Wealthy shoppers have become bargain hunters, and that’s hurting retailers like Neiman Marcus, Nordstrom, and Saks.
Shoppers at lower income levels have been hunting bargains for years. They started gravitating toward discount retailers like TJ Maxx, Marshalls, and Dollar Stores during the recession, and many never went back to shopping full price.
That’s had a crippling impact on full-price department stores like Macy’s, JCPenney, and Sears, which have been closing hundreds of stores in the face of falling traffic and sales.
Now, that habit is trickling up to America’s wealthiest shoppers, signalling trouble ahead for the US luxury market.
Wealthy shoppers are suddenly comparing prices between retailers on everything they buy, and their brand loyalty has plummeted.
Sales of personal luxury goods, such as designer clothing and accessories, fell 1% last year, marking the first decline since 2009, according to Bain & Co data cited by The Wall Street Journal.
Neiman Marcus CEO Karen Katz commented on this trend late last year.
“There’s no question that our core customer is visiting us a little less frequently,” Katz told analysts on an earnings call in December. “Customers in general are less loyal to any one retailer and I think a lot of that is because of the price transparency of online. I think that’s here to stay. I don’t think that’s going to change.”
In the most recent quarter, same-stores sales fell 6.8% at Neiman Marcus and 0.9% at Nordstrom, including a 6.8% drop at its full-priced stores. Saks’ same-store sales were flat.
Retailers like high-end jeweller Tiffany & Co. and preppy clothing brand Ralph Lauren have also been struggling, and both recently pushed out their CEOs, the Journal notes.
Price-comparison shopping is nothing new.
Companies like Amazon are making it easier than ever for people to compare prices online by offering tools like barcode scanners, which customers can access through their smartphones and use in stores to easily check prices on specific items.
With that trend now trickling up to America’s wealthiest customers, and with companies like Amazon and Walmart now breaking into the luxury fashion market, high-end retailers are struggling to set themselves apart.
Neiman Marcus is trying to tackle the issue by offering more exclusive products and “making sure the vendors that we do business with have less of a distribution in the US,” Katz said.
Meanwhile Saks is trying to make its stores more “exciting,” according to Jerry Storch, CEO of Neiman Marcus parent Hudson’s Bay Co.
“We are focused on continuing to delight our customers with exclusive product offerings and custom all-channel shopping experiences, and by creating exciting retail destinations to increase foot traffic in our stores,” Storch said in January.
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