Two Retailers Weigh Increasing Foot Traffic Versus Online Expansion

The contrast between Neiman Marcus and Allbirds couldn’t be steeper. The traditional retail standard Neiman Marcus fell into bankruptcy during the pandemic, while newcomer and direct-to-consumer brand Allbirds is rolling out an offline expansion. As both brands take steps to adjust to the pandemic, Placer.ai took a look at whether a focus on driving foot traffic into physical stores is the path to sustainability for either company.

Through the recession, Neiman Marcus has seen a significant decline in monthly visits year-over-year, nearing a 100% decrease in April and May, but continuing to see traffic reduction of 40% in August, according to data from Placer.ai. Allbirds, on the other hand, also had a rough April and May, but in-store visits had nearly recovered in August, down only 15.7% year-over-year. Placer.ai recently looked deeper into these two retailers and their recent strategies.

In September, Neiman Marcus emerged from bankruptcy; however, Placer.ai is unconvinced that the retailer will be able to reverse its downward direction. First, Neiman Marcus was struggling prior to the pandemic. In January, for example, monthly in-store visits were down 1.4%. The good news is that the brand has improved through the pandemic, inching closer to 2019 levels each month. The decline in foot traffic isn’t exclusive to Neiman Marcus, all department stores have experienced a similar trend.

As Neiman Marcus recovers from the bankruptcy, the retailer is looking to expand into e-commerce. Placer.ai believes that this a plus, but is concerned about how the brand will manage its physical real estate space. There is opportunity for the brand, which already has a strong overlap customer base. Cross-shopping patterns from 2019 show that Neiman Marcus has 53.0% and 45.7% overlap in customers with Macy’s and Nordstrom. Other high-end brands see much less cross-shopping trends.

Looking ahead, Placer.ai recommends that Neiman Marcus utilize its flagship brand to drive high-end visitors. In this area, it should focus on amenities like personal shopping, which could grow in popularity during the pandemic. In addition, it should also utilize its lower-priced brand Neiman Marcus Last Call more effectively, because value will become an important driver of activity in the coming months. So far, the Last Call brand has had monthly visits decline on par with the higher-end brand. In some ways, Neiman Marcus is missing an opportunity.

Allbirds offline expansion was not a surprise to Placer.ai. The researcher predicted the trend last year, and at the start of 2020, the expansion of DTC brands was named as one of the year’s biggest potential trends. The pandemic didn’t change that. Allbirds specifically has raised $100 million in series E funding to expand into new locations. Unlike Neiman Marcus, the company was seeing a strong increase in monthly traffic in January and February, up 159.3% and 69.0% respectively.

This trend shows the importance of owning offline locations, and is a lesson that Neiman Marcus can learn in growing its online presence.