U.S. Retail Industry Trends: Neiman Marcus and Luxury Retailers Have Confidence Despite Consumer Shifts and Sinking Same Store Sales Numbers
Thursday April 16, 2009
March same store sales numbers trickled in from the retail industry over the past two weeks, yielding few surprises, and solidifying established trends in new consumer spending patterns which are upgrading value and downgrading luxury. Despite dramatic setbacks, luxury retailers like Neiman Marcus are exhibiting confidence about the return of affluent spending that defies their March and Q1 2009 results.
Overall retail sales fell 1.1% in March, according to the Commerce Department, which was worse than generally predicted by economists and industry analysts. Has anyone else noticed that U.S. retail industry sales results seem to “disappoint” a lot?
Criticizing a retailer’s performance based on its failure to meet expectations is kind of like blaming the clouds for failing to precipitate in the way that the television meteorologist thinks they should. Reportedly, analysts and economists were repeatedly “surprised” at the March 2009 same store sales figures. But perhaps that says more about the abilities of the predictors to predict than it does about the ability of retailers to retail.
Comparing monthly same store figures for the first three calendar months of 2009 reveals very few deviations. Hot Topic, Aeropostale, and Wal-Mart have plus signs, Limited, Gap, and Macy's have minus signs. Ross Dress for Less continues to trend up, Neiman Marcus continues to trend down. Where’s the surprise?
When Neiman Marucs CEO Karen Katz addressed the Nelley School of Business at Texas Christian University today, she expressed her company’s conviction to focus on the affluent customer, and not compromise the high-end shopping experience delivered to that customer. That kind of stubborn loyalty to the steadfast 102 year-old Neiman Marcus brand is admirable.
A CEO with less clarity and conviction might have gotten distracted by the company’s $509 million net loss last quarter, its three rounds of layoffs, its salaried employee pay cuts, and the money it needed to borrow recently to make interest payments on some senior notes and reserve cash. Despite all of these pesky realities, Neiman Marcus continues to be Neiman Marcus.
For example, there is still a new Neiman Marcus store opening planned for September, and plans for the charity gala being staged as part of the opening are already in the press. Also in the news are several special events with major designers in various Neiman Marcus stores.
Beatle daughter turned clothes designer Stella McCartney showcased some of her Fall fashions this month at the San Francisco Neiman store. Clutch designer to the stars, Fiona Kotur Marin is meeting and greeting Neiman customers at two different South Florida stores today and tomorrow.
With these high profile events, Neiman is both generating buzz and creating an excuse for affluent shoppers to walk back through the doors and reactivate their spending addictions. The question remains if there is any amount of champagne events that can get people under the influence of luxury shopping again any time soon.
Designers, manufacturers, and retailers at all price points are all facing the grim reality that stuff is only worth what people are willing to pay for it. We all understood that as a vague economic notion, but the giant marketing machine that is the American free enterprise system successfully hypnotized a significant number of consumers into believing in a wildly inflated value of many things for quite some time.
An $848 Kotur handbag was never actually “worth” $848, except in the currency of perceived value and status. The luxury sector is staying the course, banking on the belief that the Real Housewives mentality will emerge from the shadows of recession, and the status of stuff will be elevated once more.
This is probably a safe bet, but the question is whether the resurgence will be robust enough to support 40 Neiman Marcus stores, and whether it will happen before the stores’ own credit line is maxed out.
Overall retail sales fell 1.1% in March, according to the Commerce Department, which was worse than generally predicted by economists and industry analysts. Has anyone else noticed that U.S. retail industry sales results seem to “disappoint” a lot?
Criticizing a retailer’s performance based on its failure to meet expectations is kind of like blaming the clouds for failing to precipitate in the way that the television meteorologist thinks they should. Reportedly, analysts and economists were repeatedly “surprised” at the March 2009 same store sales figures. But perhaps that says more about the abilities of the predictors to predict than it does about the ability of retailers to retail.
Comparing monthly same store figures for the first three calendar months of 2009 reveals very few deviations. Hot Topic, Aeropostale, and Wal-Mart have plus signs, Limited, Gap, and Macy's have minus signs. Ross Dress for Less continues to trend up, Neiman Marcus continues to trend down. Where’s the surprise?
When Neiman Marucs CEO Karen Katz addressed the Nelley School of Business at Texas Christian University today, she expressed her company’s conviction to focus on the affluent customer, and not compromise the high-end shopping experience delivered to that customer. That kind of stubborn loyalty to the steadfast 102 year-old Neiman Marcus brand is admirable.
A CEO with less clarity and conviction might have gotten distracted by the company’s $509 million net loss last quarter, its three rounds of layoffs, its salaried employee pay cuts, and the money it needed to borrow recently to make interest payments on some senior notes and reserve cash. Despite all of these pesky realities, Neiman Marcus continues to be Neiman Marcus.
For example, there is still a new Neiman Marcus store opening planned for September, and plans for the charity gala being staged as part of the opening are already in the press. Also in the news are several special events with major designers in various Neiman Marcus stores.
Beatle daughter turned clothes designer Stella McCartney showcased some of her Fall fashions this month at the San Francisco Neiman store. Clutch designer to the stars, Fiona Kotur Marin is meeting and greeting Neiman customers at two different South Florida stores today and tomorrow.
With these high profile events, Neiman is both generating buzz and creating an excuse for affluent shoppers to walk back through the doors and reactivate their spending addictions. The question remains if there is any amount of champagne events that can get people under the influence of luxury shopping again any time soon.
Designers, manufacturers, and retailers at all price points are all facing the grim reality that stuff is only worth what people are willing to pay for it. We all understood that as a vague economic notion, but the giant marketing machine that is the American free enterprise system successfully hypnotized a significant number of consumers into believing in a wildly inflated value of many things for quite some time.
An $848 Kotur handbag was never actually “worth” $848, except in the currency of perceived value and status. The luxury sector is staying the course, banking on the belief that the Real Housewives mentality will emerge from the shadows of recession, and the status of stuff will be elevated once more.
This is probably a safe bet, but the question is whether the resurgence will be robust enough to support 40 Neiman Marcus stores, and whether it will happen before the stores’ own credit line is maxed out.
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