[FONT="]more on the collection, wonder what the 18 K gold item is![/FONT]
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[FONT="]At Neiman Marcus Group Inc., plans for a top secret tie-up went by the code name "T." Its partner called it "N." The hush-hush talks weren't for a merger but rather an experiment that pushes retailing's boundaries.[/FONT]
[FONT="]On Tuesday, the luxury retail chain said it will put together a limited collection from 24 American designers this holiday season with an unlikely partner—discounter Target Corp. TGT +0.13% [/FONT]
[FONT="]Items from fashion houses including Diane Von Furstenberg, Derek Lam, Rodarte and Tory Burch will range from $7.99 to $499.99 and average $60. Each chain will offer the same items, ranging from stationery to sporting goods, at the same price. The label will have both the Target bulls-eye logo and the Neiman Marcus logo.[/FONT]
[FONT="]Customers fill the aisles at a Target store in Chicago on July 5.[/FONT]
[FONT="]The partnership is the latest move by Neiman's chief executive, Karen Katz, to make the high-end department store—which is often disparaged with the nickname "Needless Markup" —more accessible to a broader range of customers, specifically younger and less-affluent customers. The gamble is whether Neiman's association with Target's cheap-chic sensibility will erode the luxury chain's aura of exclusivity and the pricing power that confers.[/FONT]
[FONT="]Retail Tie-Up[/FONT]
[FONT="]The Target + Neiman Marcus Holiday Collection includes a mix of more than 50 limited-edition products, which range in price from $7.99 to $499.99. Designers include:[/FONT]
[FONT="]Alice + Olivia[/FONT]
[FONT="]Altuzarra[/FONT]
[FONT="]Band of Outsiders[/FONT]
[FONT="]Brian Atwood[/FONT]
[FONT="]Carolina Herrera[/FONT]
[FONT="]Derek Lam[/FONT]
[FONT="]Diane von Furstenberg[/FONT]
[FONT="]Eddie Borgo[/FONT]
[FONT="]Jason Wu[/FONT]
[FONT="]Judith Leiber[/FONT]
[FONT="]Lela Rose[/FONT]
[FONT="]Marchesa[/FONT]
[FONT="]Marc Jacobs[/FONT]
[FONT="]Oscar de la Renta[/FONT]
[FONT="]Philip Crangi[/FONT]
[FONT="]Prabal Gurung[/FONT]
[FONT="]Proenza Schouler[/FONT]
[FONT="]Rag & Bone[/FONT]
[FONT="]Robert Rodriguez[/FONT]
[FONT="]Rodarte[/FONT]
[FONT="]Skaist-Taylor[/FONT]
[FONT="]Thom Browne[/FONT]
[FONT="]Tory Burch[/FONT]
[FONT="]Tracy Reese[/FONT]
[FONT="]The move taps into the high-low trend that has become more pronounced in retail since the recession. Shoppers pinch pennies on basics but splurge when they see something they really want. [/FONT]
[FONT="]The result is that expensive stores like Neiman's have regularly turned in strong sales growth, as have dollar stores on the low end. Companies in the middle, such as J.C. Penney Co. JCP +5.07% and Gap Inc., GPS +0.82% have suffered. [/FONT]
[FONT="]Fashion designers, meanwhile, are increasingly comfortable dipping into mass-market channels, with such luminaries as Karl Lagerfeld and Stella McCartney producing clothing lines for H&M Hennes & Mauritz GPS +0.82% AB.[/FONT]
[FONT="]For Target, the benefits of the tie-up are clear. The discounter needs exclusive lines to keep shoppers in its stores, and it gets to bask in the glow of Neiman Marcus. [/FONT]
[FONT="]What's more, corralling so many designers would probably not have been possible without adding Neiman's clout. [/FONT]
[FONT="]For Neiman, the equation is more complex. It said it needed Target's extensive supply chain to produce the goods in bulk. But it already carries designer labels—at true designer prices with far fatter profit margins. [/FONT]
[FONT="]What it needs is a way to draw in people who otherwise might be too intimidated to step inside its stores. [/FONT]
[FONT="]While Neiman may be known for $1,000 Christian Louboutin stilettos and an extravagant holiday catalog featuring gifts like a $250,000 speedboat, the chain's executives say many of their customers shop at Target, which is known for smart designs at low prices. [/FONT]
[FONT="]"The way people shop in the last decade, they mix and match," said Wanda Gierhart, Neiman's chief marketing officer. "A lot of Target shoppers shop in our stores." [/FONT]
[FONT="]"It is amazing how much we think alike," said Stacia Andersen, Target's senior vice president of merchandising for home furnishings, citing the emphasis both chains have put on design.[/FONT]
[FONT="]Neiman Marcus brokered introductions to the designers in February. Target will produce the collection's 50 pieces, something Neiman lacked the wherewithal to do, Ms. Gierhart said.[/FONT]
[FONT="]After years of relying on getting wealthy customers to pay higher and higher prices, Neiman under Ms. Katz has worked to broaden its appeal by offering new, lower-priced collections and toning down practices that were seen by some as snobbish. [/FONT]
[FONT="]In October, the department store did away with its long-standing policy of only accepting cash, American Express or a Neiman Marcus card. [/FONT]
[FONT="]Lela Rose, one of the designers in the project, suspects some of her customers are Target shoppers. Ms. Rose produces bridal fashion and women's dresses that average $1,095 apiece. [/FONT]
[FONT="]Her core customers are affluent women between 35 to 60 years old who typically shop at Neiman, her biggest buyer. But she figures they shop for other goods at Target, where the median household income of shoppers is $64,000 a year.[/FONT]
[FONT="]The dress and shirt she's making for the holiday collection aren't made with fabrics she would normally use, but she said the aesthetics are comparable to her regular product. Most important, the line will give her exposure to new customers.[/FONT]
[FONT="]"There are so many collaborations these days and designers have seen it's not something that lowers your brand equity unless it's done in a poor quality way," she said. [/FONT]
[FONT="]Neiman has considered partnering with Target for years, Ms. Gierhart said. It proposed a joint collection in December, and executives from Target flew to Neiman's Dallas headquarters to brainstorm how it might work.[/FONT]
[FONT="]Target last September quickly sold out of a discount collection of clothes and furnishings from Italian fashion house Missoni, which drew huge lines and overloaded the company's website. [/FONT]
[FONT="]The new collection will debut Dec. 1 and run for three weeks at Target and Neiman stores and websites. [/FONT]
[FONT="]The line will include clothing and accessories, some involving difficult manufacturing using hand-blown glass, fine leather and 18 karat gold, she said. The Neiman Christmas catalog will offer the whole collection for purchase as a group, though the company declined to say how much it would cost. [/FONT]
[FONT="]Neiman Marcus has benefited from the luxury consumer's quick recovery from the recession. Revenue for the three quarters to April 28 rose 8.3% to $3.3 billion, with profits increasing 63% to $151 million. [/FONT]
[FONT="]Target's sales and profits have been uneven during the slow recovery, as its customers hesitated to shop for discretionary items. [/FONT]
[FONT="]In recent months, clothing sales have started to pick up at Target, but home furnishings remain weak. In its first fiscal quarter ended April 28, its sales rose 5.9% to $16.86 billion, with profits growing 1.2% to $697 million. [/FONT]
[FONT="]Some retail experts have said Target has been hurt by retail chains such as H&M and Kohl's Corp. KSS +0.79% offering lower-priced designer collections. [/FONT]
[FONT="]Target has also been vulnerable to "showrooming," where shoppers browse items in stores only to buy them cheaper elsewhere, often online. In January, Target Chief Executive Gregg Steinhafel sent a letter to suppliers prodding them to lower prices or come up with more exclusive items to counter the trend.[/FONT]
[FONT="]Adrianne Shapira, a retail analyst at Goldman Sachs, called the partnership a "home run" for Target. "With Neiman Marcus supporting them, it puts them in the real luxury business," she said.[/FONT]
[FONT="]For Neiman, it is a "risk-adjusted bet" to appeal to younger customers, Ms. Shapira said, adding, "They want to show they are cool and hip." (wsj.com/anne zimmermann)
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