Is Neiman Marcus right to focus on the top two percent of its customers?
Photo: Neiman Marcus

Neiman Marcus’s CEO recently made a statement about the type of customer that the luxury department store operator wants to attract. Some sales staff believe he is putting out the wrong vibe, which might end up hurting the retailer.

Geoffroy van Raemdonck, CEO of Neiman Marcus, said in a Fortune interview earlier this month that the retailer plans to focus on the two percent of its customers that make up 40 percent of its sales, those customers being its wealthiest, the New York Post reported.

“We are no longer about selling everywhere on the price spectrum, from clearance to high-end jewelry,” Mr. van Raemdonck said in the interview. He characterized it as preferable to have regular shoppers spending $27,000 per year vs. single-visit transactions with no guaranteed customer return.

In the wake of the controversial statements, top sales reps at the retailer were “horrified,” according to the Post. An anonymous sales rep told the Post about a customer who spends around $5,000 each year being “personally offended” at Mr. van Raemdonck’s comments. “What about the future millionaires?”, the sales rep asked, alluding to the role of the aspirational luxury shopper in Neiman Marcus’s customer base.

The stated focus on the ultra-wealthy luxury customer seems to be in conflict with Neiman Marcus’s recent strategic moves.

For instance, In September 2021, Neiman Marcus partnered with streetwear publication Hypebeast to create a shoppable virtual showroom featuring exclusive sneakers from 11 luxury footwear brands, according to a press release. The styles were available for purchase on neimanmarcus.com and at 37 select Neiman Marcus brick-and-mortar locations.

Research shows that the earning power of the luxury streetwear customer differs significantly from the high-end luxury customer.

Two surveys covering a total of 40,000 customers and 700 industry workers recently conducted by strategy& (a subsidiary of PwC) in conjunction with Hypebeast found that 70 percent of streetwear customers make $40,000 a year or less. However those same customers were willing to spend on big-ticket purchases in the space. Fifty-six percent said they spent an average of $100 to $300 on a single purchase, and 32 percent of Japanese respondents in particular spent $500 or more on a single purchase.

BrainTrust

“Trying to make a brand exclusive to only a specific customer profile is not a very good growth strategy, in my opinion.”

Gary Sankary

Retail Industry Strategy, Esri


Discussion Questions

DISCUSSION QUESTIONS: What do you see as the value of customers outside of the top two percent for luxury retailers like Neiman Marcus? Will Geoffroy van Raemdonck’s statements alienate customers as some Neiman Marcus salespeople are concerned it will?

Poll

How important are aspirational customers for retailers operating in the luxury segment?

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30 responses to “Is Neiman Marcus right to focus on the top two percent of its customers?”

  1. Mark Ryski Avatar
    Mark Ryski

    It’s perfectly reasonable for a CEO to define the market he/she believes they should focus on, but whether this is the right part of the market to focus on or not is up for debate. The concerns expressed by staff and customers are valid — narrowing the focus too much will certainly alienate some customers. But given this new positioning, that’s kind of the point. Neiman Marcus will need to proceed with caution on this move. Ultimately, the success or failure of this strategy will be reflected in their financial results, and this approach will likely cause things to look worse, not better in the short-term.

  2. Dr. Stephen Needel Avatar
    Dr. Stephen Needel

    I’m not sure his comments were as well-worded as he might have liked (in hindsight) but setting a higher-end target market is not an unreasonable strategy.

  3. Richard Hernandez Avatar
    Richard Hernandez

    I believe if you have done the analysis and research to reach this decision, then you go with it. I believe Neiman Marcus will need to have some latitude to make any adjustments necessary.

  4. Ken Morris Avatar
    Ken Morris

    The reality of the department store business is actually that most retailers follow the 80/20 rule: 20 percent of the customers make up 80 percent of the sales. Neiman Marcus has always catered to their top net worth customers, and this is just a refinement of what has made them successful. Every marketer does segmentation, but behind the scenes. With the data available to retailers these days, there is no reason to hyper-focus on annual spending alone. The top 2 percent is not a static group.

    Bad customer moments can alienate this top tier, so it is essential to laser focus your efforts to keep them happy. Remember Julia Roberts as Vivian in PRETTY WOMAN, returning to confront the “saleswoman” who had kicked her out of the uppity shop the day before? “Big mistake! Big! HUGE!”

  5. Jeff Sward Avatar
    Jeff Sward

    Sounds like the real growth opportunity lies in exploring the merchandising tweaks necessary to better address the next 4 percent to 8 percent of their customers. Still only 6 percent to 10 percent of their total. And yes, the comments sounded arrogant and snobbish. The point could have been made much more gracefully.

  6. Bob Amster Avatar
    Bob Amster

    There are aspirational customers that one day may be in the top 2 percent. They should not be downplayed. Next year’s 2 percent have to come from somewhere. The children of today’s top 2 percent could easily become the top 2 percent of tomorrow. They should not be ignored. Is this too simple?

  7. Liza Amlani Avatar
    Liza Amlani

    Neiman Marcus should be focused on where and how their future customers will spend, not just the wealthiest 2 percent. What happens when the 2 percent stop shopping and don’t exist anymore? The reality is that the 2 percent are aging and won’t live forever. Households have evolved and they can’t count on the next generation who live in this 2 percent to shop Neiman Marcus as tastes are changing. New money and Gen Z have spending power. The focus should be on strategies to capture new market share and finding reasons why more customers aren’t shopping Neiman Marcus.

  8. Gary Sankary Avatar
    Gary Sankary

    “Elite” and “aspirational” have different connotations.

    From a marketing perspective, so do “exclusive” and “restricted.” One will give you room to grow your customer base, and one will turn people off. Trying to make a brand exclusive to only a specific customer profile is not a very good growth strategy, in my opinion.

  9. Peter Charness Avatar
    Peter Charness

    Retailers need to have a persona to focus on in designing their assortments. The top 2 percent is a perfectly good starting point. Aspirational 2 percenters may end up as buyers as well, and at sale time — well who knows who will be in the store buying the discounts. But having a firm vision of who to sell to is a great focus for assortment planning.

  10. Gene Detroyer Avatar
    Gene Detroyer

    I imagine van Raemdonck was speaking to his team rather than the customer. There is a message that should resonate with every level of Neiman Marcus. Employees, not just the associates on the floor, should ask themselves if their actions reflect service to what a wealthy customer should expect. He did not say to ignore everyone else.

    Decades ago, I went naively went into Bonwit Teller. I was treated in a very arrogant way. They assessed correctly that I could not afford anything in the store. Today I can afford almost everything they sell. I have never been back and likely won’t be.

    1. Craig Sundstrom Avatar
      Craig Sundstrom

      They don’t sell anything any more as they went out of business. Oh … I see what you did there!

  11. Ricardo Belmar Avatar
    Ricardo Belmar

    While it’s reasonable to have a strategy that focuses on the customers with the largest lifetime value, you still need a strategy to grow the next best customers or you’re limiting your future growth. Mr Raemdonck’s words could have been better chosen so as not to alienate that next tier customer. After all, that’s where much of Neiman Marcus’s future growth will come from — those customers that are already spending with them, but might spend more if appropriately enticed. A successful growth strategy needs both types of customers!

  12. Carol Spieckerman Avatar
    Carol Spieckerman

    Putting out a vibe is one subjective take, the reality of valuable customers aging out of the brand should be a wake-up call. Neiman Marcus has no doubt been aware of this problem for years (hence the brand alliances and other moves) yet Mr. van Raemdonck’s comments come off as regressive and elitist. Many of Neiman Marcus’s customers may never hear the statements, yet associates are all too aware. For commission-based salespeople, the message could be a real buzz kill.

  13. Lee Peterson Avatar
    Lee Peterson

    Interesting strategy, and probably taken out of context, but if he’s serious about the top 2 percent — good luck with that. Especially in a dying business model (department stores). I can see top 20 percent or even 15 percent, but top 2 percent? And what do the “bottom 20 percent” think? “We’re not for you.”? I’ll reserve judgement until I hear more but boy, as it stands, see you later.

    1. Casey Golden Avatar
      Casey Golden

      Typically we’d look at the top 10 percent to 15 percent of top spenders at a luxury brand. If they are focusing on the top 2 percent and see an annual spend break at $27,000, they’ve lost their top and need to focus on building it back to keep the aspirational customer coming back. Otherwise, they’ll be closer to Macy’s and not a Neiman Marcus anymore.

    2. Gary Sankary Avatar
      Gary Sankary

      I think Neiman Marcus’s bigger problem is the 2% they’re focused on, in their business anyway, skew pretty old. I could be wrong … but just from my observation, they have a demographic time bomb on their hands. Like many others in their segment.

  14. David Spear Avatar
    David Spear

    I can see how some associates and consumers might view Mr. van Raemdonck’s comments as snobbish and rude. Hopefully, this won’t trigger a shopper backlash at Neiman Marcus. Truth is, most companies run shopper segmentations and come away with targeting and treating the top 10 percent, 15 percent, 20 percent of shoppers a bit differently than the bottom 10 percent. This is simply the reality of smart marketing and how retailers can make the most of their analysis. If he wanted to stick to only the top 2 percent, then I’d tell him: “good luck, but don’t hold your breath.”

  15. Bob Phibbs Avatar
    Bob Phibbs

    The hubris of this comment is shocking. Everyone wants the top 2 percent, and you get them not by announcing it but by customer service. This is the same guy who famously showed off his mansion while sending out pink slips. Imagine a Neiman Marcus salesperson who caters to those who just spend $10,000 a year. #tonedeaf

  16. Cathy Hotka Avatar
    Cathy Hotka

    I know someone who used to work for a glamorous luxury brand, who confirmed that the brand’s core audience was about 3,000 people. Controversial as it sounds, Mr. van Raemdonck is probably correct to focus on that elite group. How many of us need a new Ralph Lauren Purple Label tuxedo or $4,000 dress?

  17. Patricia Vekich Waldron Avatar
    Patricia Vekich Waldron

    Making sure you have the merchandise and services needed to satisfy your most valuable core customers is essential. Announcing to the world that 98 percent of your customers are not important is foolish.

  18. Shep Hyken Avatar
    Shep Hyken

    I’m a little concerned that the first time customer, who could potentially be a 2 percenter, might not get the experience they deserve. To the point of the anonymous salesperson, a $5,000/year spend is good.

    I shopped at a high-end men’s clothing retailer whose owner realized his store didn’t need to be in a mall to serve its customers. His store was a destination for most customers. I came in twice a year when there was a sale. I always bought a sport jacket or suit. He said, “If all my customers bought a suit or jacket every sale, I’d be a happy man.” He had many customers that would drop $25,000 or more on a visit. The point is he always made me feel appreciated, regardless of how much or little I spent.

    If Neiman Marcus doesn’t want to appeal to the broader population, they don’t need to be in a mall. They don’t need to have clearance or big sales. That’s their choice. And regardless of how much someone spends, if they only buy one item a year, they should still be appreciated. (I’m sure they will be!)

  19. Casey Golden Avatar
    Casey Golden

    Luxury brands and retailers are destinations that come with high customer expectations. Neiman Marcus has lost its luster and diluted its brand experience by not focusing on excellence. If the top customers can not be served properly, then no one is receiving a premium experience.

    I’ve had many customers that spent more than $100,000 a year, $27,000 is a pretty reasonable entry point. Aspirational customers may not be able to afford the most expensive items, but they can still be valuable repeat customers and brand advocates. They may return for special occasions, clear out sale items, take advantage of loyalty programs to stabilize revenue, and be more likely to engage on social and write reviews.

    I’d challenge top sales reps at the retailer being “horrified,” they are commission based and typically working their book and rarely have the bandwidth to build their book by developing a $5,000 customer into a $27,000 annual spend. By focusing on the top, technology can make the greatest impact scaling talent, shopping services and assortment plans down market to develop their client base over time.

  20. John Hyman Avatar
    John Hyman

    Mr. van Raemdonck might be careful what he wishes for, as ridiculously wealthy patrons are highly difficult to satisfy, extremely fickle in their product choices, and not loyal. As many other panelists have observed, there is a risk of offending the merely affluent clientele who have many other options where to spend their disposable income.

  21. DeAnn Campbell Avatar
    DeAnn Campbell

    I’m likely in the minority, but I do think this is the right strategy. There are too many retailers (Nordstrom, Saks, Macy’s, Bloomingdales, Von Maur…) firmly rooted in the large middle, but very little in the way of competition at the top. Rather than spending enormous resources going head-to-head with Nordstrom, why not hyper-focus on filling the white space between individual luxury boutiques and a more convenient one-stop department store experience. I would even go bigger by offering a high-end concierge service for an annual fee to consolidate not only product purchases, but help with services such as dry cleaning, repairs, style consultants, rentals for big events, etc.

  22. Michael Blackburn Avatar
    Michael Blackburn

    I’m willing to bet it doesn’t have much of an impact on today’s customer — the full 100% think they are the 2 percent.

  23. Craig Sundstrom Avatar
    Craig Sundstrom

    I thought “How in the He** did a simple, common sense statement in a magazine interview become “controversial”? Then I noticed the NY Post mention … that beacon of light — “Headless Body in Topless Bar” — of journalism (though to be fair, I believe the business coverage is better than the rest of the paper). Translation: much ado….

    As far as the basic question: Mr. van R said focus, and that’s perfectly logical … it’s not like they’re asking for a 1040 to gain admission to the store. It might make sense to have (somewhat) lower price points in lines aimed at younger customers — the idea being that they will “grow into it” as they become older, and wealthier — but how much is a business decision. I think the only mistake here was TMI: it used to be “never give an amount and a time,” perhaps that should just be “never say anything specific.”

  24. Ahsen Avatar
    Ahsen

    To focus on the two percent of its customers that make up 40 percent of its sales, must be a carefully curated strategy from retailer Neiman Marcus. Retail and online data can be utilized to create hyper focused customer segmentations, define the specific audiences that matter and surface unique experiences to each of those groups. What Neiman Marcus would be missing will be new millionaires with a taste for luxury and an engaged Generation Z. There is a rapid rise in the number of rich people in the world and approximately half of them come from the United States.

  25. Brad Halverson Avatar
    Brad Halverson

    I’m in full support of the idea that a luxury brand should spend most of its messaging, product mix and marketing dollar toward the core customer base. But 2% gives you little to no room to attract the next profitable 15% along on the journey.

    Retailers require more layers of customers, than say ultra-exclusive brand Rolls-Royce. If they are seeing too many single-visit transactions, then maybe that’s saying something about the experience, the customer not connecting, the mix of products, service — or all the above.

  26. george@centersdynamic.com Avatar
    george@centersdynamic.com

    We should learn from history. For those older, you may recall that in 1983, Halston signed a $1 billion, six-year deal with JCPenney (and reported it himself, on live television), which was unheard of at the time. Halston’s vision was to “dress every woman in America,” no matter where they shopped; his line Halston III, available exclusively at JCPenney, allowed him to do just that. This move was met with disdain by the high-fashion world, and the tide began to turn on the then-golden Halston. Bergdorf Goodman, the high-end department store that had maintained a two decade-long creative partnership with Halston, immediately dropped his line upon hearing the news. Despite the widening wealth gap in this country, I support the CEO’s remarks.

  27. Anil Patel Avatar
    Anil Patel

    The luxury retailer is aiming at centralizing their special services and offerings for loyal customers who also heavily spend. In my opinion, narrowing down the focus on the top 2% of customers does not conclude that others will simply be excluded from Neiman Marcus’s offerings.

    A business’s aim should be to make profits. If a certain number of customers generate the most revenue for the business, then the retailers would be willing to go the “extra mile” to satisfy these customers. Therefore, focusing is definitely a good strategy to get more returns from existing customers.

30 Comments
oldest
newest
Mark Ryski
Mark Ryski
5 months ago

It’s perfectly reasonable for a CEO to define the market he/she believes they should focus on, but whether this is the right part of the market to focus on or not is up for debate. The concerns expressed by staff and customers are valid — narrowing the focus too much will certainly alienate some customers. But given this new positioning, that’s kind of the point. Neiman Marcus will need to proceed with caution on this move. Ultimately, the success or failure of this strategy will be reflected in their financial results, and this approach will likely cause things to look worse, not better in the short-term.

Dr. Stephen Needel
Dr. Stephen Needel
5 months ago

I’m not sure his comments were as well-worded as he might have liked (in hindsight) but setting a higher-end target market is not an unreasonable strategy.

Richard Hernandez
Richard Hernandez
5 months ago

I believe if you have done the analysis and research to reach this decision, then you go with it. I believe Neiman Marcus will need to have some latitude to make any adjustments necessary.

Ken Morris
Ken Morris
5 months ago

The reality of the department store business is actually that most retailers follow the 80/20 rule: 20 percent of the customers make up 80 percent of the sales. Neiman Marcus has always catered to their top net worth customers, and this is just a refinement of what has made them successful. Every marketer does segmentation, but behind the scenes. With the data available to retailers these days, there is no reason to hyper-focus on annual spending alone. The top 2 percent is not a static group.

Bad customer moments can alienate this top tier, so it is essential to laser focus your efforts to keep them happy. Remember Julia Roberts as Vivian in PRETTY WOMAN, returning to confront the “saleswoman” who had kicked her out of the uppity shop the day before? “Big mistake! Big! HUGE!”

Jeff Sward
Jeff Sward
5 months ago

Sounds like the real growth opportunity lies in exploring the merchandising tweaks necessary to better address the next 4 percent to 8 percent of their customers. Still only 6 percent to 10 percent of their total. And yes, the comments sounded arrogant and snobbish. The point could have been made much more gracefully.

Bob Amster
Bob Amster
5 months ago

There are aspirational customers that one day may be in the top 2 percent. They should not be downplayed. Next year’s 2 percent have to come from somewhere. The children of today’s top 2 percent could easily become the top 2 percent of tomorrow. They should not be ignored. Is this too simple?

Liza Amlani
Liza Amlani
5 months ago

Neiman Marcus should be focused on where and how their future customers will spend, not just the wealthiest 2 percent. What happens when the 2 percent stop shopping and don’t exist anymore? The reality is that the 2 percent are aging and won’t live forever. Households have evolved and they can’t count on the next generation who live in this 2 percent to shop Neiman Marcus as tastes are changing. New money and Gen Z have spending power. The focus should be on strategies to capture new market share and finding reasons why more customers aren’t shopping Neiman Marcus.

Gary Sankary
Gary Sankary
5 months ago

“Elite” and “aspirational” have different connotations.

From a marketing perspective, so do “exclusive” and “restricted.” One will give you room to grow your customer base, and one will turn people off. Trying to make a brand exclusive to only a specific customer profile is not a very good growth strategy, in my opinion.

Peter Charness
Peter Charness
5 months ago

Retailers need to have a persona to focus on in designing their assortments. The top 2 percent is a perfectly good starting point. Aspirational 2 percenters may end up as buyers as well, and at sale time — well who knows who will be in the store buying the discounts. But having a firm vision of who to sell to is a great focus for assortment planning.

Gene Detroyer
Gene Detroyer
5 months ago

I imagine van Raemdonck was speaking to his team rather than the customer. There is a message that should resonate with every level of Neiman Marcus. Employees, not just the associates on the floor, should ask themselves if their actions reflect service to what a wealthy customer should expect. He did not say to ignore everyone else.

Decades ago, I went naively went into Bonwit Teller. I was treated in a very arrogant way. They assessed correctly that I could not afford anything in the store. Today I can afford almost everything they sell. I have never been back and likely won’t be.

Craig Sundstrom
Craig Sundstrom
  Gene Detroyer
5 months ago

They don’t sell anything any more as they went out of business. Oh … I see what you did there!

Ricardo Belmar
Ricardo Belmar
5 months ago

While it’s reasonable to have a strategy that focuses on the customers with the largest lifetime value, you still need a strategy to grow the next best customers or you’re limiting your future growth. Mr Raemdonck’s words could have been better chosen so as not to alienate that next tier customer. After all, that’s where much of Neiman Marcus’s future growth will come from — those customers that are already spending with them, but might spend more if appropriately enticed. A successful growth strategy needs both types of customers!

Carol Spieckerman
Carol Spieckerman
5 months ago

Putting out a vibe is one subjective take, the reality of valuable customers aging out of the brand should be a wake-up call. Neiman Marcus has no doubt been aware of this problem for years (hence the brand alliances and other moves) yet Mr. van Raemdonck’s comments come off as regressive and elitist. Many of Neiman Marcus’s customers may never hear the statements, yet associates are all too aware. For commission-based salespeople, the message could be a real buzz kill.

Lee Peterson
Lee Peterson
5 months ago

Interesting strategy, and probably taken out of context, but if he’s serious about the top 2 percent — good luck with that. Especially in a dying business model (department stores). I can see top 20 percent or even 15 percent, but top 2 percent? And what do the “bottom 20 percent” think? “We’re not for you.”? I’ll reserve judgement until I hear more but boy, as it stands, see you later.

Casey Golden
Casey Golden
  Lee Peterson
5 months ago

Typically we’d look at the top 10 percent to 15 percent of top spenders at a luxury brand. If they are focusing on the top 2 percent and see an annual spend break at $27,000, they’ve lost their top and need to focus on building it back to keep the aspirational customer coming back. Otherwise, they’ll be closer to Macy’s and not a Neiman Marcus anymore.

Gary Sankary
Gary Sankary
  Lee Peterson
5 months ago

I think Neiman Marcus’s bigger problem is the 2% they’re focused on, in their business anyway, skew pretty old. I could be wrong … but just from my observation, they have a demographic time bomb on their hands. Like many others in their segment.

David Spear
David Spear
5 months ago

I can see how some associates and consumers might view Mr. van Raemdonck’s comments as snobbish and rude. Hopefully, this won’t trigger a shopper backlash at Neiman Marcus. Truth is, most companies run shopper segmentations and come away with targeting and treating the top 10 percent, 15 percent, 20 percent of shoppers a bit differently than the bottom 10 percent. This is simply the reality of smart marketing and how retailers can make the most of their analysis. If he wanted to stick to only the top 2 percent, then I’d tell him: “good luck, but don’t hold your breath.”

Bob Phibbs
Bob Phibbs
5 months ago

The hubris of this comment is shocking. Everyone wants the top 2 percent, and you get them not by announcing it but by customer service. This is the same guy who famously showed off his mansion while sending out pink slips. Imagine a Neiman Marcus salesperson who caters to those who just spend $10,000 a year. #tonedeaf

Cathy Hotka
Cathy Hotka
5 months ago

I know someone who used to work for a glamorous luxury brand, who confirmed that the brand’s core audience was about 3,000 people. Controversial as it sounds, Mr. van Raemdonck is probably correct to focus on that elite group. How many of us need a new Ralph Lauren Purple Label tuxedo or $4,000 dress?

Patricia Vekich Waldron
Patricia Vekich Waldron
5 months ago

Making sure you have the merchandise and services needed to satisfy your most valuable core customers is essential. Announcing to the world that 98 percent of your customers are not important is foolish.

Shep Hyken
Shep Hyken
5 months ago

I’m a little concerned that the first time customer, who could potentially be a 2 percenter, might not get the experience they deserve. To the point of the anonymous salesperson, a $5,000/year spend is good.

I shopped at a high-end men’s clothing retailer whose owner realized his store didn’t need to be in a mall to serve its customers. His store was a destination for most customers. I came in twice a year when there was a sale. I always bought a sport jacket or suit. He said, “If all my customers bought a suit or jacket every sale, I’d be a happy man.” He had many customers that would drop $25,000 or more on a visit. The point is he always made me feel appreciated, regardless of how much or little I spent.

If Neiman Marcus doesn’t want to appeal to the broader population, they don’t need to be in a mall. They don’t need to have clearance or big sales. That’s their choice. And regardless of how much someone spends, if they only buy one item a year, they should still be appreciated. (I’m sure they will be!)

Casey Golden
Casey Golden
5 months ago

Luxury brands and retailers are destinations that come with high customer expectations. Neiman Marcus has lost its luster and diluted its brand experience by not focusing on excellence. If the top customers can not be served properly, then no one is receiving a premium experience.

I’ve had many customers that spent more than $100,000 a year, $27,000 is a pretty reasonable entry point. Aspirational customers may not be able to afford the most expensive items, but they can still be valuable repeat customers and brand advocates. They may return for special occasions, clear out sale items, take advantage of loyalty programs to stabilize revenue, and be more likely to engage on social and write reviews.

I’d challenge top sales reps at the retailer being “horrified,” they are commission based and typically working their book and rarely have the bandwidth to build their book by developing a $5,000 customer into a $27,000 annual spend. By focusing on the top, technology can make the greatest impact scaling talent, shopping services and assortment plans down market to develop their client base over time.

John Hyman
John Hyman
5 months ago

Mr. van Raemdonck might be careful what he wishes for, as ridiculously wealthy patrons are highly difficult to satisfy, extremely fickle in their product choices, and not loyal. As many other panelists have observed, there is a risk of offending the merely affluent clientele who have many other options where to spend their disposable income.

DeAnn Campbell
DeAnn Campbell
5 months ago

I’m likely in the minority, but I do think this is the right strategy. There are too many retailers (Nordstrom, Saks, Macy’s, Bloomingdales, Von Maur…) firmly rooted in the large middle, but very little in the way of competition at the top. Rather than spending enormous resources going head-to-head with Nordstrom, why not hyper-focus on filling the white space between individual luxury boutiques and a more convenient one-stop department store experience. I would even go bigger by offering a high-end concierge service for an annual fee to consolidate not only product purchases, but help with services such as dry cleaning, repairs, style consultants, rentals for big events, etc.

Michael Blackburn
Michael Blackburn
5 months ago

I’m willing to bet it doesn’t have much of an impact on today’s customer — the full 100% think they are the 2 percent.

Craig Sundstrom
Craig Sundstrom
5 months ago

I thought “How in the He** did a simple, common sense statement in a magazine interview become “controversial”? Then I noticed the NY Post mention … that beacon of light — “Headless Body in Topless Bar” — of journalism (though to be fair, I believe the business coverage is better than the rest of the paper). Translation: much ado….

As far as the basic question: Mr. van R said focus, and that’s perfectly logical … it’s not like they’re asking for a 1040 to gain admission to the store. It might make sense to have (somewhat) lower price points in lines aimed at younger customers — the idea being that they will “grow into it” as they become older, and wealthier — but how much is a business decision. I think the only mistake here was TMI: it used to be “never give an amount and a time,” perhaps that should just be “never say anything specific.”

Ahsen
Ahsen
5 months ago

To focus on the two percent of its customers that make up 40 percent of its sales, must be a carefully curated strategy from retailer Neiman Marcus. Retail and online data can be utilized to create hyper focused customer segmentations, define the specific audiences that matter and surface unique experiences to each of those groups. What Neiman Marcus would be missing will be new millionaires with a taste for luxury and an engaged Generation Z. There is a rapid rise in the number of rich people in the world and approximately half of them come from the United States.

Brad Halverson
Brad Halverson
5 months ago

I’m in full support of the idea that a luxury brand should spend most of its messaging, product mix and marketing dollar toward the core customer base. But 2% gives you little to no room to attract the next profitable 15% along on the journey.

Retailers require more layers of customers, than say ultra-exclusive brand Rolls-Royce. If they are seeing too many single-visit transactions, then maybe that’s saying something about the experience, the customer not connecting, the mix of products, service — or all the above.

george@centersdynamic.com
george@centersdynamic.com
5 months ago

We should learn from history. For those older, you may recall that in 1983, Halston signed a $1 billion, six-year deal with JCPenney (and reported it himself, on live television), which was unheard of at the time. Halston’s vision was to “dress every woman in America,” no matter where they shopped; his line Halston III, available exclusively at JCPenney, allowed him to do just that. This move was met with disdain by the high-fashion world, and the tide began to turn on the then-golden Halston. Bergdorf Goodman, the high-end department store that had maintained a two decade-long creative partnership with Halston, immediately dropped his line upon hearing the news. Despite the widening wealth gap in this country, I support the CEO’s remarks.

Anil Patel
Anil Patel
5 months ago

The luxury retailer is aiming at centralizing their special services and offerings for loyal customers who also heavily spend. In my opinion, narrowing down the focus on the top 2% of customers does not conclude that others will simply be excluded from Neiman Marcus’s offerings.

A business’s aim should be to make profits. If a certain number of customers generate the most revenue for the business, then the retailers would be willing to go the “extra mile” to satisfy these customers. Therefore, focusing is definitely a good strategy to get more returns from existing customers.