Neiman Marcus collaboration fell flat, so experts advise retailer to focus on boosting online sales.
Target Corp. probably won’t launch a design partnership collection for the upcoming holiday shopping season.
While the Minneapolis-based retailer hasn’t completely ruled it out, creating an extensive line in time for December would be highly impractical, since Target normally needs a year or so to plan such an ambitious project.
“We have no current plans for a holiday design partnership,” spokeswoman Katie Boylan said.
Target’s decision not to deploy its most potent weapon for the most crucial sales period of the year follows its failed collaboration with Neiman Marcus last Christmas. Despite an ambitious collection — 50 products from 24 top designers — and the reputations of two respected retailers, Target and Neiman Marcus’ collaboration mostly fell flat with consumers. Weak sales forced Target to sell off excess inventory by slashing prices, something that in past years would seem unthinkable for the savvy purveyor of cheap chic.
Doug Stephens, a Toronto-based retail consultant, gives Target high marks for taking big risks with such ambitious experiments. Nonetheless, Target’s decision to forgo a holiday collection this year “looks like they are retreating with their tails between their legs,” he said.
A hard time of year for Target
The Target-Neiman Marcus flop underscores Target’s struggles with the last three months of the year, which can account for up to 40 percent of annual sales. Target has traditionally avoided the price wars that usually dominate the holiday shopping season as retailers try to grab as many sales as they can through heavy discounting. While Target’s approach to the holiday season lets it preserve its profit margins, the retailer’s holiday sales over the past three years have been lackluster.
By selling the Neiman Marcus collaboration through the first weeks of December, Target executives hoped to drive people into stores during a relatively slow period in the holiday shopping season. The collection was meant to create excitement and allow Target to shift the holiday conversation to something other than the lowest price.
But “holidays are always very, very, difficult” times to do such things, Stephens said. “It begs the question, should you bring something new to market when you are competing against all of this holiday noise, which starts earlier and earlier in the year?”
In the end, Target executives say the Neiman Marcus partnership didn’t work for a variety of reasons. First, it was complicated, both from a marketing and inventory perspective. It was unclear whether Target and Neiman Marcus were selling the designers or selling themselves. Also, Target’s decision to start marking down merchandise left Neiman Marcus, a luxury retailer, in an awkward position since they sold the same products.
“We learned about the complexity that comes when you have so many designers at once,” executive vice president and chief marketing officer Jeff Jones said in a recent interview. “I think simple is better. Simple to understand. Simple to execute.”
Second, consumers didn’t want to pay full price for items when they were searching for discounts and deals during an uncertain economy, he said.
So without a design partnership, where does that leave Target come November and December?
Carol Spieckerman, president of newmarketbuilders retail consulting firm, thinks Target should focus on squeezing the most sales it can off its digital operations, including website and mobile.
Over the past year, Target has made significant investments in technology, revamping target.com, launching a digital coupon program through Facebook and installing Wi-Fi in stores. It’s time for those investments to start producing meaningful results, Spieckerman said.
For Target, “getting its omnichannel act together during the holidays is much more important than generating buzz through design partnerships,” she said.