Nearly a year after emerging from Chapter 11 bankruptcy, Neiman Marcus is reemerging with a new marketing campaign meant to reintroduce the brand to the world and chart a path forward for the beleaguered department store.
Though it remains to be seen whether the company’s “Re-Introduce Yourself” campaign, announced earlier this week, will bring shoppers back to Neiman, Jared Blank, chief marketing officer at enterprise eCommerce platform VTEX, said he’s bullish on the brand’s prospects.
“I think Neiman is actually doing the right thing by sort of retrenching, figuring out what’s core to our business, how we build that out and how we layer digital on top of it,” he said.
Blank, who previously worked with Tommy Hilfiger as well as Bluecore, Doodle and Deloitte, told PYMNTS that Neiman Marcus’ primary problem going into bankruptcy was the amount of debt it had taken on, which prevented the brand from investing in its infrastructure as the world shifted to eCommerce.
“Once COVID hit, there was basically nothing they could do but restructure,” Blank said. “But the good news is a lot of that debt got off their books, which allowed them to rethink their business.” Neiman Marcus is now more focused on its core business, he said, and is rethinking what luxury means post-pandemic.
Related news: Neiman Marcus Emerges From Chapter 11
Neiman Marcus filed for bankruptcy in May of 2020, blaming the pandemic for placing “inexorable pressure” on its business. After emerging from bankruptcy protection in September, the retailer has spent the past year scaling back its brick-and-mortar operations in order to focus more on digital sales. This shift began prior to the pandemic and the company’s bankruptcy, but in the past nine months, Neiman has committed to investing $85 million in its supply chain and purchased merchandising-as-a-service startup Stylyze for an undisclosed amount.
Read more: Neiman Marcus Group Plans To Buy Stylyze As Part Of Digital Push
Blank said Neiman Marcus is likely slightly behind where they would like to be — competitors Nordstrom and Saks Fifth Avenue, for example, have been adapting while Neiman was restructuring — but the company is starting to free up cash flow to invest in digital, which will be a benefit going forward. Blank noted that malls are also still a boon to Neiman, as the A-level malls where the retailer has set up shop are doing better than the B- and C-level malls that make headlines about the dying mall.
“We’ll see how that plays out over the next six months with what’s going on with COVID, but I think that long term, being in malls in great locations will still be a benefit,” he said.
Changing Dynamics
One potential hurdle, Blank noted, is that while Neiman has been restructuring, luxury brands have moved more toward direct-to-consumer (D2C) sales, further raising the question of where Neiman Marcus fits in.
“Neiman had the role for years and years of being the curator of what luxury is,” Blank said. “And I think there’s a lot of question of whether the world still needs that when luxury brands can now speak directly to their own customers.”
Additionally, there are new players to the luxury game. Amazon, for example, launched its Luxury Stores shortly before Neiman Marcus emerged from bankruptcy, and has quickly begun using the platform as an opportunity to introduce people to new designers.
See: Amazon Upgrades Luxury Marketplace With Glossy Ads Aimed At Designers, Customers
PYMNTS’ research has found that online luxury purchases grew 39 percent worldwide year over year in both April and May of 2020. Online retail sales are anticipated to account for 25 percent of total luxury purchases by 2025, up from 10 percent in 2019.
On the Rebound
Neiman Marcus CEO Geoffroy van Raemdonck told The Wall Street Journal in June that the retailer’s sales have rebounded from last year when COVID-19 forced its stores to close, though they have yet to reach pre-pandemic levels.
Neiman Marcus no longer reports public financial results and declined a request for comment from PYMNTS, though figures seen by the WSJ showed a 44 percent year-over-year increase of in-store sales. However, sales were down almost 7 percent compared to 2019. Sales from eCommerce represent about 35 percent of Neiman Marcus’ total revenue, up from 1.6 percent in 2019.
That follows with projections from consultancy Bain & Co., which said earlier this year that sales of luxury goods could rebound from the effects of the coronavirus as early as this year thanks to shoppers in the U.S. and China. Though a full rebound is likely to hold off until next year, this is still a faster turnaround than Bain predicted in November, when the firm said demand for luxury goods may not return to a pre-COVID state until 2023.
More details: Luxury Goods Sales Returning to Pre-COVID Levels, Bain Says
The luxury goods sector saw sales drop by 23 percent last year, its biggest decline in history and the first in more than a decade.
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