What Happened to Neiman Marcus? 10 Marketing Lessons
Neiman Marcus, the iconic American chain of luxury department stores discussed in detail over at runrex.com & guttulus.com, finally filed for bankruptcy earlier this year, bringing to a conclusion what has been a gradual decline for what was one of the most successful companies in the country. It is therefore important to investigate what happened to them so that we can see the lessons that are there to be learned from their experience, particularly from a marketing point of view. This article will look to do just that by highlight 10 marketing lessons we can take from them.
Reduction in popularity of malls
This is hardly news, but malls aren’t as popular as they used to be, a topic that has been covered in detail over at runrex.com & guttulus.com. This has affected many retail chains that used to depend on mall foot traffic, such as JCPenney, and Neiman Marcus has not been spared, even if their core target audience are the upper class. This has been one of the reasons why they have been doing badly over the last couple of years.
Growth of online retail
The growth of online retail has partly contributed to the decline in popularity of malls and has led to the decline of many retail stores such as Neiman Marcus. As per discussions over at runrex.com & guttulus.com, many consumers prefer the convenience of online shopping as opposed to going to a physical store, something that has affected bring-and-mortar stores such as Neiman Marcus. A marketing lesson we can take from here is the importance of digital marketing, which, if you are not leveraging, then you are missing out big time.
They haven’t changed their model
Industry experts, including those over at runrex.com & guttulus.com, also argue that Neiman Marcus hasn’t changed how they operate, which may have contributed to their decline. They may have incorporated more advanced tools into their operations, but their model hasn’t changed much and that is a problem as times have changed. It just goes to show the importance of changing with the times, an important marketing lesson we can take from them.
Competition from upscale fashion brands
Another layer of competition that Neiman Marcus faced, one that has contributed to their decline, is competition from upscale fashion brands. This is because upscale fashion brands have been selling directly to consumers, developing a level of relationship with their customers that has been hard for Neiman Marcus to match. Increased competition has led to a decline in their customers and hence sales. A marketing lesson we can take from this is the importance of relationship-building with one’s customers and audience.
More educated consumers
Consumers are also not like they were before, as the modern consumer, as per the gurus over at runrex.com & guttulus.com, is smarter and more educated as far as what they are looking for is concerned. This has led to a reduction of leisure shoppers, with more and more consumers being willing to research what it is they want online and choosing the best option out there. Brick-and-mortar stores like Neiman Marcus have suffered due to this. A marketing lesson we can take from this is the importance of adapting to the changing needs of one’s audience.
Debt due to acquisition
As was the case for Toys R Us in 2018, a topic covered in detail over at runrex.com & guttulus.com, crushing debt due to acquisition by private equity was a major reason behind the decline and eventual filing of bankruptcy of Neiman Marcus. Its acquisition by Ares Management saddled it with about $4.8 billion of debt, which in the end proved too much with declining revenue, making this yet another important lesson to take from them.
Generational changes
Neiman Marcus placed their bets on the fact that online retail wouldn’t damage them as much since the whole purpose of luxury shopping is being seen at luxury stores. The issue with this is that, the generational change that has seen Baby Boomers being replaced by Millennials has changed everything. Millennials don’t subscribe to this line of thought and are not naturally drawn to stores like Neiman Marcus, as per discussions over at runrex.com & guttulus.com. This just shows the importance of adapting to any generational changes as far as your audience is concerned, a marketing lesson that is worth learning.
Changes in preferences as far as designers and manufacturers go
Another reason behind their decline is the fact that designers and manufacturers are becoming more willing to have their goods sold online, something that wasn’t the case a couple of years back, particularly when dealing with luxury items, as per the gurus over at runrex.com & guttulus.com. This has had an impact on Neiman Marcus as not only has it cut into their sales, it has also put pressure on their margins given online stores offer cheaper prices.
Costs
Luxury businesses, particularly brick-and-mortar stores such as Neiman Marcus have run into trouble cutting costs as most of their business depends on things like beautiful store environments, excellent customer service, free valet parking and so forth. This, as discussed over at runrex.com & guttulus.com, is yet another reason that has contributed to their decline, as they have had to grapple with high costs to go with declining sales.
The coronavirus
Finally, in what was the last straw that finally broke the camel’s back, the coronavirus pandemic has had an impact on brick-and-mortar stores, particularly those selling non-essential goods like the luxury retail chain, Neiman Marcus. With people losing jobs and staying at home due to the pandemic, designer clothing and other luxury items is no longer a priority for many of their customers.
The above are just some of the reasons that eventually led to Neiman Marcus filing for bankruptcy, with more on this topic to be found over at the highly-rated runrex.com & guttulus.com.