For Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, the luxury retailer is the same as it ever was — and changing.
The luxury, consumer-centric DNA is intact, but how NMG builds relationships with customers and the tools it uses in the operations have been transforming.
“We believe in integrated retail,” said van Raemdonck in a conversation with James Fallon, WWD’s editorial director. “You sell through stores. You sell online. You also sell through a third channel which is remote selling. That’s something that existed in an unstructured way, where sales associates were texting to their customers. But in 2019 we built Connect, which is a clienteling tool, and in March 2020 we rolled it out to 50 associates as a beta test for two weeks and then the pandemic hit and we accelerated that rollout. It got immediate adoption by 3,000 associates, and that really allowed us to keep in touch with our customers during the lockdown. Those tools have done so well for us that we have continued to invest and it’s agile. It releases new features.”
With this third channel, the goal is “to scale the relationship” with customers, said van Raemdonck. It involves utilizing artificial intelligence machine learning, through Stylyze, a Seattle-based, women-founded SaaS platform that Neiman’s acquired last June. “It basically tells the sales associate, ‘these are the customers you should call and these are the looks you should provide,’ and then the sales associate also can say this look isn’t for you and let’s add a look,” van Raemdonck explained.
His point: the “scaling” of relationships with Neiman’s customers, while powered by technology, has a human touch. “It’s still the sales associate reaching out to you, selling to you when you are not in the store or inviting you to come to the store,” said the CEO.
According to van Raemdonck, NMG has had eight million client interactions since launching Connect and sales associates interact with 50 to 100 customers via Connect each week. “It leads to significantly more conversion, and at the end of the day, it’s not so much what you present to them and selling exactly that, it’s about sending them something relevant enough so that they engage with you and there is a dialogue. Sometimes the dialogue is just about fashion. Sometimes it’s about inspiration. Sometimes it’s about selling something specifically.”
With the onset of Connect, NMG changed its compensation structure. “We reward sales associates for every interaction they’ve had so if you engage on Connect, but a transaction doesn’t happen immediately, the sales associate still gets credit,” provided the products discussed are subsequently bought online or in the store, van Raemdonck explained. “As long as we can track that there was an interaction, we give credit to the sales associate which then gives them many more reasons to reach out and constantly be in touch with their customers.” The Connect technology and its machine learning “helps sales associates to know more about customers. It’s not 100 percent accurate but it is predictive. It gives you confidence to invest in great fashion, and where we see patterns of where customers are going. And then we win by going bold — taking big inventory positions. You inspire the customer.
“But at the end of the day I always turn to our buyers and ask, ‘Do you feel it in your gut?’ Ultimately, that is more important than the prediction.”
Outlining other changes at NMG, van Raemdonck said a new app for Neiman Marcus will be launched very soon. “It will really allow people to book services and experiences in the stores. The stores are the theater.”
Asked if Neiman’s would consider spinning off its e-commerce site, as Saks has done, van Raemdonck replied: “Never say no to something, but our focus right now is very much on that integrated retail. If you focus on the customer lifetime value, we don’t want to shortchange the customer by saying we are only serving you in one way.”
At the Bergdorf Goodman division, van Raemdonck said the strategy is to continue to “lead with the brand and leverage the iconic building, iconic location and iconic history of fashion curation. The expression of that brand digitally is where we are going to find the maximum expansion of Bergdorf’s,” so its luxury offering is more widely available. “It’s not about differentiation. It’s about staying true to the unique asset we have.”
Services are growing at Neiman’s. “We have 43 restaurants, which play a key part of the experience in the stores,” the CEO noted. “We also have a minority investment in Fashionphile [a leader in luxury resale] to identify the things you are not wearing and give someone else a chance to wear them and receive a gift card at Bergdorf’s or Neiman Marcus. That to me is is very much of a service, a contribution to the circular economy but also a service helping you refresh your wardrobe.”
NMG in April 2019 acquired its stake in Fashionphile, and is in the process of expanding the program from six to 15 Neiman’s stores where Fashionphile customers can drop off and receive a quote and payment for their items. Customers can also shop the Fashionphile website, and Neiman’s expects customers who drop off the goods to also shop the store.
“It’s part of the culture right now to be much more focused on sustainability,” said van Raemdonck. Younger customers, he observed, “believe a brand is a person, and how the person behaves, how the brand produces, whether it’s sustainable or not sustainable is really important to the younger customer. We believe that’s very high on young peoples’ considerations for purchasing. We have put a team in place for ESG and are making commitments. It’s part of the culture right now to be much more focused on sustainability.”
Regarding how NMG has been performing, van Raemdonck said that pre-pandemic, “the business of Neiman Marcus and Bergdorf Goodman were profitable but we had a huge level of debt. We took the opportunity of the pandemic to make difficult decisions and restructure our balance sheet.” NMG, which emerged from its five-month-long bankruptcy in September 2020, has more than $1 billion of available liquidity, van Raemdonck said. “That positions us really well for the future so I am happy that we used that time to really get fit for the rebound that we have now.
“We see our top brands being up 40 percent to pre-COVID-19 levels and that speaks to the demand for luxury. There is a younger customer who had more disposable income during the pandemic because they couldn’t go out. They couldn’t travel and they are discovering spending in luxury. Once you discover the beauty of a luxury brand, then you continue” with it. “We have seen new customers increase in penetration. It used to be one out six new customers would come back in three months — now it’s one out of five. It’s real luxury customers coming to us. We can attract them and retain them.
“And there is also the men’s customer and that is very much driven by supply,” van Raemdonck said. “The luxury brands have invested in men’s. There are a lot of new designers. They are creating magical things.
“What we haven’t seen yet is the full luxury customer coming back with the same frequency as before. But there is a really good tailwind coming into the holiday. Last holiday, people were not free to do what they wanted. They were not free to travel.” For holiday 2021, “We feel very prepared in having the assortment, in putting holiday out early. Holiday always starts early for us. We recognize like everyone else, there are challenges getting the workforce in warehouses, in shipping and receiving the goods. We are most prepared. We will be very agile. We haven’t felt the impact of that.”
Van Raemdonck cited two big learnings from the pandemic, that the NMG team is resilient and “able to adjust to whatever comes their way” and that Neiman’s customers are loyal. “They continue to engage with us and our associates, and ultimately the brand partners stuck with us and we are partnering with them in a way that is much stronger and more intimate than before,” van Raemdonck said.
“You never wish for adversity but in adversity you find strength, especially as a leader. We are now better positioned than we were 18 months ago.”