Like most traditional retailers (and, well, humans), Neiman Marcus — which also owns Bergdorf Goodman and MyTheresa.com — has had a rough 2016. And 2017 isn't looking much better, at least not yet.
During their earnings conference calls with investors, executives tend to try and spin negative sales results to make them sound hopeful and/or positive, but President and CEO Karen Katz knew she couldn't get away with that BS, beginning the call by saying, "It's hard to cast these results in a positive light; they are very disappointing." In the first quarter of fiscal 2017 — or the three months ending Oct. 29 — total revenue was down 7.4 percent to $1.08 billion. Comparable revenues (meaning sales in stores that have been open at least a year) decreased 8 percent, and the company reported a net loss of $23.5 million compared to a net loss of $10.5 million for the first quarter of fiscal year 2016. Not great!
Instead of attempting to make things seem fine, Katz's strategy for the call was to assert that Neiman Marcus is taking a closer look at how luxury consumers shop in these changing times and making updates to better align with those habits. The company's two most important findings, according to Katz? "Price transparency" and "buy now, wear now."
The problem: Shoppers are using the internet to price compare and will go where the best deal is, with "less regard for loyalty, channel or brand."
The solution: Introducing more exclusive products that shoppers can't find elsewhere.
The problem: Katz actually said, as if it were some sort of revelation rather than common sense, that "customers now are less likely to buy a winter coat in summer or sandals in the dead of winter."
The solution: Of course, it's not entirely Neiman Marcus's fault that it isn't stocking items appropriate for the weather. It has to do with when brands deliver, which Katz says the company is working with vendors to "think differently" about.
In its last earnings report, the retailer encouraged brands to adopt "see now, buy now" strategies, as it feels that overexposed runway collections are also damaging its business.
Another (and more localized) problem has been the proximity of Bergdorf Goodman's Fifth Avenue flagship to Trump Tower. "The traffic and situation around that part of Fifth Avenue has become quite congested," said Katz. "We are working through the situation between the NYPD and Secret Service to make sure the customer has easy access to get into Bergdorf Goodman."
Neiman Marcus is also trying hard to understand how to target the "affluent millennial" customer, as well as those millennials that will become affluent in the next five to 10 years — hence its new partnership with Rent the Runway, a company that serves that demographic daily. Rent the Runway has opened a large shop-in-shop inside Neiman Marcus's San Francisco flagship with plans to open more throughout the country in 2017. In another move to attract a younger clientele, Bergdorf Goodman opened an outpost of New York-based streetwear retailer Kith inside of its men's store earlier this year.
Clearly, Neiman Marcus is realizing it can't rest on its laurels as a 110-year-old luxury institution any longer. Ladies who lunch alone aren't going to bring the retailer back to growth.