The contrast between Neiman Marcus and Allbirds couldn't be steeper. Traditional retail standard Neiman Marcus went bankrupt during the pandemic, while newcomer and direct-to-consumer brand Allbirds launches an offline expansion. As both brands take steps to prepare for the pandemic, Placer.ai looked to see if a focus on increasing pedestrian traffic into physical stores was the path to sustainability for both companies.
During the recession, Neiman Marcus saw a significant year-over-year drop in monthly visits, approaching a nearly 100% drop in April and May, but continued to see a 40% drop in traffic in August, according to data from Placer.ai. Allbirds, on the other hand, also had a tough April and May, but visits to stores had almost recovered in August, declining only 15.7% year over year. Placer.ai recently took a deeper look into these two retailers and their recent strategies.
In September Neiman Marcus emerged from bankruptcy; However, Placer.ai is not convinced that the retailer can reverse its downward direction. First, Neiman Marcus fought before the pandemic. In January, for example, monthly store visits decreased by 1.4%. The good news is that the brand has improved through the pandemic and is approaching 2019 levels every month. The decline in foot traffic is not just reserved for Neiman Marcus, all department stores have seen a similar trend.
As Neiman Marcus recovers from bankruptcy, the retailer is aiming to expand into e-commerce. Placer.ai believes this is a plus, but is concerned about how the brand will manage their physical real estate space. There are opportunities for the brand, which already has a lot of customer overlap. Cross-shopping patterns from 2019 show Neiman Marcus having an overlap of 53.0% and 45.7% with customers with Macy's and Nordstrom. Other high-end brands see much less cross-shopping trends.
Looking ahead, Placer.ai recommends Neiman Marcus using its flagship brand to attract high-end visitors. In this area, the focus should be on amenities like in-person shopping, which could become increasingly popular during the pandemic. Additionally, the company should leverage its lower-priced Neiman Marcus Last Call brand more effectively as value becomes a major driver of activity in the months ahead. Previously, the Last Call brand had monthly visits down to the level of the high-end brand. In a way, Neiman Marcus is missing out on an opportunity.
Allbirds' offline expansion came as no surprise to Placer.ai. The researcher predicted the trend last year, and in early 2020, the expansion of DTC brands was cited as one of the biggest potential trends of the year. The pandemic has not changed that. Allbirds has specifically raised $ 100 million in serial e-funds to expand in new locations. Unlike Neiman Marcus, the company saw massive monthly traffic increases of 159.3% and 69.0%, respectively, in January and February.
This trend shows the importance of having offline locations and is a lesson Neiman Marcus can learn as he grows his online presence.