Placer.ai: Off-Price Weighs On Neiman Marcus Future

Neiman Marcus may have emerged from Chapter 11 bankruptcy protection, but it isn’t out of the woods yet, according to Placer.ai, and off-price retail may play an important part in how its future proceeds.

In late September, the company accomplished a major feat by clearing bankruptcy, but Ethan Chernofsky, the traffic tracker’s vp/marketing, pointed out that its store visit numbers haven’t looked promising. Even before the pandemic halted store activity, Neiman Marcus had a mixed start to 2020 with visits down 1.4% in January and up just 2.4% in February despite an industry-wide, late-month sales surge and a 29th day in the month due to leap year. Visits have been rising since, with consistent growth each month bringing the retailer closer to 2019 levels.

At the same time, the department store industry has been realigning, Chernofsky noted, and trying to refocus on e-commerce. The move to digital is an important part of the Neiman Marcus story, he added, as it will go a long way to determining the retailers ability to successfully rebound over time. It will raise questions about what purpose the retailer’s offline footprint serves and how the brand leverages its core offline assets.

When analyzing cross-shopping patterns from early 2019 through early 2020 to avoid pandemic trends, it became evident that upscale Neiman Marcus sees the highest levels of cross-shopping with other department store brands, specifically Macy’s and Nordstrom with 53% and 45.7%. However, immediately trailing those banners is a mix of off-price leaders and other mass-market retailers, with T.J. Maxx at 38.9%, Marshalls at 38.6% and Nordstrom Rack at 30.5%.

Beyond that, Kohl’s, Ross, Old Navy, J.C. Penney and H&M all fall between Nordstrom and the next department stores on the cross-shopping list, Dillard’s, at 20.3%, and Bloomingdale’s, at 19.3%. When it comes to Neiman Marcus Last Call locations, the point becomes even clearer, Chernofsky said, with Macy’s again in the top spot, at 55.7%, followed closely by Marshall’s, at 45.5%, T.J. Maxx at 45.3%, Ross at 41.8% and Kohl’s at 35.1%.

Given the cross shopping numbers, Neiman Marcus could do well to lean on Last Call in addition to digital, as off-pricers are significant to its customers’ shopping habits, Chernofsky noted.