Neiman Marcus

The Ask:

In 2020, luxury department store Neiman Marcus filed for Ch.11 bankruptcy. Develop a strategic plan for the company to overcome this challenge and avoid the same outcome in the future

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Background:

The
Problem:

They have strong customer loyalty from high-income, recession-resistant shoppers. 81% of sales are from Neiman Marcus loyalty members, who love the portfolio of highly-sought-after classic luxury brands like Chanel and Dior. However, their digital and social presence is limited. They’ve failed to entice younger consumers to their stores, leading to closures across the country- including the two flagship locations of Bergdorf Goodman in New York City. Neiman Marcus filed for Bankruptcy in the summer of 2020 and faces non-existence if they do not update their marketing strategies and find a way to appeal to more of the market.

The
Question:

How does Neiman Marcus maintain the cachet they’ve built around the brand while cutting back on corporate expenses and engaging a new, wider audience than their “legacy elite shoppers”?

What We
Looked At:

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Exclusivity is what Neiman has really driven a lot of their success from. They cater to super high income individuals and offer a diverse range of products that only those individuals can afford. We found through survey that almost 50% of respondents believed their brand image was “posh” or “luxe”.

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Current Shopper:

Women (25-55) with disposable income that value luxury items and experiences.

These women are often avid loyalty program members.

The
Business
Issue:

The business issue is twofold. Corporate wasn’t gathering the right data- they were asking associates to develop insights on current customers. When 80% of sales come from the same 20% of customers, you’re not getting enough information to grow the base- only to tailor it to what current loyalists are saying. We also believe they didn’t develop a bold or cold enough strategy from the data. Not bold enough to change the tide, but not cold enough to stop the ship from sinking either.

BUSINESS
STRATEGY
PART I:

Go DEEP over wide:

Reduce risk by pivoting to experience-driven, showroom-style concept stores that solely sell Neiman Marcus’s highest margin goods: handbags.

Why?

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Handbags were the most purchased/intend on purchasing in the next 12 months item by High Net Worth women, our target market. 83% intend or have purchased a bag within 12 months of the survey. 63% of women surveyed responded that they do purchase luxury goods, and 45% of them specifically love luxury handbags- more than any other category asked about. We also found a Mintel study that noted 54% of women 18-44 will try a bag on in store before purchasing, regardless whether they do so online or in store. They physical experience is extremely important to them- something we noted when developing our recommendation.

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Differentiate Neiman Marcus from other luxury stores by offering the variety of a department store but the focus of single-brand stores by launching a handbags concept shop.