Physical luxury sales lag, but off-price Neiman Marcus, Nordstrom are picking up shoppers

While luxury sales are slowing as consumers flock to cheaper retailers for apparel, beauty, and other goods, luxury retailers with off-price brands, like Neiman Marcus Last Call and Nordstrom Rack, are seeing store visits climb.

• Visits to Neiman Marcus Last Call were up 11.5% YoY in H1 2024, compared with a 3.1% decrease in traffic to Neiman Marcus locations altogether, according to Placer.ai.
• Nordstrom Rack also saw an increase in traffic (8.6%), while visits to the Nordstrom banner as a whole declined 5.4%.

Overall, US luxury spending fell 11% YoY in July, following a 7% decrease in June, per Citi Research. Declining foot traffic is a major issue for luxury brands—physical personal luxury sales will make up 81.5% of total personal luxury sales in the US this year, per our forecast.

The off-price opportunity: Consumers are on the hunt for deals. Both Neiman Marcus Last Call and Nordstrom Rack are seeing share of visits rise compared with their full-priced counterparts.

• Neiman Marcus Last Call has grown its share of total Neiman Marcus banner visits from 11.2% in Q2 2019 to 15.6% in Q2 2024, while Nordstrom Rack’s grew from 51.5% to 56.7% in the same time period.
• This could be partly due to the closure of some regular locations by both brands, according to Placer.ai. Get more insights on foot traffic data at our Placer 100 content hub.

While only a handful of Neiman Marcus Last Call locations remain in the US, Nordstrom is expanding its Nordstrom Rack business, opening 11 new locations this year, with 12 more planned.

• Net sales for Nordstrom Rack increased 13.8% and comparable sales rose 7.9% in its latest quarter.
• In addition to increasing traffic to its physical locations, Nordstrom Rack’s online business grew 6% in Q2.
• “The digital piece—it is a point of differentiation,” said CEO Erik B. Nordstrom in a recent earnings call. “There's not many online off-price retailers out there.”

The bottom line: We forecast total personal luxury retail sales in the US will rise 2.8% to reach $108.66 billion this year. However, given the value-focused state of consumers, it will be a struggle for brands to earn their share of luxury sales in the second half of the year.

• While luxury retailers may not want to offer straight discounts, there are other ways to provide consumers with perks or freebies to make a purchase feel worthwhile.
• Brands can also rely on the tried-and-true differentiators of luxury—exclusive access to products and white glove customer service.

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