Sommer Hamilton '04, December 1st, 2005
The Neiman Marcus Group sold to private investors in early October for $100 a share, fetching the largest price ever for any retailer. Sitting pretty at the helm of the Neiman Marcus stores, CEOÂ Karen KatzÂ pointed out in an Oct. 31 visit with Mays marketing graduate students that the luxury store’s careful cultivation of customers and high-impact sales associates are what made it such a valuable buy.
In 2004 the high-end retailer earned $555 per square foot of space in its 35 stores, compared to an average of $200 a foot at competitor Nordstrom’s, making Dallas-based Neiman Marcus a model of efficiency. Sales associates at Neiman receive the most training (200 hours in the first year) of any of the major luxury stores, and turnover from the self-motivated sales workforce is the lowest in the industry, at 35 percent compared to the industry-average 67 percent.
That translates to excellent customer service, the kind in which the target Neiman shopper â€” the high-income, middle-aged woman â€” is served in the dressing room or receives items in the mail from watchful sales associates.
But Katz said it’s the stores’ commitment to appeal to up-and-coming customers that shows the most opportunity for growth. “We want to attract aspirational customers and help them understand why they need to shop at Neiman Marcus,” she said. “We need to capture them as their wealth begins to accumulate.”
Katz is the dapper first-ever woman CEO of Neiman Marcus who was rejected, fresh out of college, in her first application to the retailer’s training program â€” “Success is sweet revenge,” she jokes. After helping initiate the online sales push and overseeing catalog services in Neiman Marcus Direct, she now handles 71 percent of the Neiman Marcus Group as CEO of the stores division.
Showcasing the hottest sellers for the fall, Katz pointed to a market segment the stores hope to wedge into: men’s fashion, as premium velvet jackets for both men and women flew off the shelves. Men are the first to drop fashion from their must-have list when the economy is shaky, but Neiman wants them to find it as essential as any other consumer items.
After all, they’ll need a new jacket to look good next fall. And helping make sure they do is what gets Katz out of bed every morning.
“I’m passionate about merchandising,” she says, with a broad smile. “A great piece of leather gets me going, a great handbag makes me soarâ€¦ selling velvet jackets to men keeps me at it every day.”