Neiman Marcus Case Study The problem is that Neiman Marcus is unsure about how to go about sustaining growth in the short term future. Robert Smith, the President and Co-Chief Operating Officer of Harcourt General and Chief Executive Officer of the Neiman Marcus Group, Inc. , thought that the opening of new Galleries may revitalize the organization. Something needs to be done about Neiman Marcus’ growth, which has remained steady over the last few years. The existing business model in the U. S. has been successful, but it no longer allows for any expansion.
Because Neiman Marcus caters specifically to high value customers, it is difficult to increase sales without dropping down to a lower quality of goods. Burton Tansky, President and Chief Operating Officer of Neiman Marcus Group, has come up with five ways for Neiman Marcus to grow without looking for outside help: 1. Customer by customer – a higher wallet-share can be captured by increasing the share of customer spending 2. Developing new stores from a full-line store model – there are limited opportunities to grow 3. New space within current stores – this is the safest and most likely option because it has already proven successful 4.
Introduce new retail concepts – customer loyalty programs are the key to increasing customer share 5. Acquiring new franchises – expand existing portfolio by diversifying products Previously, Neiman Marcus has focused on the third of these, expanding the existing space within stores. This was extremely successful in Beverly Hills and Houston. However, the COO of Neiman Marcus feels that the Galleries of Neiman Marcus will be the force that causes significant growth in the market. I feel that this strategy will prove to be a success because of the high percentage of baby boomers in the market.
These people are now in their 50’s and 60’s and are is the ideal target market range. The ideal target range for Neiman Marcus is those aged between 45 and 54 and with incomes of over $100,000 because these people make the fastest growing age segment of the U. S. population. The downside for Neiman Marcus’ target segment is that it only represents 3% on the U. S. population. Although, the goal for Neiman is to serve the luxury customer, so only a small percentage of the total population can fit into this category.
In order to sustain market growth, I would advise Neiman Marcus to continue with its InCircle program. The reason why this segment is so important is because they represent more than half of Neiman Marcus’ profits, and thus should be treated with respect and kindness. The rewards system is good to maintain customer loyalty, but more needs to be done to attract new customers. The other customer target groups, namely clearance customers, special occasion customers, and career clothing shoppers, should have efforts made to entice them too.
One such solution to this would be to try to attract these customers into the InCircle customers. This could be done by offering weekly trials of the InCircle program so that these customers could get a taste of what it is like to be an InCircle customer.