The Neiman Marcus Group, confronting declining store traffic and a challenging luxury market, has a wish list for industry change and it involves tackling some of the fashion industry’s most sensitive subjects.
The luxury retailer wants a faster supply chain for products made from “base” fabrics and materials; increased product innovation; two types of fashion shows at different times and for different audiences; smarter pricing for greater perceived value, and tighter relationships with suppliers.
“We are going to have to work more closely together than ever before,” stated Jim Gold, Neiman Marcus Group president and chief merchandising officer, who outlined the wish list. “Our partnerships need to be stronger than ever. We need to innovate. We need to embrace speed.”
On the supply chain, Gold observed, “In some ways the industry has made enormous progress. In other ways, we haven’t made enough. Many of our products are extremely artisanal; they are handmade. The amount of work that goes into them is hard to imagine, unless you actually see them being made and those are always going to take time to get produced.
“But there are many other products that we carry that have base fabrics, base materials that just take too long to get to the stores, to reorder. We need to work much more closely together, retailers and manufacturers, to continuously test, learn and respond. Retailing in the digital age requires much more speed.”
Pricing is another issue that Gold addressed. “Price sensitivity is intensifying. The customer demands greater price value than ever before. We must all challenge ourselves on our price structure and eliminate waste and unnecessary spend so we can give the customer as much value as possible. Brands like The Row, Altuzarra, Gucci, have been very smart about their pricing strategy. The intensification of promotions is eroding the perception of our products. The wide distribution of identical merchandise that gets caught up in a vicious cycle of price matching is clearly a recipe for disaster. We encourage the brands to think long-term and take strong control of their channel and assortment strategy. There is so much progress than can be made in this respect.”
The Neiman Marcus Group veteran also called for greater product innovation. “I am always struck that even in the most challenging seasons there are many brands that thrive. We can never forget that product design and innovation rule the day. The most coveted brands like Chanel, Dior, Cuccinelli, Saint Laurent, Gucci, Fendi, Chloé, Moncler, to name a few, are absolutely obsessed with generating newness in their product offering.”
On fashion shows, Gold said, “There is so much talk….It’s not an easy problem to solve. All brands are not created equally. They have very different objectives. In a perfect world, we would think about two kinds of shows. We need to have for certain kinds of brands — the most fashion-forward, artisanal, couture brands — we need to have industry-facing shows, to go back to the old days. These should be small, intimate affairs, that are really all about the buyers, and the long-lead press. It’s all about next season’s offering.
“At the same time, we should have public-facing shows, that’s all about the digital press. Those shows should be driving the current season’s trends and products driving the stores — trends of the season being reinforced by these big splashy public fashion events.
“The old-fashioned approach is simply creating mass customer confusion.”
Gold said that for its 109-year history, Neiman Marcus has been “reframing” fashion retail, that tools used to manage client relationships “have evolved as have the experiences in our stores,” and that roughly four years ago, the company started rebuilding its foundation to manage inventory and gain customer insights. “We needed to rethink our systems and our organizational structure. We have been tackling everything from our e-commerce platform to enterprise content management, warehouse systems, merchandise systems and master customer data management.”
NMG recently went live with its common merchandising system, called NMG One, which has experienced some issues with vendors but should reap much reward down the road. “It’s been a huge transformation,” Gold said. “Our channels, our brands are now on one platform. We will have a common product hierarchy, common product attributes, common product reporting,” and the “master” data that emerges will drive “better merchandise insight, better inventory management and better customer service,” he said.
“As we get smarter and smarter through our analytics, we can leverage customer information to improve product personalization and marketing personalization through the web and our sales associates. The days of organizing our teams by channel are over. We restructured our executive leadership, merchandising teams, marketing teams and the operating teams. Neiman Marcus stores, Neiman Marcus web are now Neiman Marcus brand.”
With NMG One, “we can better leverage inventory and improve order fulfillment.” When “master” customer data is added, “we are able to combine merchant instincts with technology-driven insight.”
Gold also stressed the importance of personalizing the communications with customers, including e-mails, marketing, product recommendations, and that Neiman’s rebuilding of its foundation enriches the effort. “Whether it’s the homepage, e-mails, search and browse, product recommendations, display ads, targeted offers — they all need to speak to the individual customers,” Gold stressed. “Our sales associates will play a central role. Personalization is at its best when combined with the human touch.”
“There are times when shopping on the web is absolutely ideal. When done right, no shopping experience is better than a great department store. It’s about the people in the store. I’ve been in stores that are brand new that are missing the human touch, the right associates that bring warmth and fun. Then we go to other stores that are a little torn and tattered, but there are great associates, filled with life and energy. They make you feel special when you come to the door. You can never forget the importance of the people in the stores.
“For the 25 years I have been at Neiman Marcus, the single hardest thing we do is staffing the store with great people. We have 4,000 and it is a tough job. If you are having a bad day and you have an office job, you can close your door and clear your head. When you are a sales associate or manager on the floor, you are on stage all day long.”