Let's take a break from personal branding to look at a real tough branding issue that so many companies are facing, in this New World Order.
Founded in 1907, this legendary retailer quickly set the platinum standard for uncompromising quality, style, product presentation, innovation, and customer service ... resulting in unyielding customer loyalty, and a track record of sales and profitability growth unmatched in the retail segment. Perhaps the only other retail brand in the world that carries the same cache' is Harrods in London.
The brand is Neiman Marcus, the retailer that even Nordstrom looks up to. At least until recently.
The folks who oversee the Neiman Marcus brand have the following picture to look at ... sales for the first three quarters are down 21%; and for this period, NM posted an operating loss of $460.8 million compared to operating earnings of $472.6 million in the prior year. That's a swing of $933.4 million, in one year!
Those folks, by the way, are a long way removed from founder Herbert Marcus and his son Stanley, who guided the company into the 1970's. NM is now owned by two private-equity funds ... TPG Capital and Warburg Pincus LLC ... and these folks tend to have short attention spans and desires for quick profits from their investments.
As they looked at this picture, they decided that they needed a new merchandising strategy. As innovative as Neiman Marcus has historically been, they've probably relied on the same basic merchandising strategy for the past 92 years ... so, shifting to a new strategy has to be a very delicate thing, but you take drastic measures when you're on track to lose well over $500 million this year.
The new strategy? According to The Wall Street Journal (6/12/09), Neiman's new merchandising strategy "will strengthen our position in mid-price goods."
Herbert and Stanley are rolling in their graves, while the new owners are repositioning Neiman Marcus to compete with Macy's. Can you imagine what the folks at Kohl's and Target are thinking? They weren't even on the same planet with Neiman Marcus, but now the gap is narrowing.
And, why are sales and profits down so much at NM, while Nordstrom's sales are down 9% and profits are a respectable $81 million? According to NM's CEO, Burt Tansky, "while customers hadn't questioned our prices in the past, we are sensing a shift in our customer's mind-set."
Welcome, Burt, to the New World Order.
So, if you were Neiman Marcus, what would YOU do? Sit tight, and hope that you can convince enough people to spend $79 for True Religion Medium-Wash Jeans for their "Baby Boy" ... or, do you carry merchandise that your customers could find in their local Macy's store?
In the New World Order, every company has to rethink its strategy. And, after all of the thinking is done, then they have to figure out what they should do.
Let us know what YOU think NM should do.
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ReplyDeleteI don't have a clue as to what I'd do. That said, I don't think I'd do what the company is doing. They're discounting their brand equity, lining themselves up to become "just another department store." In this day and age, that doesn't seem like a wise decision.
ReplyDeleteI'd say they should cut operating costs, maybe close locations and reduce store sizes, and then hone in on their core customers and core offerings. There's still plenty of room for niche players in this marketplace.
It'll be interesting to see how this plays out.
As a long time NM customer, I always shopped there because they had something other department stores did not have. It was different, unique, and sometimes more costly, but not always. The service was always excellent. I am a discriminating shopper. Still am. But I do not frequent NM as much anymore as their "stuff" is no longer intriguing and different, not at all practical in a special sense, and the service has deteriorated. The cosmetic department is a shadow of it's former self.
ReplyDeleteThe strategy of let's be like everyone else will fail. Let's give the customer something special. Something they won't find elsewhere. Set a trend. Make shopping fun. Create an environment of purchasing less for more....OK.
It's not about how much you can get for your dollar but WHAT you get for your dollar. Make shopping at NM for IMPORTANT purchases. That show thought and caring for the person or ocassion it is purchased for.
That would bring me back.