Target and Neiman Marcus Partnership Makes No Sense—and All the Sense in the World

As countless writers have noted, Target and Neiman Marcus make a very “odd couple”—one’s a discounter, the other’s a high-end store sometimes called “Needless Markup.”

But when the duo announced they were collaborating on a holiday collection featuring 24 designers—including, quite likely, some jewelry items—analysts fell all over themselves praising the plan’s genius, despite how counterintuitive it all is. (The two stores will be selling the same products, at the same price points.) Company employees seem pretty giddy as well. “How [the two retailers] ever kept this big of a secret so long will remain one of the grand questions of this generation,” wrote a Target blogger. 

What’s striking here is, first, the sight of competing department stores working together in a collaboration that was apparently years in the making. We have come a long way from “Would Macy’s tell Gimbels?” And in a way, all traditional retailers are fighting the same enemies: the still-sputtering economy on one hand, and the Internet on the other. This could open the door to other retailers joining forces.

Clearly, both big names stand to gain here. Target gets access to the 24 designers, giving it more big names to feature in its stores (like it did with Missoni last year). Neiman benefits from Target’s sourcing power, and gains exposure from being featured in Target’s stores and advertising. (Remember, the two companies don’t have the same reach: Target has more than 1,700 stores; Neiman, 42.) And while Target might be seeking some of Neiman’s high-end luster, Neiman might also benefit from Target’s air of accessibility, as consultant Debra Kaye told Marketplace:

Now that you know that [Neiman has] the same items as Target, they welcome the same kind of people as Target, you’re not afraid of them anymore, so you’re more likely to go in their stores. It’s a really good traffic builder.

As for the 24 designers, this is another example of high-end names appearing in places where luxury designers have traditionally feared to tread. Of course, some may wonder if appearing at Target—even if it’s in a limited-time collection, in association with Neiman Marcus—will damage their brand. 

Many years ago, when Indian diamonds first appeared on the market, a debate raged over whether small, low-end stones would “cheapen” the product. But that doesn’t seem to have mattered: Consumers can distinguish between a diamond bought at Walmart and one bought at Cartier.

Likewise, they seem to be able to tell apart, say, the Missoni that appeared at Target and other Missoni items. But that was also a limited-time offer. The question now is: If these brands start to regularly appear at discounters, will their “specialness” and air of exclusivity start to wear off? Or, given that many affluent consumers regularly shop at discounters anyway, do these traditional distinctions even matter anymore? 

Obviously, everyone is testing the new parameters here. Target’s CEO has even said the collaboration “sets the stage for a redefining moment in retail.” Which may be true; a Marketplace reporter compared it to “Cartier and Zale working together.” That also seems like a pretty strange idea. But then again…perhaps…

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