Neiman Marcus Looks to Future Growth
Last year was a tough one for many luxury retailers and the
incoming chief executive at Neiman Marcus, Karen Katz, will tell you that her
company was no exception.
"Luxury retail in general took the hardest hit during this recession," Ms.
Katz told the Dallas Business Journal. "Our customers pulled back
dramatically from spending."
On the plus side, Ms. Katz can point to recent
double-digit year-over-year sales improvements at the chain.
"The customer is definitely back in the stores," she said.
Most
observers agree that Neiman Marcus, like others, needs to make some changes
coming out of the experience of the Great Recession. The retailer has more
tightly managed inventory and tinkered with discounts and lower price
points to keep its offerings accessible to shoppers.
The company continues to look for ways to further improve on the customer
experience, as well.
Ms. Katz told the Dallas Business Journal, "I believe
that the intersection of traditional retailing, e-commerce retailing and social
networking … all
of that is going to come together in a very different way than we can see it
today. We are just starting to understand how powerful that intersection can
be, so we’ll see where it evolves to."
Discussion Questions: What do you think Neiman Marcus should do to be more
successful in light of the realities of the current marketplace and its competition?
Do you see online, mobile and social media being key to the chain’s future
growth prospects?
I don’t think Nieman Marcus has the luxury of waiting to see how the intersection of in-store, e-commerce and social media “evolve.” Well, they do actually, but by then the competitive landscape may not be to their advantage.
I believe that the retailer has an opportunity now, to consider a different business plan. Rather than wait for things to happen to Nieman Marcus, they can leverage their core strengths and marry them with existing and visionary shopping behavior.
In other words, they should take on the flexibility new technology offers to reach out to their customers and provide innovative shopping experiences and boost those that resonate and forget the ones that don’t work well. Keep experimenting with customers and at the same time reward the shoppers for their involvement with Nieman Marcus as it searches for the right combination of product, pricing, environment and experience.
At the end of the day, Nieman may find several combinations that work for different segments and can build stronger relationships by paying attention to various groups of significant customers. Trail blazing is not waiting to see what happens somewhere else, but instead is making something new and successful happen on your turf.
I agree with Joan. Even “fast-followers” could easily get left in the dust, especially at the top end of retail, where immediate and regular shopper delight inspires shoppers. Neiman Marcus must trail-blaze to explore every possible way to allow luxury shoppers) and importantly, those who want to “feel like” luxury shoppers) to set aside the rational brain waves that discourage shopping, and to connect with the emotional pleasures of what the experience at Neiman Marcus could be.
If there is no shopper segmentation in place, there should be, and it should include ethnography, exploring every possible connection point to “what could be” as defined by the shoppers. There is no one-size-fits-all answer in luxury, nor should there be a one-size-fits-all communication and experience strategy for shoppers.
My rational side is winning right now; I’ve not shopped NM stores in over a year. But, believe me, I want to! So I’m anxious to see what will happen that can entice me back into the fold.
Neiman Marcus is referred to as Needless Markup for a reason. The Great Recession showed how vulnerable they are. NM needs to focus on their customer experience. Luxury must and should be more than high prices. It also must stand for best-in-class customer service. Luxury shoppers will no longer be wooed by the snob appeal of a retailer. They want value, and that value should be the in-store experience.
Boomers will become less important to Neiman’s, and its growth path is going to be tech-savvy affluent younger customers, and international customers. If the company commits the right investment in technology, this could be a great time to work in technology at NM.
Karen Katz is precisely correct in envisioning what must be done in retailing. “I believe that the intersection of traditional retailing, e-commerce retailing and social networking…all of that is going to come together in a very different way than we can see it today. We are just starting to understand how powerful that intersection can be, so we’ll see where it evolves to.”
The problem is that NM has two things going against it. The first is, though luxury, it is a department store and the department store business model is and has been at risk. The second challenge is that the consumer continues to save rather than buy. While statistics released this week indicate retail sales are up slightly, they also indicated that the savings rate was up more than twice that.
If there is going to be a successful integrated luxury retailer, NM has as good a chance, if not better than anyone. But the real question is, “Is there a future for luxury retailers as we have known them over the last 20 plus years?”
Neiman-Marcus has been a synonym for “the very best” for generations. Stanley Marcus’ book “Minding the Store” is still one of the best descriptions of luxury retail ever written. While it is currently much smaller, the desire for the “very best” will endure and eventually rise again, although not, in my opinion, to the scale of the last two decades.
As Cathy points out, the challenge for NM will be to adapt to the current environment and maintain the promise of the brand. E-commerce now represents 12% of all retail sales and is growing geometrically. Understanding this evolution and interpreting it for the luxury brand is critical for NM’s future.
Neiman Marcus needs to clearly understand the race began a while back and they are still at the gate deciding the route they want to take. The e-marketing and social media experience is on going and is only going to become more powerful.
It would be good to take a look at the Nordstrom model of customer satisfaction as they begin the move to become part of the electronic world. Price is a factor, no matter who you think your client base is. Customer satisfaction is critical to customer retention. Neiman Marcus has spent too long saying “hey, remember me?” They have to show why they are going to become the shoppers’ preference. Have you seen that from them recently?
Considering the economic status of the average Neiman Marcus shopper, it’s safe to assume many are tech-savvy people who probably use Blackberries, iPhone 4, Droid, etc. With that in mind, Neiman Marcus should absolutely use location-based marketing, social media, and other technical promotions. However, they need to be sure they appropriately represent their brand in this space, which is also heavily populated by edgy, youth-oriented brands that do not represent the image NM wants to present.
The ultra wealthy are different than us, therefore the strategy to serve them is also different.
Neiman Marcus should get with the times and accept ALL major debit and credit cards. I was shopping in Dallas and was informed as I was checking out that they only accept American Express and Neiman Marcus cards. Luckily I carry an AE card, but the person behind me didn’t so they just left!
The social makeup of a Neiman shopper is not as price sensitive as others. They are looking for the experience, and people still need…want that. Remain focused and listen to and understand your customer preferences.
Maybe they can start looking at opportunities abroad. But just many others have commented, value/customer experience is key.