The retailer, based in Dallas, is preparing to open a new line of outlet stores this fall called Last Call Studio, which will sell clothes that have never passed through a Neiman Marcus or even the retailer’s existing chain of Last Call outlet stores.
The Studio stores, to be located in suburban areas or strip malls that are not outlet centers, will specialize in moderately priced goods — blousy tops, knee-length skirts — aimed at the value-minded shopper who “may not have the reach level to buy the fine apparel that Neiman Marcus offers,” said Wanda Gierhart, Neiman’s chief marketing officer.
The strategy speaks to several economic realities in the postrecession retail world: the soft real estate market has left desirable small storefronts unoccupied; many traditional outlet stores have too little clearance merchandise to sell because retailers have trimmed inventories; and as the recovery stumbles, even luxury retailers cannot afford to ignore the price-conscious shopper.
“From a modest out-of-sight, out-of-mind liquidation tool, it has now really morphed into a strategic and financial necessity for those companies,” Arnold Aronson, managing director for retail strategies at the consulting firm Kurt Salmon Associates, said of outlet stores run by big retailers. “It’s especially driven since the recession in response to the customer’s demand for much more value.”
Other high-end retailers have also been exploring ways to attract more ordinary shoppers through discount apparel. Nordstrom has been aggressively expanding Nordstrom Rack, having opened 15 new stores so far this year, including its first New York City outlet. Saks Fifth Avenue is redesigning its Off 5th stores to make shopping there more enjoyable, through new lighting and open floor plans. And from the digital side, flash-sale sites like Gilt Groupe, HauteLook and Rue La La are grabbing territory with steep discounts on designer clothes.
Although the luxury market is showing signs of recovery, it plummeted during the recession. At Neiman Marcus, sales at stores open more than a year have risen since December 2009. But that came after 18 months of declines, including some of the worst in retailing in mid-2009.
Neiman Marcus executives said that while they began developing the Last Call Studio idea about five years ago, signs of vitality among so-called value shoppers spurred them to introduce it now.
It “clearly is a sector that has continued to show good growth even through the recession years,” said Tom Lind, senior vice president and managing director for Last Call.
Even Neiman Marcus’s Last Call outlet stores can be too expensive for these shoppers. The 27 Last Call stores carry a mix of clearance clothes from Neiman Marcus stores and merchandise ordered specifically for them.
The new Studio stores will carry lower-end products, bought directly from vendors, not the scuffed but still new pair of Manolo Blahniks (as high as $1,995 at Neiman’s) that can show up at Last Call stores (for about two-thirds as much). That is in part because there is not much clearance inventory left. There was $790.5 million worth of inventory at Neiman Marcus and Bergdorf Goodman stores as of the beginning of August, down 19 percent from two years ago.
“We cut our inventory buys when the recession hit, so obviously it produces fewer goods for outlets later on,” Ms. Gierhart said.
The biggest name brands at the Studio stores will be apparel makers like Vince (clothing prices will run about $180 to $220, versus $42 to $1,450 at the regular stores), which are selling leftover stock from their department store lines and specially made apparel.
Buying directly from apparel makers, rather than waiting for clearance merchandise, has advantages because the Studio stores will have dependable offerings, Mr. Lind said.
“We’ll have more continuity in the product we’ll offer,” Mr. Lind said. “If boots are the trend of the season, she’s going to be looking for a great boot selection, so we’ll want to have more than what we can rely on from the store.”
A prototype of the Studio store in Dallas looks more like a career-wear store — an Ann Taylor or a Chico’s — than it does a Neiman Marcus or an outlet store. Clothes are simple and conservative, and muted colors like black, taupe and pink reign.
Studio stores will be less than half the size of the biggest Last Call mall outlet stores. Apart from the Dallas prototype, the first stores will open in Rockville, Md., and Paramus, N.J., in November. “We want to create more trips and have faster turns, so we’re going to go to the neighborhood where she lives,” Ms. Gierhart said.
Dana L. Telsey, chief executive and chief research officer at Telsey Advisory Group, said it was a smart real estate move. Few new malls were opening, she said, and even a vacated space in a mall would require three to four years to convert to a regular Neiman Marcus. But with the in-town shops, Neiman Marcus could swoop in to empty spaces quickly and easily.
“Being able to find some different real estate venues for it and at some different price points works,” she said.
Mr. Lind said the company had identified areas across the country where Last Call Studio stores could succeed. To bring in traffic, they will add new merchandise weekly — Neiman Marcus is expecting many Studio shoppers to come almost every week, versus the three to five times a year that a typical shopper visits its existing outlet stores.
Earlier this month, Neiman Marcus introduced an accompanying Web site, LastCall.com. Neiman’s competitor Saks has avoided Web sites for its outlet stores so far, though Nordstrom, another competitor, introduced NordstromRack.com on Monday. Jamie Nordstrom, the president of Nordstrom Direct, said the introduction took a while because figuring out how to sell the limited stock of clearance items online was challenging.
“It’s a different animal,” he said in a recent interview.
Mr. Lind agreed that displaying clearance inventory from stores online would be difficult, but LastCall.com showed mostly direct-to-outlet merchandise, with its Last Hurrah section showing sale items that had not sold at NeimanMarcus.com, not the physical stores.
“That merchandise has already been photographed, you’ve already made the investment — basically, you’ve already put up a page,” he said.
“There’s a huge appetite out there,” Ms. Gierhart said.
SOURCE: The New York Times by Stephanie Clifford
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