Target and Neiman Marcus, an Odd Fashion Pairing? Not At All

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Cheap chic discounter Target (TGT) and upscale department store Neiman Marcus are teaming up on a holiday fashion, home and accessories collection that will be sold at both chains -- marking an unprecedented partnership between two retailers.

Strange bedfellows? Not really. The two have more in common than meets the eye.

Neiman Marcus TargetTarget has sold some of the same luxury brands as Neiman Marcus, Kevin Ryan, CEO of Gilt Groupe, the nation's biggest private-sale website, tells Daily Finance.

While you'll never find Neiman Marcus' $995 Jean Paul Gaultier dress in Target's stores, a $59 frock from Gaultier has indeed dangled from the discounter's racks. And it's no secret that Target enjoys an upscale cachet unlike any other mass merchant.

Since the late 1990s, Target has brought high fashion and hip design to the masses with exclusive collections from tony designers and upscale names, like Gaultier and Missoni, offerings once unheard of for a discount chain.

Today, the demographic of Target loyalists includes the more affluent consumers who also shop Neiman Marcus. And when the co-branded collection debuts Dec. 1, Neiman Marcus, with only 42 stores, will gain a new level of exposure in Target's 1,763 stores, Gilt Groupe's Ryan says. "It gives them scale."

What's more, "It's a big win for Neiman Marcus, which definitely needs to become more relevant to younger, more contemporary customers," Mark Cohen, professor of marketing in the retailing studies department of Columbia University's business school, and former CEO of Bradlees and Sears Canada, tells DailyFinance.

The Target-Neiman partnership will also derail competitors' merchandising efforts, Cohen predicts. "The Big losers -- there are always winners and losers in retail --are J.C. Penney, whose 'shop' idea becomes even more irrelevant than it already is, and Macy's, whose own designer collaborative program suffers by comparison," he says.

A Match Made in Heaven?

The limited-edition holiday gift line will include women and men's apparel from 24 designers, including Diane von Furstenberg, Oscar de la Renta, Marc Jacobs, Jason Wu, Tory Burch and Tracy Reese.

It will also feature children's apparel, home decor, sporting goods and electronics accessories.

Dubbed, The Target + Neiman Collection, prices for items in the line will range from $7.99 to $499.99, with most under $60.

Shoppers React

Judging from reaction to the news on Facebook, shoppers at both Neiman Marcus and Target are already giddy about the pairing.

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Shoppers on Neiman Marcus' Facebook fan page professed their love of both stores. "Wow, can't wait! I love both stores," said one Neiman's fan.

"My two favorite stores! High end [and] low end can move towards the higher end!" said another shopper.

Target shoppers were equally enthusiastic. "Oh my GOSH! Cannot wait! PLEASE ensure your website is ready!!!," said one shopper, a not-so-veiled reference to the way Target's website crashed the day the retailer premiered its exclusive Missoni collection last fall, after it failed to anticipate the extraordinary demand the launch would generate.

But not all shoppers were enthused.

Some Neiman Marcus purists said the partnership sounded the death knell for the department store's tony image, and predicted the co-branded line would be of discount-store quality.

"By no means would I expect any of the pieces to end up being heirloom quality that can cherished and passed down as valuable pieces," said one Neiman's fan.

"Neiman Marcus, that is disappointing, and a total downgrade to team up with Target," said another.

One shopper smirked: "Neiman's adds hot dog and popcorn stand at the front of stores? Red shopping carts ... now coming to a store near you?"

The luxury retailer found it necessary to allay its its customers' concerns, interjecting its own response among the thousands of comments:

"Hi everybody! Thanks for all the enthusiasm! And for those of you who are worried about our 'image,' we appreciate your concern as well," the company said. "Here's the thing. If our image is not innovative, welcoming of all, and open-minded about good design, we're OK with changing that. So thanks again. Remember December 1, and we'll keep you posted!"

5 Retailers That Are Showrooming-Proof
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Target and Neiman Marcus, an Odd Fashion Pairing? Not At All

At a time when Best Buy (BBY) is closing stores and looking for a new CEO, rival hhgregg is thriving.

The consumer electronics retailer saw net sales climb 21% in its latest quarter, and it's planning to add 20 to 22 new stores in its fiscal year that began in April.

Why is the awkwardly named hhgregg growing at a time when Best Buy is shrinking? Well, hhgregg emphasizes heavy appliances and mattresses, which are among the many items that may be too big to effectively sell online. Can you imagine the shipping charges on a washer/dryer combo? It also helps that hhgregg doesn't rely on regular traffic from folks picking up the latest CDs or DVDs, as digital delivery of music and video is also clobbering Best Buy.

The cheap-chic discounter is tackling the showrooming trend head-on. Earlier this year, the company revealed that its plan to keep (AMZN) at bay involves a steady diet of exclusive products.

Target routinely teams up with trendy designers for product lines that can only be purchased at Target. If vendors can't provide the chain with Target-exclusive products, the company is asking for pricing discounts so it can match online-only rivals.

It's not a perfect strategy, but Target also has a level of panache that's lacking at its rival discount department stores. People gab about going to Target -- or "Tar-zhay" -- on Twitter or Facebook. You'll probably never see anyone bragging about heading out to Kmart.

Warehouse clubs are used to cutting costs to the bone. The exposed beams, stacked racks, and frills-free decor aren't an intricate theme. The warehouse setting is deliberately bare-boned to pass the savings on to end users.

It also doesn't hurt that items are being purchased in bulk for deep savings. And, naturally, the perishable nature of many of its items also makes them a natural choice for in-store, rather than online, purchases.

How popular is Costco? Well, it pushed through a 10% increase in its monthly membership fee -- yes, Costco shoppers have to pay for the right to shop there -- and customers didn't flinch at all.

Another Best Buy rival that's showing no signs of online stores nibbling at its market share is Conn's. The company's latest quarter saw comparable-store sales soar 17.8%. As Best Buy copes with shrinking margins, Conn's gross margins expanded to the point that it was able to deliver quarterly operating profits and net income that more than doubled over the prior year's performance.

Part of Conn's recipe for success is an emphasis on the appliances and mattresses that have been keeping hhgregg immune from the deadly dot-coms, but Conn's also goes even further by offering full furniture lines.

Conn's 64 stores are also in the farming heartland of Texas, Louisiana, and Oklahoma -- places where the prevalence of homes on large tracts of land benefit its sales of lawn tractors and zero-turn mowers.

CarMax is the country's largest retailer of used cars. Its 112 used-car superstores offer haggle-free pricing, and they'll buy your used car even if you don't buy one. Why not? The company's gross profit on used cars is three times greater than the gross profit on new vehicles.

Being a category killer has its advantages. Even the success of eBay (EBAY) with its eBay Motors ultimately can't compete with CarMax's regional presence in 56 markets.


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