Neiman Marcus' future customers are worryingly frugal

neiman marcus

(Associated Press)

The luxury retailer Neiman Marcus is planning to go public.

The department-store brand says it plans to open more stores and expand into new markets.

But while Neiman Marcus' baby-boomer customers shell out $300 for a sweater, the younger generations that will make up its future customers aren't as willing to part with their cash.

In June, Bloomberg News profiled these buyers, who are in a category called Henry, or High Earners Not Rich Yet.

People who make between $100,000 and $250,000 are "making very careful decisions" on discretionary purchases, luxury-marketing expert Pam Danziger told Bloomberg.

"That's smart for them, but it's certainly not good for the economy," she said.

Companies including Ralph Lauren, Coach, and Michael Kors are going after consumers ages 25 to 34 with money to spend but who aren't rich, Danziger said in a recent report.

These customers make up 18% of households, but as they suffer sluggish income growth, they are increasingly conservative with their dollars.

Neiman Marcus' 43 stores, which include the two Bergdorf Goodman stores in New York, cater to the richest consumers, but the brand has tried to appeal to a mass market in recent years.

The retailer collaborated with Target in 2012, featuring designers such as Tory Burch, Marc Jacobs, and Oscar de la Renta. Despite looking great on paper, the collaboration was a flop, with pieces marked down by 70% or more.

target neiman marcus collaboration

(Neiman Marcus)

In 2013, Neiman Marcus' Jim Gold told The Dallas Morning News that the brand was working to attract young customers with incomes of $75,000 or higher through cheaper items such as cosmetics and denim.
There's no mention of that in the latest initial-public-offering filing.

The company does point to MyTheresa, a brand it acquired last year that is aimed at "younger, fashion-forward, luxury customers, primarily from Europe, Asia and the Middle East."

Michael Kors

(Getty)

Neiman Marcus excels at tailoring the shopping experience for its customers.

"We are able to associate approximately 90% of our total revenues with specific customers," the company wrote in its IPO filing. "Additionally, we are able to associate substantially all browsing behavior on our digital platforms with unique individuals. By aggregating this data and employing advanced analytics, we are able to generate a single view of these customers."

While the company is promising to grow by tapping into rising affluence, particularly overseas, this kind of attention to detail could prove difficult to scale once Neiman Marcus is a public company.

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