $7.99 to $499.99, with most costing less than $60.
Product categories include fashion and accessories for men, women and kids as well as home goods, stationery, sporting goods and accessories for electronics, said Target spokesman Joshua Thomas. Each designer made between one to three pieces. Product attributes include real silk, leather, hand-blown glass and 18K gold, Thomas said.
The collection will be available at Neiman Marcus's 42 namesake emporiums and Target's 1,763 locations, and marks the first time that both retailers will sell their designs at other chains.
Investors liked the news, sending Target (TGT) shares up 2.1%, the biggest gainer in the S&P Retail Index, which declined in afternoon trades. Dallas-based Neiman Marcus is closely held.
Neiman Marcus, which sells housewares and couture from a $428 Rachel Roy sheath dress to a $2,795 Burberry Prorsum dress, has had talks with Minneapolis-based Target for several years before it approached the company again in December about a potential partnership, according to Neiman Marcus spokeswoman Ginger Reeder.
Since then, Neiman Marcus introduced Target to the designers, with the two retailers creating a team of 50 staff to design and market the collection. Target, a general-merchandise retailer known for so-called cheap chic, has introduced its own designer collections by Missoni, among others, that have helped it increase store and online traffic. The discounter will lead the sourcing and manufacturing for the collection. See Target's unexpected Missoni website crash.
"We couldn't produce the collection at this price," Reeder said. "Target has a scale to do that. We've seen they've done this very successfully. We have the contact with the designers. They have the experience of executing at the scale."
Neiman Marcus isn't concerned about sullying its brand image, she added, pointing out that its high-end shoppers already go to Target for groceries or things like workout clothes. The collaboration allows the company to broaden its customer base and add to its selection of holiday gift items under $100. "It's a very modern way of shopping," Reeder said. Consumers "shop at all retailers."
As merchants recently reported their worst June same-store sales in about three years, there has been concern about consumers pulling back against the backdrop of the European debt crisis, stock-market volatility and the uneven pace of U.S. economic recovery.
Luxury names such as Neiman Marcus as well as
Neiman Marcus in May reported a same-store sales gain of 6.7% for the fiscal third quarter. It also owns the Bergdorf Goodman chain, which will not carry the new limited collection.
For Target, its limited-edition designs that often draw crowds have given the brand some cachet with shoppers, as it seeks to lure them to spend more on discretionary merchandise that is more profitable than consumable items, analysts have said.
Exclusive designs also are a differentiator, as its larger rival
Target last week reported disappointing June sales. Its apparel sales were up in the low single-digit rate, while home-goods sales dropped by the same rate.
"We've set the stage for a redefining moment in retail," said Target President and Chief Executive Gregg Steinhafel. "This collaboration is unlike anything Target has done before."