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Inside Neiman Marcus’ Post-Bankruptcy Playbook

The luxury department store company plans to win shoppers with redesigned stores, faster shipping and digitised personal shopping.
Neiman Marcus is investing $200 million into the redesign of stores like its Forth Worth, Texas location
Neiman Marcus is investing $200 million into the redesign of stores like its Forth Worth, Texas location. Neiman Marcus

Neiman Marcus is doubling down on the customer experience in the battle for the luxury shopper’s wallet.

Nearly a year after exiting bankruptcy, Neiman Marcus Group, which owns its namesake department store brand as well as department store Bergdorf Goodman, is investing $500 million into a growth strategy that includes direct-selling technology and building a faster logistics network.

The investment comes at a time when many department stores are struggling. Consumers are increasingly shopping online, and some retailers are grappling with high costs of operating giant stores as foot traffic has fallen. Desirable brands such as Nike and Gucci have also reduced their presence at multi-brand retailers, making it harder to attract shoppers.

The idea behind the Neiman Marcus strategy is to invest as much as possible into its existing luxury customer base by offering perks like faster shipping, digitised personal shopping and premium retail spaces so that high spenders develop a long-term relationship with the brand.

“We are not about market share, or having the most customers; we are about having the customers who have the highest potential to spend with us,” said Geoffroy van Raemdonck, chief executive officer of Neiman Marcus Group.

We are not about market share, or having the most customers; we are about having the customers who have the highest potential to spend with us.

And by curating a tight assortment of classic luxury brands like Balenciaga and Chanel with up-and-coming designers like Japanese streetwear brand Mastermind and the menswear brand Rhude, it believes new and younger customers will follow suit.

Neiman Marcus is spending about $200 million on store renovations to build out lounges, coffee bars and alteration services. In a post-Covid world, the company is betting that in-store services and amenities will further foster customer loyalty.

“[This customer] likes the luxury of a relationship, someone who’s inspiring them, providing them service, preparing a fitting room,” said van Raemdonck. “What we know is when you recruit a customer in the store… you have someone who is able to migrate to high price points.”

A look from the Neiman Marcus Holiday 2021 campaign.

Neiman Marcus also sees digitised personal shopping as luxury’s next frontier. During the pandemic last year, it launched NM Connect, an app where sales associates could sell directly to shoppers, and the company has been building up the back-end of the app on the heels of its success. In July, it acquired Stylyze, an AI startup whose machine learning now powers NM Connect to make product recommendations based on previous consumer purchases and prioritise which customers sales associates should contact.

“Frankly, it’s not about hitting the look perfectly right; it’s about hitting the look right enough so that … the customer says, ‘it is appealing, it’s interesting, you’ve piqued my interest, let’s start a dialogue,’” said van Raemdonck. “We’re creating that connection and that inspiration.”

Neiman has also developed a consumer-facing app called Stanley, which aggregates daily looks and allows users to book personal shopping appointments. The intention with Stanley is to get shoppers interacting with the brand on a regular basis, van Raemdonck said, even if it’s just initially to mix and match outfits.

“It’s about driving that frequency and catching customers who are passionate customers, who are a younger customer, digital customers, and giving them a reason to engage,” he said.

Neiman Marcus filed for Chapter 11 in May 2020, and exited bankruptcy four months later, after offloading about $4 billion in debt. It closed down several underperforming stores, including most of its off-price division, Last Call.

With shoppers returning to stores post-Covid, Neiman Marcus has seen an uptick in sales. Van Raemdonck said sales grew 6 percent compared to 2019 during the company’s fourth quarter, which ended in July. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) in its fourth quarter grew to about $100 million, more than twice what the company earned in 2019, it said. E-commerce sales in fiscal year 2021, which ended in July, hit $1.2 billion, Van Raemdonck added, with digital sales representing 35 percent of the company’s total revenue.

Still, Neiman Marcus faces competition in capturing luxury shoppers, both from rival department stores such as Saks, and from digital platforms like Net-a-Porter, Farfetch and Mytheresa.

Designers like Carolina Herrera selectively partner with wholesalers like Neiman Marcus

Van Raemdonck said Neiman Marcus has been refreshing its product assortment. In June, the company hired Lisa Aiken, Moda Operandi’s fashion director, as its fashion and lifestyle director, and she’s been tasked with going after emerging brands. Neiman Marcus also carries luxury brands like Tom Ford, Jil Sander, and Van Cleef & Arpels, which are selective about wholesale partners in general.

But as a multi-brand retailer, the department store company sits in a challenging sector. The ability to build a business online has meant that more brands are directing shoppers to their own websites and stores, and some luxury brands are tightening distribution to cut out wholesalers like Neiman Marcus entirely.

A landing page for Gucci from Neiman Marcus’ website in 2019 touted handbags, shoes, clothes and even kidswear from the Kering-owned brand. Today, the same page lists seven stores where Gucci merchandise is available and links to sunglasses, jewellery and fragrance available online. Neiman Marcus told BoF that it is “currently working with Gucci on evolving our online approach and new partnership model in a way that supports both of our strategies.” The company said in categories such as shoes, Gucci is in its top-ranking group of brands.

Van Raemdonck said the brand’s reputation in luxury will ultimately help it stand out.

“If you’re looking for sneakers, and you know there are five brands that are hot, they can try the five brands [with us] instead of going to five different stores,” he said.

Investing in the luxury shopper should pay off for Neiman Marcus, said Thomaï Serdari, a professor of fashion and luxury marketing at NYU.

“They want to feel like they are a part of their own niche community, and that they are special,” said Serdari. “Luxury shoppers want highly personalised styling, and the personalisation of product, and the attention to detail.”

Its commitment to investing — and integrating— its retail and digital businesses will also set it apart from competition, added Serdari. Department stores like Saks have split its e-commerce and retail business, and activist investors are pushing Macy’s to do the same, but Neiman Marcus is taking the opposite approach by connecting its channels.

For us, there’s a connective tissue between stores and online.

“For us, there’s a connective tissue between stores and online,” said Bob Kupbens, chief digital officer of the Neiman Marcus Group. “Customers don’t think of themselves as an online shopper, they don’t think of themselves as a store shopper. They think of themselves as a Neiman Marcus customer.”

To truly excel in luxury services, shoppers expect products will arrive instantly, which is why van Raemdonck added that Neiman Marcus has been investing in its supply chain, including updating the technology in its Pennsylvania and Texas fulfilment centres so that it can offer same-day or two-day delivery to customers.

“We think it’s really important, for retention, that when we say it’s going to be next morning or same day, that it arrives there the same day,” van Raemdonck said. “Those capabilities and the visibility will really help us.”

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