Neiman Marcus unveils 'digital first' strategy
Neiman Marcus on Tuesday unveiled a new strategy it’s calling "Digital First" to further its position in the luxury retail space "by anticipating customers' evolving behaviors and engaging them more deeply to drive traffic online and in stores," according to a company press release.
The company also reported total fourth quarter revenues of $1.12 billion, reflecting a 0.5% decline in same-store revenues from the year-ago quarter. That's a net loss in the quarter of $366.3 million, compared to its $407.3 million loss the prior year. Sales are improving in apparel, handbags and shoes, especially sneakers, Karen Katz said in a conference call Tuesday. E-commerce sales were $363 million in the period, with same-store digital sales rising 9.1%.
The department store’s much delayed inventory management system is finally operational, after taking longer to implement than expected, and is already helping make merchandising more disciplined, Katz said.
Neiman Marcus managed to narrow its losses, with certain categories gaining traction, but the results reflect the retailer’s 10th straight quarter of declines. The retailer's strengths, which were especially evident at its Bergdorf Goodman unit, continued into the first quarter, executives said, despite store closures during the hurricanes. The company closed its Houston store and two off-price Last Call stores for a week due to Hurricane Harvey, and seven Neiman Marcus stores and six Last Call stores for an average five days in Florida during Hurricane Irma, Katz said.
"Our business is improving despite … headwinds in the retail sector," Katz told analysts in a conference call.
The retailer continues to trim its off-price portfolio — one of the best performing areas of retail — and will shutter another 10 stores to present "a more focused Last Call footprint and a more compelling experience in the off-price category," Katz told analysts. She confirmed that the retailer has scaled back its presence at the Hudson Yards development on the West Side of Manhattan by 10% of what the company had originally projected.
The retailer's scaling down of its off-price operations may reflect a move to underpin its reputation as a luxury department store, and its digital strategy could help that a lot, according to Chris Paradysz, CEO of PMX Agency.
"In today’s luxury market, those who are thriving are those that are connecting the social and online experience with the lifestyle experience of the brand," Paradysz told Retail Dive in an email. "Digital is really an accelerator for luxury, but sometimes the ability to shift to digital has been a bit more stifled in this industry than others."
Higher end retailers are often reluctant to risk the close relationship they’ve been able to establish with customers in their luxe physical spaces, he said. "It comes down to the fear of losing the cachet," he said. "But when a brand carries over the intimate relationship, and the emotion over to the digital world, there’s a tremendous opportunity. It’s a game changer, and it’s been a game changer for brands who are doing it well."
It remains to be seen whether Neiman Marcus can pull that off. But Katz promised that the digital luxury services the company is working on, including style services, will involve highly personalized interactions on a variety of channels, including text and email, based on personal preferences, past purchases and search data. The company is also developing improvements to its website and Katz told analysts that their renewed commitment to differentiated merchandising will be obvious through the retailer’s digital interactions.
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