Dressing Up A New Model
Wednesday, October 11, 2006
At first glance, there seems to be little resemblance between the edgy boutique called Cusp that opened recently at Tysons Corner Center and the venerable Neiman Marcus department store at neighboring Tysons Galleria -- give or take a Marc Jacobs bag or two.
Cusp is less than one-tenth the size of Neiman's and carries labels with names such as Morphine Generation. The season's It bags are stacked haphazardly on a wooden table. Deejay events are planned for some Thursday nights.
But Cusp is the rebellious little sister of the Neiman Marcus brand, one of just two pilot stores nationally that company executives hope will help the chain connect with a younger, more casual -- and potentially free-spending -- consumer.
"It's a brand-new baby for us," said Ginger Reeder, vice president of corporate communications for Neiman Marcus Group Inc. "It's going to attract a customer who might not think she is a Neiman Marcus customer. She's fashion savvy and knows about trend . . . but for some reason the look and feel of Neiman Marcus is not for her."
The reason likely has a lot to do with the sales growth slump that has dogged department stores for years. Once considered the biggest draws at shopping malls, department stores have steadily lost customers to such specialty shops as Abercrombie & Fitch and Crate & Barrel.
There have, however, been signs of a rebound. The sector had its best monthly performance since 1997 in September, hitting 8.6 percent sales growth at stores open at least a year, compared with the previous year, according to the trade group International Council of Shopping Centers. At Neiman Marcus, sales rose 7.9 percent for the month, and sales at apparel chain retailers grew 4.6 percent.
Total retail sales at traditional department stores have fallen 13 percent, to $84.1 billion in 2005 from $96.3 billion in 2000, the consulting firm Unity Marketing reported.
"For retailers across the board, we have a lot of formats that are heading toward maturity," said Mary Brett Whitfield, senior vice president of the consulting firm Retail Forward and director of its intelligence system. "Growth is the impetus for all of these initiatives."
Neiman Marcus is not the first luxury department store to create offshoots that mimic the feel of a specialty boutique. Barneys New York has turned its Co-op concept into a full-fledged line of retail stores, including one in Chevy Chase and one in Georgetown. Bloomingdale's downsized its SoHo store opened two years ago and has won praise for its design and merchandise selection.
"The future of the department-store retailer is going to be this model," said Marshal Cohen, chief analyst with the market research firm NPD Group. Department stores "have learned that they have to re-engineer who they are and what they are."
The offshoots tend to carry more trendy merchandise with slightly lower prices than their department store counterparts. Barneys Co-op, for example, carries few items that cost more than $1,000. The stores operate as boutiques, with limited stock and often featuring emerging labels. And retailers can open offshoots in more markets than they could with their traditional stores because of the smaller size and more accessible prices.
Barneys Co-op was born two decades ago, part of the retailer's first women's store that showcased contemporary designers. Spokeswoman Dawn Brown said the company turned the concept into a free-standing store seven years ago and now operates a dozen across the country. Barneys plans to open at least four a year, compared with the annual goal of two traditional stores.
Co-op "is an introduction to Barneys for a lot of people," she said.
Cusp stores, meanwhile, are still in the experimental stage. The Tysons Corner store and the one in California opened in the summer. A third is scheduled to move into Georgetown in February.
Neiman's Reeder said strong growth in sales of the chain's contemporary clothing was the catalyst for Cusp. There was little room to expand the department without infringing on other areas of the store, not to mention possibly alienating core customers. When the company was bought last year by private investors Texas Pacific Group and Warburg Pincus LLC, the new management encouraged thinking outside of the box.
"They need to create this laboratory-type of environment," Cohen said. "It also gives them the ability to engage with a different customer. Are you going to want to shop where your grandmother shops?"
So Joyce Healy, vice president of women's contemporary sportswear at Neiman Marcus, had to begin thinking about a different kind of consumer as she bought items to fill the Cusp shelves: someone who reads fashion magazines and shops eclectically; someone who has a strong sense of personal style and is willing to take a chance on new brands.
That translated into a store format organized by trends, rather than by designers, because Cusp shoppers prefer to assemble their own looks, executives said. The front of the Tysons store, for example, is all about dresses: sheer Chloe dresses, Marc Jacobs baby-doll dresses and Diane Von Furstenberg wrap dresses all hanging next to one another. Nearby is what merchandising store manager Danielle Bastian called the "rocker room," featuring a belt with a glittering skull and a book entitled "Rebel Style," by G. Bruce Boyer.
Nearly all of the store's stock is on the floor. One half-hidden wall is stacked with boxes upon boxes of shoes, which include a pair by Manolo Blahnik in a camouflage motif.
"We have a mental picture in our mind," Healy said. "It's who that customer is, what she's going to want and how we can enhance her closet."
Cusp has a heavy emphasis on denim and carries apparel lines with names that might easily turn off a traditional Neiman Marcus customer: Twisted Heart and Rag & Bone, in addition to Morphine Generation. Employees hand stenciled many of the signs in the store, and they are able to move merchandise around to create their own displays, Bastian said. They change the outfits on the mannequins often, as if they were Barbie dolls.
"We can change things every day if we wanted to," she said.
Cohen said that whether the Cusp concept ever takes off is irrelevant to its success. The goal is to learn how to approach a different demographic and earn credibility, he said. With the department store sector struggling to redefine itself, those lessons should prove useful for the future.
"I think honestly they don't know the answer and they don't care what the answer is," Cohen said. "They know that in either case they're going to gain knowledge of what the future holds for them. . . . There is no wrong result to the experiment."