Neiman Marcus enters the suburban outlet market

Minutes after the staff unlocked the doors to the new Neiman Marcus Last Call Clearance Center in Gurnee Mills, the aisles were packed with women searching for deals on high-end designer brands.

A Jil Sander suit originally $1,745 was marked $610. A patent leather Badgley Mischka purse, originally $395, was $255. On the lower end, a white cotton Diane Von Furstenberg shirt, originally $198, was marked $69. Additional 10 to 30 percent discounts were available on some items.

The excitement over this store - the first Neiman Marcus outlet store in Illinois and only the second in the Midwest (the other being in Auburn Hills, Mich.) - is stirred by markdowns on top designer brands that are rarely discounted, like Tory Burch or Dolce & Gabbana.

Kate Wagner, of Kildeer, spent $150 on a white Chanel sweater that was originally marked $690. While she acknowledged that some people would be appalled at the price, she said it's a bargain for high-end shoppers.

"If you know Neimans, and you know the brands, it's so worth it," Wagner said. "If you're looking to get something for $20, this is not the place."

The merchandise - which includes men's, women's children and home decor items - comes from two sources, said Bill Earnheart, vice president of stores for the Neiman Marcus Clearance Division.

About 45 percent is overstock from stores, and 55 percent is purchased specifically for the outlet stores. Earnheart said it's not inferior merchandise, but rather, end-of-season or overstock from their vendors.

"We are part of the Neiman Marcus brand, and we intend to protect the Neiman Marcus brand," he said. "If you shop the other stores that are in Gurnee Mills, you're going to find stuff that is a lot less expensive than what we have. We have quality merchandise. (Our shoppers) are people looking for value."

Designer outlet stores aren't a new concept in the Chicago suburbs. Stores like Nordstrom Rack and Saks Fifth Avenue OFF 5th already pepper the area, and there's an entire mall designated to designer brands, the Chicago Premium Outlets in Aurora.

Many companies, including Neiman Marcus, are finding their outlet operations are outperforming their regular stores, prompting the push for more outlets.

Outlet stores are a bright spot in an otherwise dismal retail market, and now account for 2 percent of all retail sales in the U.S. - an estimated $20 billion a year, said David Ober, a Wheaton College alumni who owns three outlet malls and is president of the outlet industry's international trade organization.

Outlet sales are up 2 to 15 percent, compared with double-digit losses at mall department stores, he said. They've also attracted two important demographics: "power moms" and teenagers.

"Teenagers have found outlets, big-time," Ober said. "There have been huge increases at outlet stores like Aéropostale and Guess."

While people still crave designer labels, the recession has made shoppers more savvy and is pressuring retailers to lower prices.

"If you walk through a Neiman Marcus or Nordstrom, there is a significant number of people who are in the 'just looking' crowd. They're not active shoppers. People are looking for trends, new colors, new styles - and then seeing what they can find elsewhere for less," said Michael Shmarak, marketing expert at Sidney Maxwell Public Relations in Chicago.

They often find it at outlet stores. But for high-end companies, who want in on the outlet action, they must be careful not to "cheapen" their name or lose non-outlet customers. Their goal, then, is to attract a whole new customer to their outlet store.

"High-end customers and discount shoppers are two different people," said Robert Smith, CEO of Champion Media Worldwide in Loves Park. "One is looking for the best quality and the other is looking for the lowest price."

Neiman Marcus Last Call Clearance will provide a boost to Gurnee Mills, an outlet mall that in past years has had a reputation for encouraging the latter customer.

"Neiman Marcus brings something new to the center. Something there's a demand for out here. It's definitely a feather in our cap," said Randy Ebertowski, Gurnee Mills' general manager.

Most people with negative opinions about the mall haven't been there for a few years, Ebertowski said, and since then, cleanliness and customer service have become top priorities.

He described Gurnee Mills' niche as "variety" - entertainment and shopping, regular and outlet stores, with some stores focused on low price and others on value.

Other suburban malls tried to woo Neiman Marcus' Last Call Clearance, but the company chose Gurnee Mills because, among other reasons, it can draw from both the Chicago and Milwaukee markets.

"We expect this to be a high-performing store for us," Earnheart said. "It's a very busy mall."

Gurnee Mills draws 23 million shoppers a year - rivaling the traffic at Woodfield mall in Schaumburg - and had a 100 percent occupancy rate last Christmas, Ebertowski said.

While Ebertowski wouldn't divulge the mall's current occupancy rate, saying it's something he "can't share," he noted that it's had two new anchors open in the past three weeks (Neiman's and Value City Furniture).

Gurnee Mill's demographics are "perfect" for Neiman Marcus, said Ebertowski who described the area as being near million-dollar homes and large horse farms.

"Neiman Marcus is a smart company ... and they had a lot of choices. They weren't going to go into a mall if they didn't think it would have a lot of traffic," he said.