Some of that money will be spent at its Pinnacle Park facility. The Dallas-based luxury retailer also hired two executives and says it wants to be more collaborative with brands it sells.
By guest author Maria Halkias from Dallas Morning News
Neiman Marcus is beginning to show the “financial flexibility” it gained from a difficult bankruptcy filing last year.
The luxury retailer said on January 27, 2021, that it will spend USD 85 million on systems and fulfilment centres, including an investment in its Pinnacle Park distribution centre in Dallas, to strengthen its online business.
At the same time, the Dallas-based retailer hired two new executives and said it plans to remodel six stores in the next 18 months.
CEO Geoffroy van Raemdonck said the moves accelerate the company’s “transformation reflecting our renewed financial flexibility and desire to invest in areas that are a source of unique competitive advantage and create shareholder value.”
Bob Kupbens, whose background includes Apple, eBay, Delta and ADT, becomes executive vice president and chief product and technology officer. The company said Kupbens will develop new digital products and capabilities that enhance store and online experiences at both Neiman Marcus and Bergdorf Goodman.
He’ll be working with David Goubert, president at Neiman Marcus; Darcy Penick, president of Bergdorf Goodman; and Lana Todorovich, president and chief merchandising officer at Neiman Marcus.
“This is really all about being bold and innovative and looking at the next 100 years very differently,” Todorovich said in an interview. “We’re starting with unique, strong relationships with luxury houses.”
Neiman Marcus’ top customers shop its stores 44 times a year and online 112 times a year and represent 20% of annual sales, she said. That’s a valuable customer base for brands that have a relationship directly with customers, she said.
The other new hire is Paolo Riva, former CEO of Victoria Beckham who was also an executive with Diane von Furstenberg and Tory Burch. He is filling a newly created position of general manager, brand partnerships and merchandising for the Neiman Marcus brand. He’ll report to Todorovich.
Neiman Marcus already has strong relationships with the brands it sells, but those relationships are evolving with more collaborations, Todorovich said. “With Paolo’s leadership, we will ensure Neiman Marcus further enhances the value we provide to our brand partners.”
“Our customers are very loyal and multigenerational,” Todorovich said, adding that new collaborations, sometimes using technology and data, will help Neiman Marcus’ brand partners. “It’s not necessarily the same population. We have a unique group of shoppers.”
Van Raemdonck said the new investments are not a “catch-up” move but a “double-down” on the innovation in place over the last 18 months, such as its Connect software tools used by 4000 sales associates that he said is unmatched in the industry today.
“We can keep up our customer relationships even if they’re not in the store,” he said. “No one else can do that. No one has our sales associates.”
When stores were temporarily closed by the pandemic last year, Neiman Marcus accelerated the rollout of its digital sales tool.
Since March, 2.8 million customer connections resulted in USD 100 million additional remote sales. Historically, online sales represented more than 30 % of total sales and exceeded USD 1.5 billion a year. Neiman Marcus is privately held and doesn’t report quarterly results.
The retailer completed its bankruptcy reorganization last year with 38 full-line stores, five Last Call stores and one of the largest online luxury businesses. It also shed about USD 4 billion in debt with interest payments of almost USD 300 million that wiped out operating profits.
It’s also a smaller company with 9000 employees instead of more than 14000 this time last year, but still larger than most of its luxury retailing competitors.