Neiman Marcus begins its new life outside of bankruptcy
Neiman Marcus emerged from bankruptcy on September 25 with plans to sharpen its focus on full-price selling and perfect digital clienteling. However, the exit begins with significant reductions in its in-store workforce to adjust for lean sales expectations in wake of COVID-19.
Geoffroy van Raemdonck, CEO, wrote in a letter to vendors attained by Women’s Wear Daily, “This change is substantial and incredibly difficult, but we must ensure we have the right structure and right size team in place that matches our reduced financial forecast.”
Neiman’s plan is to transform “into a luxury customer platform, focused on customer engagement across a luxury lifestyle.” Management is redefining in-store roles as “service ambassadors, digital client advisers and personal stylists.” The retailer has added an NM Connect clienteling tool this year and the “Your Neiman’s” digitally-driven personalized hub to further support omnichannel offerings. Online already accounts for a third of the company’s sales.
Some stores were closed and debt reduced in bankruptcy proceedings, but the luxury sector is expected to fare worse than other retailer channels in the coming months as the recession reduces high-end discretionary purchases and tourist traffic remains at a standstill due to the coronavirus. Arguably, luxury’s high-touch approach presents bigger challenges for social distancing than other channels.
Last week, S&P said it expects Neiman’s sales to decline in the mid- to high-single-digit range through its fiscal year ended June 2021 due to depressed in-store traffic from safety concerns, the recession’s impact and secular department store challenges.
Like other department stores, Neiman’s has struggled to attract Millennials and Gen Z. Beyond digital engagement, Neiman’s will have to deliver experiences and cutting-edge brands that resonate with younger consumers. Vendors, however, are less reliant on shelf space at luxury stores as larger labels such as Prada and Gucci are rapidly expanding in direct-to-consumer channels and start-ups can launch with more authenticity online.
Neiman’s can still capitalize on its legacy and core following. Gene Spiegelman, vice chairman and Ripco Real Estate, told Vogue Business, “Brands go [out of business] because they lose the loyalty and the connection with their customer. That’s the fundamental foundation for Neiman Marcus’s survival.”
- Neiman Marcus Group Completes Chapter 11 Process; Emerges with Strengthened Capital Structure – Neiman Marcus Group/PRNewswire
- Neiman Marcus, fresh out of bankruptcy, is starting a new round of staff cuts – Dallas Morning News
- Neiman Marcus Group Reducing Headcount in Stores and Restaurants – Women’s Wear Daily
- Out of bankruptcy, Neiman Marcus plans a comeback – Vogue Business
- Neiman Marcus launches digital hub to bring the in-store experience online – RetailWire
- NMG Holding Company Inc. Rated ‘CCC+’ After Emergence From Bankruptcy; Outlook Negative – S&P Global Ratings
- Neiman Marcus Needs To Court The Millennial And Gen Z Customer. Can It Succeed? – Forbes
- Neiman Marcus Group Announces Key Strategic Executive Hires to Build a Luxury Customer Platform – Neiman Marcus Group/Business Wire
DISCUSSION QUESTIONS: How would you assess the strengths and weaknesses of Neiman Marcus? What will be the key to its sustainability in the years ahead? Does management seem to be taking the right steps?