Everyone in retail has heard the apocryphal story about how Stanley Marcus came to be known. Stanley greets his customers every morning at the door of Neiman Marcus in Dallas. He knows his clients’ names, knows what they want, and treats them as their VIPs. They repaid his favor to Mr. Stanley and his Neiman Marcus retained their lifelong loyalty.
But then Neiman Marcus was sold to Mr Carter-Hawley Hale. Stanley went into retirement mode and the company grew. It is not that his single-minded service spirit disappeared, but “rich people” took over, and the primary goal became the bottom line of service.
Running a business primarily on a balance sheet is a mistake for any retailer, but it’s the kiss of death for a luxury retailer like Neiman Marcus. That almost happened when Neiman Marcus Group was forced to file for Chapter 11 bankruptcy in early 2020.
After successfully emerging from bankruptcy, CEO Geoffroy van Raemdonck made all the tough business decisions, including closing 22 stores, most painfully its prized NYC Hudson Yards location.
Starting with reducing the footprint of 37 stores and 10,000 employees, he had to rebuild the company and did so by resurrecting Mr. The cornerstone of Stanley’s customer-first philosophy in his “Revolutionary Luxury Experience” strategic plan is the five-point NMG|Way corporate culture transformation.
Van Raemdonck and his team have gone through a challenging two-year journey that is producing what is needed, and from an outsider’s point of view, is really producing extraordinary results. In fiscal 2022, which ended in July, the company reported a gross merchandise value of more than $5 billion and an 11% increase in EBITDA margins from the previous year.
Comparable store sales increased more than 30% compared to the same period last year, with adjusted EBITDA of $495 million. The company claims investments in technology and digital capabilities are key to its integrated luxury retail model that combines in-store, e-commerce and distance selling.
Specific investments include the acquisition of Stylze to drive customers’ omnichannel journeys, and Farfetch Platform Solutions to enhance its Bergdorf Goodman e-commerce platform.
But perhaps the most impactful technology investment for the luxury retailer is its behind-the-scenes proprietary Connect app, which the company’s 3,000-plus salespeople use to interact with customers remotely.
It allows them to share styling advice, product recommendations, personalised look books and close deals. For example, an average of 1.5 million texts and personalized emails are sent to customers each month.
Through Connect, the personal connection between customers and sales associates is amplified, effectively delivering Mr. Stanley’s approach to personal customer service for the 21st century.
Connect tools enable a high level of personalized customer service unmatched by artificial intelligence and bots. It extends personal customer service to more customers and goes beyond the four walls of the store to wherever customers are.
This new way of serving customers in person aligns with a “growth mindset,” one of the five pillars of NMG|Way’s cultural transformation. A growth mindset requires the entire company to adapt to change, embrace change, take on new challenges, look for new opportunities, and do better “always”.
As their typical salesperson has been with the company for nearly a decade, they have embraced this new technology-enhanced approach to customer service.
More than one-third of salespeople generate more than $1 million in customer spend each year. Additionally, customers who interact through multiple channels, such as in-store and through distance selling, spend five times more than customers who shop in just one channel.
new way of working
This enhanced, service-from-anywhere approach also supports another NMG|Way pillar called WOW, which means ‘the way it works’.
The NMG corporate structure is envisioned as a network of connected hubs “serving employees and their needs” so employees can have a work center at home. Its stores and distribution centers serve as hubs, and a new corporate center is under construction in Uptown Dallas, centrally located between downtown Dallas and the flagship NorthPark store.
“Our NMG|WOW philosophy enables our people to work anytime, anywhere for the best results,” said Eric Severson, Executive Vice President, Chief People and Sense of Belonging.
The WOW Center strategy increases job satisfaction, which translates into happier employees, which in turn makes customers happier. Happier customers are loyal. The top 2% of customers earn an average of more than $25,000 per year through more than 25 transactions, or about 40% of total sales.
Loyal customer ‘belonging’ is the third pillar of NMG|Way’s strategy, as are valued employees. This extends to the wider luxury business community. The most coveted luxury brands also want to belong to Neiman Marcus.
Belonging means diversity, fairness and inclusion in the corporate culture, which aligns with the values of traditional luxury brands such as Loewe, Prada, Valentino, Burberry and Balmain, which have provided NMG with exclusive collections over the past year. It has also helped bring more than 200 new brands representing emerging and diverse designers to the NMG family.
The fourth pillar of NMG|Way’s culture is its Environmental, Social and Governance (ESG) program. The company has just released its first ESG report, titled “Our Journey to Impactful Change.”
Through its forward-looking ESG strategy, it aims to drive sustainable products and services, foster a culture of belonging among all groups including employees, business partners, brands and customers, and “love” in its communities and leading for the community.
The report outlines NMG’s 2025 and 2030 goals, including extending the lifespan of more than one million luxury items through recycling services such as patching, replacement, restoration, resale and donation, as well as increasing revenue from sustainable and ethical products. It will help clients make better choices through sustainable editing by Neiman Marcus and Bergdorf Goodman.
At the heart of its ESG goals is to increase inclusion and diversity in an already highly inclusive and diverse culture.
The final pillar of the NMG|Way culture is the values, which are the thread that ties everything together. “NMG is a relationship business,” says CEO van Raemdonck, and relationships are built on shared values.
The values embraced encourage employees to be bold, memorable, trustworthy, wholehearted and to be the best they can be. NMG reinforces these values, the WOW (Way of Work) principle of working smarter, being present, integrating life and work, and feeling empowered.
“What’s driving demand today is something special about service, experience and stories,” shared van Raemdonck. “The competitive advantage in retail is doing whatever it takes to serve the customer.”
The NMG|Way culture is about employees providing a “special” beacon to customers and their work colleagues, the company brand and business partners, and the wider community.
It codifies the NMG corporate culture, making the experience of working for, collaborating and visiting the company as unique as the shopping experience at Neiman Marcus and Bergdorf Goodman.