Neiman Marcus is taking the next steps to better understand its customers, thanks to AI. The retailer will be investing $500 million into digital and physical, speeding up deliveries and implementing new AI technology.
Neiman Marcus has had a bumpy ride over the last few months, recovering from a Chapter 11 bankruptcy protection in September. As a result of the store closures during the pandemic, the retailer reduced its debt from $5.1 billion to $1.1 billion. According to AP News, the retailer now has $850 million available liquidity, compared to the $132 million it had a year ago.
The retail industry is currently undergoing a luxury fashion reboot, with sales for designers like Chanel going through the roof in a post-pandemic boom. The French retailer is currently forecasting to have its sales increase by double digits compared to 2019.
This can be the same for Neiman Marcus, which is using this increased interest in luxury fashion as part of its strategy refresh. As part of this revival, Neiman Marcus will focus on its luxury and high-end customers. According to van Raemdonck, 40 percent of its shoppers spend at least $10,000 at Neiman Marcus a year.
“The luxury sector is rebounding, and they are focusing on their core, luxury consumer. I’m extremely optimistic about their potential,” explained Gary Wasner, the CEO of Hilldun Corp. Hildun is a fashion financing company that was a creditor for Neiman Marcus during its bankruptcy case.
“Over the past year, we’ve been strengthening the foundation of our business. We knew the rebound was coming, and we’ve been experiencing the return of luxury as it accelerates,” said Geoffroy van Raemdonck, the President and Chief Merchandising Officer at Neiman Marcus Group. “As we generate Ebitda, it can be reinvested in the business.”
Geoffroy van Raemdonck | via CNBC
According to van Raemdonck, e-commerce sales now represent 35 percent of total revenue for the retailer, up 1.6 percent from 2019. Furthermore, the AOV has increased by more than 80 percent in the recent quarter, compared to the year prior.
The first steps in this revival include investing $100 million in renovating its entire chain network. The retailer has plans to include experiences and technology in its stores – it currently has 37 locations in the US and two Bergdorf Goodman stores.
Another major investment that Neiman Marcus is implementing as part of its new strategy is the acquisition of Stylyze, a machine learning SaaS platform that recreated the in-store experience for digital platforms, including styling, clienteling and visual merchandising. Stylyze has previously worked with US retailers like Home Depot and Target and has been working with Neiman Marcus since 2018. While no details on the acquisition have been made public, the founders of Stylyze would likely remain in the company.
Stylyze uses machine learning and AI technology to recommend products based on past purchases and browsing history. With its previous experience using the platform, van Raemdonck said it developed a strong conversion of online browsers to buyers and has kept shoppers coming back. As Christina Boni, the Senior VP of Moody’s Investment, said, and investment into digital is just as essential as the investment into stores in this climate. “If you’re not able to make those investments, you will fall behind. To the extent they were able to reduce leverage that will help them compete more effectively,” she said.
Younger shoppers rely heavily on digital to find new products, driving the investment for Neiman Marcus. “The real opportunity is to use the customer who joins you online, migrating them into a real relationship,” explained van Raemdonck. “This could be you buying online, but you share your cart with a digital stylist, and they give you advice, and then you finalise your transaction, or it could be that you engage with a sales associates from remote, and they advise you on what to buy, or ultimately, it could be that you come to the store.”
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