NEW YORK—In a collaboration effort that will surely stir current retailing norms, luxury retailer Neiman Marcus and mass-market discount retail chain Target Corp. announced this week plans to team up on a holiday promotion.
Dallas-based Neiman Marcus will select a limited edition of 24 brand names to sell at both Neiman Marcus and Target locations nationwide for the 2012 holiday shopping season.
At first glance, they seem like an odd couple, but in today’s tough economic environment, the tie-up could prove lucrative.
The cross-selling effort will include items ranging in price between $7.99 and $499.00, with most items selling for lower than $60.
Brand names included in this promotion will be names consumers don’t normally find inside Target stores. Fashion items from elite designers such as Tory Burch, Diane Von Furstenberg, Marc Jacobs, Jason Wu, and Oscar de la Renta will all be included.
The companies said that the collection will go on sale starting Dec. 1 and be available through the holidays.
This isn’t the first time Target has carried collections from famous designers—last year it sold limited-edition items designed by Italian design house Missoni. But such a wide-ranging collaboration is a first for the Minneapolis, Minn.-based company.
“This collaboration is unlike anything Target has done before, and we are confident our guests will be thrilled with this extraordinary collection that features some of America’s most pre-eminent designers,” said Target CEO Gregg Steinhafel in a statement this week.
The benefits are huge and obvious for Target. Its association with Neiman Marcus will likely lift the company from its current status of purveyor of “cheap chic” products. Wall Street certainly liked the deal in Target’s favor, as traders sent its shares up 2 percent higher after the announcement Tuesday.
Target will control production and distribution of the items, while all items will be available at both Target and Neiman Marcus stores nationwide.
But for Neiman Marcus, the rewards are harder to see.
Under CEO Karen Katz’s leadership, the luxury store chain has been tweaking its business model recently. Last year, Neiman Marcus discontinued its longstanding policy of only accepting cash, American Express credit and charge cards, or Neiman Marcus’s house credit cards.
In this promotion, Katz is undoubtedly expanding Neiman Marcus’s target market to include younger, less-affluent consumers as the U.S. economic recovery continues to be sluggish. From strictly a revenue perspective, it’s a surefire gain. Target will handle logistics and production, with Neiman Marcus reaping the sales benefit.
To hear Neiman Marcus Chief Marketing Officer Wanda Gierhart tell it, her company has been trying to partner with Target for years.
However, analysts warn that Neiman Marcus must be careful not to appear to “cheapen” its cachet in the eyes of its current customer base. After all, Neiman Marcus is known for its holiday catalogue containing some rare items, such as a $250,000 speedboat.
More than 50 products will be available from 24 designers, ranging from apparel to accessories and home décor items. All 24 designers participating are part of the Council of Fashion Designers of America.
Preview of items for sale will be released on Oct. 16.
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