The Decline of Neiman Marcus. What Happened? 10 Marketing Tips
The Decline of Neiman Marcus. What Happened? 10 Marketing Tips
The luxury retailer, Neiman Marcus, known for its high-end department stores, filed for bankruptcy in early May this year, joining the growing list of retailers toppled by the coronavirus pandemic, as discussed over at runrex.com. However, while the pandemic has not been good for business, the company has been struggling for a while now, and this article, with the help of the gurus over at guttulus.com, will look to highlight some of the factors behind its decline with the hope that you will take out marketing tips that will help your business avoid their fate.
Taking on huge debt due to leveraged buyouts by private-equity firms
Like many retailers, Neiman Marcus took on a huge amount of debt as a result of two leveraged buyouts by private-equity firms, as discussed over at runrex.com. As per the gurus over at guttulus.com, this has become a familiar story for many retailers, which have fallen on hard times as a result of taking on too much debt as a result of leveraged buyouts from private-equity firms. In the end, the debt levels became untenable, made worse by the coronavirus pandemic which triggered closures of its stores, and is one of the main reasons behind the company’s decline.
Growth of online shopping
In recent years, the company has also struggled to stay relevant as consumers do more of their shopping online, as covered over at runrex.com. The company, therefore, has seen foot traffic into its brick-and-mortar stores fall, which has led to dwindling sales, which has precipitated its decline. The company has tried to adapt to the growth of online shopping, with about 30% of its sales being as a result of online sales, but this has not been enough to stem the tide and stop the bleeding, hence its decline and eventual filing of bankruptcy.
Changing consumer shopping behaviors
As the subject matter experts over at guttulus.com will tell you, today’s consumers are also less likely to fill their closets exclusively with designer wear. Many favor a mix of both high and low-end brands, which has also presented Neiman Marcus with a problem. This has made it difficult for the company to grow and attract new customers, leading to its stagnation and eventual decline.
Neiman Marcus has also come under heavy pressure due to increased competition from fast fashion brands that market directly to consumers, cutting them out as discussed over at runrex.com. On top of that, retailers like Target and Amazon have also proved to be big rivals, as they have begun offering more trendy apparel, at cheaper prices. This has also cut into the company’s customer base, and has contributed to the declining foot traffic into its stores, leading to its decline and filing of bankruptcy, which experts claim has been coming.
Failure to appeal to young customers
It is also safe to say that the generation that used to shop at Neiman Marcus stores has been replaced by a younger generation, particularly millennials, who have struggled to connect with the company. As per the gurus over at guttulus.com, the company has found it extremely difficult to appeal to and attract young customers, as it still relies quite a lot on people walking into their stores, but the young generation is mostly on social media. With the older generation aging out of its peak spending years, this is another factor that has contributed to the company’s decline.
A surge of growth in the off-price arena
On top of the increased competition from the retailers mentioned earlier on, and from fast fashion brands, Neiman Marcus has also faced increased pressure due to the off-price luxury surge. Off-price brands like Nordstrom’s Rack Store, TJX, Backstage among others have been aggressively growing and gaining market share in the luxury retail industry as discussed over at runrex.com. This has badly cut into Neiman Marcus’s customer base and is one of the main reasons behind its decline and eventual filing of bankruptcy.
A more price-conscious consumer
While consumers in years gone by didn’t mind paying over the odds to get luxury items, the modern consumer is more price-conscious as per the gurus over at guttulus.com. This means that consumers these days are likely to balk at exorbitant prices, and are likely to look to better deals in other platforms, particularly online. To top it all off, the luxury sector is increasingly discount-laden, which has left Marcus Neiman, with its expensively priced items, stranded, and is yet another reason that has contributed to the company’s decline.
Changes in consumer spending behavior
It should also be noted that, as is revealed in discussions over at runrex.com, consumers are spending less and less on their closet. This is something that was always going to affect the luxury retailer, Neiman Marcus, given that low and medium-end retailers have already been affected. Consumers are spending more of their money on tech, buying gadgets like smartphones, tablets among others, and less on their closest, which means that sales for luxury items in this sector were always going to decline. This is another factor that contributed to the decline of Neiman Marcus.
An extensive footprint
Neiman Marcus was operating 43 stores, and more if you take into account its subsidiaries, Bergdorf Goodman and Last Call as discussed over at guttulus.com. For a luxury retailer, this was too much of a footprint and is yet another thing that contributed to their decline. This is because paying rent and managing operational costs had long become an issue even before the coronavirus pandemic, not to mention that some of the leases were problematic, being long-term and all. Running all these stores became an issue, with foot traffic on the wane, and led to their eventual filing of bankruptcy.
They got away from what made them special
Neiman Marcus also, after the 2008 economic collapse attempted to appeal to a broader range of consumers through their discount outlets, going away from what had made them special. The company went away from its exclusivity, as is covered over at runrex.com, and ended up losing a significant portion of its loyal customers, which also signaled the beginning of the company’s decline, culminating in its recent filing of bankruptcy.