Target and Neiman Marcus: Tag team for the holidays

  • Article by: THOMAS LEE , Star Tribune
  • Updated: December 1, 2012 - 4:29 PM

Their store-in-a-store collaboration blends cheap chic with a top name in luxury.

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Target CEO Gregg Steinhafel and Neiman Marcus CEO Karen Katz

NEW YORK -- Target CEO Gregg Steinhafel glanced nervously at Karen Katz, his Neiman Marcus counterpart.

"C'mon!" the crowd of photographers urged. "Put it on! Put it on!"

It was early October, and the two high-powered retail executives were in Chelsea to promote holiday merchandise to the news media.

A blue hat and a red hat lay nearby, bearing the words "Best" and "Friends" respectively. After a few seconds of awkward hesitation, Steinhafel and Katz compromise with the photographers. Sporting giant grins, they each hold up a hat as camera flashes go off.

Steinhafel and Katz may not be personally best friends but, for the moment, the companies they lead are joined at the hip. On Saturday, Target and Neiman Marcus launched a joint exclusive design collection of holiday merchandise, featuring 50 products from 24 prominent designers that will be sold at each store from now until Christmas.

Unlike previous collections like Missoni, Target and Neiman Marcus will group together all of the merchandise, which includes drinking glasses, suits, dresses and pet accessories, in one area of the store.

"We are going to create a shop within store," said Stacia Andersen, Target's senior vice president of home. "We felt putting the collection in one place in the store was very critical. We want it to be similar in every [Target and Neiman Marcus] store so we can manage it and the guest knows where to find it."

For Minneapolis-based Target, the collaboration represents its most ambitious foray into exclusive design partnerships, a strategy it pioneered but that has since been copied by every other retailer. Target's alliance with Neiman Marcus, however, takes the technique to a new level by marrying the purveyor of cheap chic to the gold standard of luxury retailing.

"We know that Neiman Marcus is the style and fashion icon in [luxury] retail," said Target's chief marketing officer, Jeffrey Jones. "And we know Target is historic for bringing design partnerships to the masses. These two things together are a real special collaboration."

In other words, any retailer can partner with Jason Wu or Marc Jacobs. Snagging Neiman Marcus is an entirely different matter.

Target is saying "'we are, in essence, the cheap chic outlet for the elite consumer,'" said Doug Stephens, president of Retail Prophet Consulting. "That's a pretty big statement for Target to make."

It also gives Target the opportunity to correct some mistakes. In September last year, Target's much-hyped Missoni collaboration was so well received that the retailer sold out the merchandise within hours and the website crashed.

While that sounds like a good problem, the episode deprived Target of an important benefit. In addition to actual sales of the merchandise, the retailer relies on exclusive collections to draw people to its stores where they presumably buy additional products.

So it's no accident that Target and Neiman Marcus more than doubled the amount inventory of Missoni and timed the launch for the holiday shopping season, when the collection can generate the maximum sales impact during the most crucial time of year for retailers.

Last December, Target's sales at stores open for at least a year, a key measure of growth, rose just 1.6 percent. This year, Target is not taking any chances. Specifically, the company wants the Neiman Marcus collection to fill a typical void between late November and Dec. 25. Consumers normally crowd stores for Black Friday deals and then wait until the last few days up to Christmas to seek last-minute sales.

"We are offering the collection at a somewhat slower time in the holiday season," Steinhafel told the Star Tribune. "There's a little bit of lull in the middle, and this enables [us] to have a big moment in the middle of the holiday season."

Stephens, the retail consultant, doubts that the strategy will generate extra sales for Target.

"The water level for consumers doesn't really change much," he said. "They are going to buy what they are going to buy. Whether it's the front end in November or the back end in December, it all comes out the same in the end."

But Rich Kizer of Kizer & Bender, a retail consulting firm, thinks Target's timing is smart because the collection will create buzz in a quiet time when retailers normally slash prices to undercut one another.

By launching Dec. 1, Target "takes the introduction of the collection out of the noise of Black Friday and Cyber Monday and opens itself a platform to be the news," Kizer said.

To that extent, Target and Neiman Marcus devoted considerable marketing muscle to the collection. The retailers hired high-profile model Karlie Kloss to star in a campaign of print and television advertisements. Target also hosted a private party at a popup store on New York's Fifth Avenue that attracted celebrities like Kate Bosworth, Leighton Meester and oe Saldana.

The collection also allowed Jones, who joined Target earlier this year, to make his first significant mark on the company. Under his guidance, Target and Neiman Marcus partnered with ABC to buy out advertising time on the season finale of the hit show "Revenge." But instead of just the usual commercials, the show worked the merchandise into the plot.

"We had the idea of making it big and spectacular and something that has never done before," Jones said. "We created an episode that ran inside the episode, bonus content that runs inside the show."

Jones said the project will serve as a template of how Target will develop future campaigns.

"We have such a history of great creative execution," Jones said. "It's really about how do we modernize what the idea means today. We know that video is one of the most shared things online. So if we can create content and harness the power of the guests who love Target and Neiman Marcus and they will want to share that content on our behalf -- that core idea is absolutely something that represents the market as we move forward."

Thomas Lee • 612-673-4113

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