Neiman Marcus Finds Wealthy Shoppers Want Better Deals

The luxury retailer, along with several other high-end retailers, are in some trouble when it comes to their customer loyalty. For the longest time, these stores never had to worry about losing their customers because of prices. However, they are finding now that even their loyal, wealthy customers are wanting better deals on their designer products. Long time Neiman Marcus customers have started abadoning their favorite retailer for online stores and even the stores of single brands due to their promotions and lower prices.

Neiman Marcus is in deeper water than any other retailer with "nearly $5 billion in debt that has grown through more than decade of private-equity" and even went as far as approaching Hudson's Bay Co (parent of Saks Fifth Ave) about buying them out as an escape. Gone are the days where if Neiman's needed to raise profit all they had to do was raise prices. For a company whose long ago mantra was "there is nothing too expensive for our customer" these rough times are not boading well for them. With discount stores such as TJ Maxx starting to sell designer apparel at such low rates, consumers began to question why they were paying full price for the same products. Despite luxury retailers attempts to compete with these prices by opening their own versions (Last Call, Off 5th, etc) the efforts weren't enought to keep them afloat.

The potential and rationale of combining Neiman Marcus with Saks Fifth Ave is great with the luxury market being as tough as it is right now. The Neiman's team will have a lot of bases to cover in making sure they stay afloat however, the likelyness that Neiman Marcus will survive on its own in the next few years is very low.

WSJ Article