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Neiman’s Thinking Small for Growth

Burton Tansky, Neiman Marcus Group's president and ceo, said the firm is looking to open stores in smaller markets with affluent customers.

NEW YORK — Neiman Marcus, which operates 37 full-price stores, has pretty much tapped traditional affluent communities in the U.S. But the luxury retailer isn’t looking for wealth in such predictable places as major metropolitan hubs and historically monied enclaves.

“There’s so much wealth in small towns and villages,” said Burton Tansky, president and chief executive officer of Neiman Marcus Group, at Tuesday’s “Retail/Apparel Landscape — 2010 and Beyond” conference organized by Emanuel Weintraub Associates here. “We’re evaluating smaller markets and seeking out sites where the well-off are clustered. We’re opening stores where we never would have 10 years ago.”

One such place is Charlotte, N.C. Tansky also said the company will expand its presence in South Florida, where it already has seven stores and he said there was opportunity for another three or four. “Florida could be a $1 billion state for us,” he said.

Tansky declined to discuss locations, but retail experts said Naples and Sarasota would be good bets and the company could open another store in Miami, possibly at the Aventura Mall.

Neiman’s core Baby Boomer customers are at the height of their earning and spending power. But Tansky has his eye on another group: the children of Boomers, who are 25 to 30 years old and have an annual income of about $75,000. “We’re developing a relationship with these customers,” he said, noting their spending on women’s contemporary apparel, handbags and shoes is growing.

Neiman’s online business continues to expand. More than 50 percent of online sales now come from outside the chain’s trading area, an indication there’s an appetite for luxury goods in far-flung places. Neiman’s is building its e-commerce business by partnering with several key vendors to create co-branded Web sites, which Tansky calls “sitelets.” Consumers enter the sites through the vendor’s portal. When they place an order, Neiman’s takes over, using its order-taking and fulfillment capabilities.

VF Corp. is also tuned into technology. Eric Wiseman, the apparel giant’s president and chief operating officer, said smart cards, with a customer’s profile and shopping history, will be used to facilitate transactions. Consumers will sit at inventory kiosks and try clothes on in virtual dressing rooms, their proportions and preferences stored on the cards.

“The balance of power will shift to the consumer,” he said. “The old wholesale-retail model won’t exist. You won’t need bricks and mortar.”

Trudy Sullivan, president of Liz Claiborne, said the company is working to create a seamless value chain for consumers, delivering more innovative products faster and at better values. Only a handful of Claiborne brands now have e-commerce sites, but Sullivan said that by 2010, “all merchandise will be available online and consumers will be more comfortable ordering it.” Claiborne is closely watching the emerging consumer classes in India and China, Sullivan said, noting the world population will be 6 billion by that time.

VF also sees potential in India and China, especially in denim, as those countries become more accepting of jeans culture. About $1.5 billion of VF’s annual revenue comes from outside the U.S., Wiseman said.

Globalization holds little intrigue for Tansky, though. “For us, the global aspect would be limited,” he said, “and India would be my last choice. In terms of stores outside of the U.S., the economics won’t work. It would be difficult to get the products we need — designer products — there. Our future prospects are clearly here in the U.S.”