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Courtesy of Business Insider

It took steep price cuts to sell the slow moving Neiman Marcus-Target holiday collection.

High-low retail collaboration misses the Target

by Carolina Herrera
Jan 30, 2013

$30 price tag: The lower-priced items

• Band of Outsiders cookie cutters
• Band of Outsiders hats (Set of 2)
• Carolina Herrera stationary set
• Oscar de la Renta pet bowl
• Proenza Schouler sweatshirt
• Rag & Bone flask
• Rag & Bone shot glasses (Set of 4)
• Rodarte ornament
• Rodarte wrapping paper
• Tory Burch beverage container
• Tory Burch lunch box
Neiman Marcus and Target Corp. delivered a highly anticipated collection for the holidays.

It was an unprecedented collaboration between a high-end and budget retail chain that intended to draw in shoppers with cheap chic style. But the collection flopped after only a few weeks on the shelves.

A wide variety of designer gifts at bargain prices should have made shopping easier this holiday season. But shoppers were confronted with $500 price tags for an Alice & Olivia bicycle and three Jason Wu ornaments for $50.

So why didn’t high-end designer names motivate Target shoppers to open their wallets?

The prices were too steep for a budget store like Target. People also expected a lot clothes and accessory items, not an abundance of home goods and décor. A Target employee says the companies failed to understand the consumer.

Tory Burch fans didn’t find her iconic ballet flats. Instead the designer created a lunch box and a beverage container.

“Consumers expected a lower-end shoe, but with her brand on it,” said the Target employee. “Designers didn’t market what they are known for.”

Although many of the designers’ names prompt images of evening gowns and cocktail dresses, half of the holiday collection was dedicated to non-apparel items such as skateboards and envelope openers.

“I wasn’t a fan of the collaboration at all!” said Lindsay Gay, a frequent Target shopper. “The brands included have such a high reputation for amazing products and Target has one for unbeatable prices and I think they both dropped the ball.“

The two popular retailers contracted 24 designers to create exclusive products for the 50-piece collection that launched Dec.1.

It is now sold out, but high demand was not the reason. Only 11 of the products were priced under $30, and after just a few weeks products had to be discounted to prompt sales. A month after launching, the collection was advertised at 70 percent off.

“They had no choice but to do it,” said analyst David Strasser from Janney Montgomery Scott LLC. “Some of the designers were already skittish about doing it in the first place.”

A source says Target had committed to a licensing agreement with Louis Vuitton designer Marc Jacobs that included products that were not to be put on clearance. Unsold products could not be donated to a third party and were to be thrown out in a compactor. However, price cuts become a necessity as sales continued to disappoint.

“I finally picked up the Marc Jacobs scarf on extreme sale at $19.99 instead of the original $60 I think it was priced at,“ said Gay.

In the past Target has typically done very well with limited edition designer collections that attract usual shoppers along with fans of the high-end brands. Italian designer Missoni and Target partnered in 2011 and the collaboration was a blowout success. By noon on the first day, shelves were empty and the Target website had crashed from all the eager fashionistas scrambling for the label.

The demand for the Neiman Marcus-Target collection last month was almost the complete opposite.

“The products weren't practical,” said Gay. “I mean a $500 Alice & Olivia bike? Cute in theory, but no.”