Short Answer

The Neiman Marcus Group

Table of Contents

Introduction

Strategic Service Vision

Background Information

Target Market: Who Shops at Neiman Marcus

Service Concept: What Do Customers Want?

Operating Strategy: What Activities are Involved?

Service Delivery System: What is the Neiman Marcus Way?

Introduction

The Neiman Marcus Group, the umbrella company for Neiman Marcus, Bergdorf Goodman, and Horchow, was established in 1987. Over the past two decades, the company has grown to become one of the top high-end retailers in the United States and is part of a multi-billion dollar industry. It has 37 retail locations and 16 Last Call (clearance merchandise) facilities across the United States. The company has established itself so well within the luxury market that sales have continued to grow every year since incorporation. As stated in the company’s 2004 Annual Report, total revenues increased by 14% in a year’s time, totaling to $3.55 billion.

The company is comprised of two divisions: the Specialty Retail Stores Division and the Direct Marketing Division. The organization of the company allows it to place attention and focus on the right activities and continue to develop strategies and processes for maintaining brand recognition and brand loyalty. The Specialty Retail Stores Division includes The Neiman Marcus Group’s retail facilities across the country. The Direct Marketing Division handles all activities related to the company’s print catalog and online offerings (Neiman Marcus Company Website). Together, both divisions build on the strength of the company.

The Neiman Marcus Group serves as a trendsetting retailer that delivers high-end goods to its customers. The company’s merchandise mix includes apparel, jewelry, accessories, shoes, beauty, home furnishings, and other miscellaneous goods (Hoover’s Electronic Journal). All products are high quality, designed and manufactured by top designers from around the world. The company values luxury and fashion and maintains a commitment to high customer service in all of its endeavors and sales opportunities.

Strategic Service Vision

The Service Vision can be described as a step-by-step process for delivering the best results in any service organization. It allows managers to organize customer wants into an understandable form and be able to draw solutions to meet those wants. There are four aspects of the Service Vision including: (1) Target Market, (2) Service Concept, (3) Operating Strategy, and (4) Service Delivery System. All four elements are geared toward closing a gap between management’s perceptions of customer wants and service procedures. This is an important concept because though customers may have a criterion of desires, often interpreting those desires and formulating processes to better serve them becomes a difficult task [1]

Target Market: Who Shops at Neiman Marcus?

Target Market, the first part of developing the Service Vision, involves understanding who the customer is. Neiman Marcus’ target market can be identified through determining what major markets or publics the organization serves, what market segments fall into each market, and recognizing demographic and psychographic characteristics of each market segment. The consumers of Neiman Marcus goods can be identified by their purchasing patterns. The merchandise categories of the retailer are segmented by sales on the company’s website and are as follows:

This chart shows that most of the company’s sales are generated by women’s apparel and women’s shoes/accessories. Therefore, women are a major target for the company. They are normally fashion savvy and find it important to look professional, trendy, and powerful.

The retailer serves three main target markets among the female segment: celebrities, Upper Class (white collar professionals), and Middle Class consumers. The first target market, celebrities, is frequently in the public eye and therefore needs products that represent prestige and a particular image. These elite individuals often serve as role models or opinion leaders and therefore must be seen looking their best and appearing to be confident. They demand a level of high respect and appreciation in every situation. Upper class customers, who make up majority of the retailer’s market share, are not necessarily in the spotlight as celebrities are. However these professionals live luxurious lifestyles and are accustomed to elegance and sophistication in all elements of their lives. This group requires that everyday goods (apparel and home décor) reflect exquisite taste, an understanding of fashion and trends, and social status. Both types of customers, celebrities and Upper Class, live in well-developed areas within the United States, hold top-level professions, make a considerable income (with a great amount of disposable income), and travel in elite social circles.

The third target market of Neiman Marcus includes individuals belonging to the Middle Class sector. This market segment has sufficient financial capabilities to live a comfortable lifestyle but is careful so as not to “over spend” or exceed financial means. These consumers are more price sensitive. Therefore shopping at high-end retailers, such as Neiman Marcus, is limited. All customer groups, whether celebrities, Upper Class professionals, or Middle Class, can be categorized as being either: (1) customers with a sense of fashion who are looking for one centralized location where they can find the most current trends and information related to the fashion world or (2) customers who may not fully understand what is in style and therefore need guidance in finding a wardrobe and other accessories to fit their polished lifestyle.

Service Concept: What Do Customers Want?

The Service Concept deals with noting the current and evolving needs and wants of the customer base. The Neiman Marcus customer is looking for personal attention, prestige, and a sense of fashion forwardness while shopping. Customers like to feel as though they belong in Neiman Marcus. The store has a rich, tasteful, elegance about it that gives it a radiant culture, welcoming its customers. Customers must be viewed as individuals, and not just as spenders; they must feel appreciated in the Neiman Marcus setting. People enjoy building relationships, connecting with other individuals, and being able to voice their opinions and ask questions. Therefore personal attention and relationship marketing are key factors for Neiman Marcus to continue to focus on.

Also, because the Neiman Marcus customer lives a posh lifestyle, he/she demands that all purchases and/or encounters made mirror this lifestyle. Such customers wear designer apparel and use designer products in their homes. These designer goods come with an expensive price point; however the Neiman Marcus customer recognizes this and is not sensitive to it (for the most part). He/she wants to look and feel glamorous at all times, which is particularly the case for the celebrity and Upper Class customers. For all customers, uniqueness, style, and refinement are reflected in personal buying patterns. These elements of prestige are critical in any customer’s shopping experiences. .

Finally, Neiman Marcus customers either are or want to be trendsetters. They want others to notice their sense of style, elegance, and professionalism. They buy merchandize that is made of the best material and by the most renowned individuals and manufacturers. Many of Neiman Marcus’ customers travel quite frequently, as they have the financial means to do so, and therefore are knowledgeable about what style is in different parts of the world. Europe, for example, is home to many top designers and therefore the newest and most unique designs are launched there first. Customers are aware of the stylish European reputation and want that same style available to them here, in the United States. Neiman Marcus is able to provide its consumers with an unmatchable degree of fashionable selections and knowledge.

Operating Strategy: What Activities are Involved?

The operating strategy consists of a list all of the processes and activities that are part of the Neiman Marcus experience. This includes both front room (where the customer is physically present) and back room (where the customer is not physically present) activities [1]. At Neiman Marcus, where much of the business involves face-to-face contact and therefore direct marketing, there are many activities that are critical to meeting customer needs. Both types of operations (front room and back room) can be explained, visually, using flowcharts (See Appendices A and B).

The flowcharts included identify which activities are related to the customer service concept: personal attention, prestige, and fashion-forwardness. As is seen in the flowcharts, many of the activities relate to one, two, or all three of the outlined service concepts. Activities dealing with two or three of the service concepts must be given more attention. Such activities, from a front room perspective, involve (1) the customer’s time spent browsing about the store, (2) asking for help/conversing with sales personnel, and (3) trying on/testing the merchandise. From a back room perspective, activities that relate to at least two of the service concepts include: (1) the hiring of sales personnel, maintenance workers, and management, (2) product positioning (in the store and as inventory), and (3) event planning (including sales promotions, fashion shows, gatherings, and other events for current and potential customers). All other activities, though important, may not need immediate or consistent improvement and attention in efforts to satisfy customer wants or may not be directly related to satisfying customer wants.

Service Delivery System: What is the Neiman Marcus Way?

Service delivery systems are procedures that an organization creates and implements in order to better serve its customers. At Neiman Marcus, such procedures are carefully designed, communicated, and utilized to provide optimum customer service, enhance employee relations, and build a strong position within the retail industry. Specific processes have been developed to tailor to each of the three service concepts. However, these specific processes can be combined to fall under three important service delivery systems: HR (involving hiring, training, and motivational processes), layout, and quality control (involving decisions related to purchases made from vendors and repair/maintenance).

Dealing with HR and in efforts to increase personal attention, the company has hired approximately three to five personal shoppers for each location across the United States. These personal shoppers are trained and motivated to help customers on a one-to-one basis. They personally schedule appointments with certain customers and build relationships with each of those customers. If a customer visits a particular personal shopper for the first time, the personal shopper will take note of the customer’s tastes. As they converse and the customer begins to try on or test the merchandise, the personal shopper is urged to get to know the customer on a deeper level than just by name. If, for example, a personal shopper notices that a customer has a vivacious personality that transcends to his/her wardrobe, the personal shopper will begin to set aside apparel and other items that are colorful, expressive, and unique – perhaps designs by Roberto Cavalli, a designer who does not shy away from bright, vibrant patterns that scream of energy and passion. Encouraging personal shoppers and other personnel to recognize details about each customer’s wants can be a difficult task.

Employees, before beginning their job responsibility at Neiman Marcus, are required to attend an orientation seminar. At orientation, they are asked to discuss and think about the Neiman Marcus vision, who the retailer serves, and how. Often, this is hard for new employees, as truly understanding a company mission and customer wants stems from interacting with customers and gaining experience in the field – both of which they have not done. Although the orientation process does encourage employees to begin to take note of consumer buying patterns and behaviors, the company has no real method of ensuring that each employee is doing so after being hired. Yes, personal shoppers and other frontline employees are pushed to pinpoint customer wants, however no process has been set up to help guide them or motivate them to be an active part of the Neiman Marcus experience. Sales personnel are paid commission only so they understand that they must sell, sell, sell. However, they need to feel more involved in the overall process. They must learn to focus on building a long-term, loyal customer base. At Neiman Marcus, where the merchandise is very expensive, a short-term customer can cost the company thousands of dollars. Therefore, the company needs to develop some sort of checking and evaluation system to help front line employees better understand specific customer wants and be able to mold their actions toward delivering to those wants. This will increase personal attention and sales per employee dramatically.

As a part of layout and in order to add to the luxurious culture and atmosphere of the store and thus provide the customer with a level of prestige he/she is used to, the company has many different systems in place. For example, a store may re-arrange or close a section off in one of its store’s for an elite customer. If the customer had called the store and told a sales representative he/she were interested in buying five fur coats (which have a very high price point), the store may choose to close off the furs section in order to focus all attention on this customer and be able to cater to his/her needs. Therefore, the retailer is flexible – willing to do anything to satisfy the customer and make him/her feel as though he/she is most important to the company. The large, multi-functional layout at Neiman Marcus allows personnel and management to add to each customer’s shopping experience.

For instance, the store is carefully arranged so that customers can browse with ease, discuss buying options with a sales person, or converse and relax with other customers. The store is decorated with unique sculptures and paintings, casual and formal sitting arrangements, large mirrors, and showcases – all adding to the elegant and prestigious ambiance. During a particular event, the store can be re-arranged or re-designed to fit the theme of the event. For example, last Fall, when the retailer held an exclusive party for elite customers at its King of Prussia location, the store was transformed into a disco. Animal print furniture made the space look classy, yet fun and wild. Colorful lighting and candles had been placed throughout the layout to add to the dramatic atmosphere. Several bars and dance floors had been set up to force guests to mingle and enjoy themselves. Upstairs, the store had been transformed into a Milan runway. The event was designed to raise money for an anti-AIDS organization. It made both customers and employees feel more involved in the cause and have fun at the same time.

In regards to quality control, the third identified service delivery system, it is especially important for the company to make wise purchasing decisions and maintain optimum repair efforts that reflect the high-quality image of the store. In terms of purchasing decisions, Neiman Marcus must continue to buy and sell goods that depict fashion forwardness (knowledge of current and up and coming fashions) as well as a vast selection of top designer merchandise. No secondary or generic brands can be used. The store only affiliates itself with images of high fashion and this must be apparent in all purchasing decisions. The company values quality control in terms of purchasing decisions so much that it frequently evaluates its vendors for efficiency in relation to certain product specifications and how they meet customer demands.

Quality control is also important from a maintenance perspective because if the company cannot repair a good to fit a customer’s want, the customer will begin to go elsewhere for his/her shopping. Maintenance involves tailoring and repair work of the merchandise. Sales personnel are asked to carefully check all inventories for product malfunction or discrepancies. Goods that need repair work must be sent to the appropriate employees and must be taken care of immediately. A record of repair times is kept and evaluated to improve quality control measures.

Concluding Thoughts

The Neiman Marcus Group is dedicated to delivering more than satisfactory results in terms of customer care, trendsetting, and creating sustainable advantages. The company has succeeded in implementing Strategic Service Vision (SSV) and becoming a strong player in the retail industry and has grown to symbolize status, fashion, and specialty service. This company recognizes important activities with respect to the need of the customers and delivers them in a way to differentiate itself from the competition. This company also values its employees and encourages them to become an integral part of its position in the market and in the mind’s of consumers.

References

1. Fitzsimmons, James A. and Mona J. Fitzsimmons. Service Management: Operations,

Strategy, Information Technology. 5th ed. Boston: Mc-Graw Hill, 2006. pp. 38-40,

140-142.

Appendix A: Front Room Operations

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Appendix B: Back Room Operations

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Start

End

Leaving the store

Asking for help and conversing with Sales Associate

Key

Personal Attention

Prestige

Fashion Forward

End

Leaving the store

Purchasing Merchandise

Choosing between options

NO

End

Leaving the store

Need to try on/test merchandise?

Going to a Neiman Marcus Facility

Entering the store

Browsing through store

Need Assistance?

YES

NO

Finding Merchandise

Trying on/Testing Merchandise

Choosing between options

YES

Purchasing Merchandise

YES

Trying on/Testing Merchandise

YES

YES

Purchasing Merchandise

NO

Purchase?

NO

Purchase?

Choosing between options

NO

Purchase?

End

Leaving the store

Start

Key

Personal Attention

Prestige

Fashion Forward

Hiring Personnel

Cleaning and Maintaining Ambiance

Event Planning

Managing Finances

Product Positioning/Inventory

End