FORBES: Neiman Marcus Needs To Court The Millennial And Gen Z Customer. Can It Succeed?

FORBES | ROXANNE ROBINSON

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Neiman Marcus filed for Chapter 11 bankruptcy protection last week, and a lot of the blame was (rightly) put on the upscale retailer’s massive debt load though the Coronavirus was cited as the cause as well. But, another issue must be raised: Neiman Marcus long struggled to attract millennial and Gen Z consumers.

Courting these two groups is key to any longstanding retailer’s existence. So how exactly did the Dallas-based retailer—more synonymous with lifestyle excess than today’s “woke” generation—fall short?

Beth Goldstein, an industry analyst at the NPD Group, says Neiman Marcus isn’t alone. “Most department stores today have this challenge, especially at the high-end. Gen Z and Millennials are driven to specialty retailers and direct-to-consumer channels, both in-store and online,” she says, adding, “New brands born online offer great stories about function, sustainability, and convenience which captured their attention.” Goldstein notes that status symbols have changed. This group values sneaker culture, tech gadgets, wellness, travel, and experiences along with “the subsequent activity on social media.” 

Robert Burke, of retail consulting group Robert Burke Associates, agrees, but notes that many of Neiman Marcus’s competitors—Saks Fifth Avenue, Nordstrom’s, and even sister store Bergdorf Goodman—have been more embracive of the new mindset. “Start with social media, which is key to this generation. Nordstrom has 3.3 million Instagram followers; Saks has 1.7 million, and Neiman Marcus 1.5 million,” Burke says. Bergdorf Goodman, which only has two New York stores, also beats the nationwide retailer with 1.8 million followers.

Burke said, “Barney’s kept everyone else on their toes when it came to cool and fun, but Bergdorf is shaking things up, too,” citing recent collaborations with Kith as “unexpected,” as well as the recent Rihanna and Bergdorf Goodman Fenty party. “Nordstrom is approachable and non-intimidating, and Saks revamped its’ flagship with a strong ground floor and innovative beauty department,” he adds. (Saks’ upgrades include FaceGym and a New York outpost of  L’Avenue.) 

One can surmise that the loyal Neiman Marcus customer would love a spot like L’Avenue, with it’s tony Parisian bistro mood. The longstanding Neiman’s in-st0re shopper tends to be the stay-at-home mom and empty nesters in the 55+ age category, anecdotally speaking. Their loyalty paid off with the points practice, instilled during the Stanley Marcus/Burt Tansky-era, that helped big spenders score prizes such as a set of Tumi luggage or an Hermès scarf.

They revelled in the personal services such as a sales associate holding coveted newly arrived merchandise for them off the floor, a glass of wine upon arrival and a phone call telling them what had just arrived, though these practices began to wane after the millennium.

Store events can help create the buzz Neiman’s needs right now, but as Burke pointed out, “When you have that much debt, it’s hard to focus on newness and to make those changes. To my knowledge, Geoffroy (van Raemdonck, NMG CEO) was doing that until the pandemic stalled the progress.”

Burke also feels that while the same could be said of Seattle-based Nordstrom to attract the die-hard New York designer-level fashion employee, the Neiman Marcus group had a more significant challenge headquartered in Dallas, making it difficult to often attract the same level of talent as New York.

NEW YORK, NEW YORK - APRIL 22: A view of Neiman Marcus at The Shops at the Hudson Yards during the ... [+]

Some industry voices felt the retailer’s first New York flagship in Hudson Yards failed to deliver that “wow factor.” Marco D’Angelo, Founder and Chief Strategist of Platform PR (and a millennial), said, “I think they gambled on their latest openings by putting money in brick and mortar for a mall fashion experience.” He suggests digital activations, exclusive offerings, and a marketing initiative focus instead.

Despite its strong DNA, Neiman Marcus needs to expand outside its comfort zone to embrace newness and a creative approach by offering luxury at all price points, according to Burke. “Take the new Saint Laurent store on Rue St. Honoré in Paris. They sell yoga mats, books, Bic lighters, too; it’s buzzy and fun.” 

D’Angelo agrees: “Multi-brand retailers such as The Webster, Dover Street Market, and Net-A-Porter are savvier at creating a strong point of view. Neiman Marcus fell behind even though they were one of the best.” He agrees that “old school” competitors outpaced the retailer, but “digital competitors like SSENSE and Violet Grey is whom they ought to be looking at right now.”

Plus, post-pandemic luxury brands will focus even more on DTC sales, a point Goldstein and Burke aligned on, making even fiercer competition.

One aspect ripe for updating is the payment process. “This generation needs the process to be seamless,” said Burke.

D’Angelo noted services like Klarna or split payments. “Amiri is a good example of this; they can’t afford a $700 item at once, but in four payments, they can do it. They want the best, and they want it now,” he said.

Neiman Marcus also seems to be out of touch with sustainability and transparency with almost zero messaging around it. “This customer is getting stronger and more powerful; you need to adapt to be creative to capture them,” says D’Angelo.

In an interview with WWD, Neiman Marcus Group CEO Geoffroy van Raemdonck detailed the ambitious plan to emerge from the bankruptcy proceedings by fall and a unique “debt-for-equity swap” for its creditors, thus effectively sharing ownership. Those creditors are on board for the change van Raemdonck promised, which include new types of services and products that shift its department store definition into a “luxury customer platform,” according to the article. Forbes reached out to Neiman Marcus and several debtors-in-possession for this article but thus far they have declined to comment.

Neiman Marcus realizes it can’t rely on its pedigree moving forward. Merchandise alone won’t cut it either. For instance, while it sold Off-White, but it didn’t offer an Off-White experience. Hopefully, the plans van Raemdonck has in mind remedy this. No one wants to see another iconic American retail enterprise vanish for good.