Neiman Marcus’ Cultural Transformation Pays Off
Everyone in retail has heard the apocryphal story about how Stanley Marcus, known to all as Mr. Stanley, would greet his customers at the Neiman Marcus door in Dallas every morning. He knew his customers by name, knew what they wanted and treated them as the VIPs they were. They returned the favor by giving Mr. Stanley and his Neiman Marcus store their lifelong loyalty.
But then Neiman Marcus was sold to Carter-Hawley Hale, Mr. Stanley went into emeritus mode and the company grew. It’s not that his single-minded dedication to service passed away, but the “money men” took over and the primary goal became servicing the bottom line.
For any retailer, running the business primarily by and for the balance sheet is a mistake, but for a luxury retailer like Neiman Marcus, it’s the kiss of death. And that nearly came for Neiman Marcus Group in early 2020 when it was forced to file Chapter 11 bankruptcy.
After successfully emerging from bankruptcy proceedings, CEO Geoffroy van Raemdonck made all the tough business decisions, including closing 22 stores, most painfully, its prized NYC Hudson Yards location.
Starting over with a reduced footprint of 37 stores and 10,000 associates, he had to build the company back up and did it by resurrecting Mr. Stanley’s customer-first philosophy in a “Revolutionizing Luxury Experiences” strategic plan with its cornerstone being a five-point NMG|Way corporate culture transformation.
Van Raemdonck and his team have been on a challenging two-year journey that is producing needed and, from an outsider’s perspective truly remarkable results. During fiscal year 2022 ending July, the company reported it delivered over $5 billion in gross merchandise value with an 11% increase in EBITDA margin over previous year.
Comparable store sales advanced over 30% compared to last year’s period, producing $495 million in adjusted EBITDA. The company touts investments in technology and digital capabilities as pivotal to its integrated luxury retail model that combines in-store, e-commerce and remote selling.
Specific investments include the acquisition of Stylze to power the customers’ omnichannel journey and Farfetch Platform Solutions to enhance its Bergdorf Goodman e-commerce platform.
But the technology investment that may be most impactful for this luxury retailer is its behind-the-scenes’ proprietary Connect application used by the company’s 3,000+ selling associates to engage their customers remotely.
It allows them to share styling advice, product recommendations, personalized look books, and complete transactions. For example, an average of 1.5 million texts and personalized emails are sent to customers per month.
Through Connect, the personal connection between the customers and the sales associate is amplified, effectively teleporting Mr. Stanley’s personal customer service approach to the 21st century.
The Connect tool supports a high-level of personalized customer service that AI and bots can’t match. It extends personal customer service to more customers and reaches beyond the store’s four walls to wherever the customer is.
Poised for growth
This new way of personally serving customers fits into the “Growth Mindset,” one of the five pillars of the NMG|Way culture transformation. The growth mindset calls on all across the company to adapt, embrace change, accept new challenges and find new opportunities to do better “always.”
With its typical selling associates having worked nearly a decade with the company, they’ve embraced this new technology-enhanced way of serving customers.
More than one-third of its selling associates generate over $1 million in customer spend per year. Further, customers who engage across multiple channels, like in-store and through remote selling, spend five times more than those who shop exclusively in one channel.
New ways of working
This enhanced, service-from-anywhere approach also supports another NMG|Way pillar called WOW, meaning “Way Of Working.”
The NMG corporate structure is envisioned as a network of connected hubs that “serves its associates and their needs,” such that an associate may have a working hub from home. Its stores and distribution centers act as hubs and a new corporate hub is being built in uptown Dallas, centrally located between its Downtown Dallas and NorthPark flagship stores.
“Our NMG|WOW philosophy empowers our associates to work whenever, however and wherever to achieve their best results,” said Eric Severson, EVP, Chief People and Belonging officer.
The WOW hub strategy results in greater job satisfaction, which translates into happier employees who then make happier customers. And happier customers are loyal. The top 2% of customers average over $25,000 annually through 25+ transactions and account for approximately 40% of total sales.
Loyal customers “Belong,” a third pillar in the NMG|Way strategy, as do valued employees. And that extends to the wider luxury business community. The most coveted luxury brands want to belong to Neiman Marcus too.
Belonging means diversity, equity and inclusion across the corporate culture, which aligns with the values of legacy luxury brands, like Loewe, Prada, Valentino, Burberry and Balmain, which did exclusive collections for NMG this past year. It also has helped bring 200+ new brands representing emerging and diverse designers into the NMG family.
The fourth pillar of the NMG|Way culture is its environmental, social and governance (ESG) program. The company just released its first ESG report, entitled “Our Journey to Revolutionize Impact.”
Through its forward-looking ESG strategy, it aims to advance sustainable products and services, cultivate the culture of belonging across all constituencies, including employees, business partners, brands and customers, and lead with “love” in and for its communities.
The report outlines NMG’s 2025 and 2030 goals, including extending the life of over a million luxury items through circular services such as mending, alternations, restoration, resale and donations, and increasing revenues from sustainable and ethical products. It will help customers make these better choices through Sustainable Edits in Neiman Marcus and Bergdorf Goodman.
And central to its ESG goals is to increase inclusion and diversity in an already highly inclusive, diverse culture.
The final pillar in NMG|Way culture is Values which is the thread that ties everything together. “NMG is a relationship business,” said CEO van Raemdonck and relationships are based on shared values.
The values espoused encourage associates to be bold, be memorable, be trustworthy, be all heart and be the best. And the values are reinforced by the NMG| WOW (Way of Working) principles of working smarter, being present, integrating life and work and feeling empowered to be empowered.
“What’s driving demand today is something special in the service and the experience and the story,” van Raemdonck shared. “The competitive advantage in retail is to do everything in service of the customer.”
The NMG|Way culture is a guiding light for associates to deliver that “something special” to customers, as well as to their work colleagues, the company’s brands and business partners and out into the wider community.
It codifies the NMG corporate culture to make the experience working for, working with and patronizing the company as unique as the shopping experiences are with Neiman Marcus and Bergdorf Goodman.