Neiman Marcus ramps up technological presence
As consumers continue to flock to the Web to spend ever more time and money, companies are following suit. And Neiman Marcus is no exception.
“As we come out of the recession, and with the change in leadership we’ve had at Neiman Marcus, it’s definitely one of the priorities of our new team to have a higher investment in technology,” Karen Katz, president and CEO of Neiman Marcus Group told WWD.
In an effort to hike up e-commerce sales and to build communications with customers via fashion insider blogs, Facebook and other social media outlets, Katz reports that the company is increasing capital expenditures.
A look at the firm’s numbers reveals that NMG’s capital expenditures are indeed soaring. These expenditures increased to $24.8 million last quarter, in comparison to the prior year’s $14.7 million of the same period. The company anticipates its spending to reach $105 million to $115 million for fiscal year 2011.
Last year, 15.6 percent of all NMG sales came from online purchases.
“Our customer is very engaged in technology,” Katz said. “Our customer is very affluent, extremely well educated and very wired, and she is fully engaging in everything when it comes to technology.”
The company’s increase in Facebook fans further proves the growth of its online presence—the number of fans climbed from 90,000 to 355,000 in the last 12 months. Moreover, half of NMG shoppers will check out a product on the Internet before walking into NMG’s physical stores.
Business is booming for Neiman Marcus, whose recent sales reflect improvements in the economy. The company’s net income increased to $46.2 million, two-and-a-half times the number of last year’s quarter. Sales also climbed 9.9 percent from a year ago, and gross profit rose 14.2 percent. Categories faring the best are ladies’ shoes, designer handbags and menswear.
“We are really selling product across all of our prices, and actually [are] pleased at the nice balance to the business,” Katz said in a conference call with analysts. “We experienced strongest growth from core and most loyal customers. Aspirational customers have an increased willingness to spend. We are seeing success bringing in new customers and reactivating others.”
Overall the chain appears to be in pretty good shape, having reported 17 consecutive months of positive comp sales and holding additional money—profit it plans to invest in new technological efforts.
These initiatives will include enlarging a Texas distribution center by 27 percent in order to hold more products for increasing online orders, advancing “midday dash” flash sales, adding more fashion shows to their website (including livestreaming events) and installing Wi-Fi in its stores.
The company has learned to draw website hits through its fashion insider tales and tips, which garner a large number of page views.
“The way we communicate the fashion trends has become increasingly important. The customer expects us to let them know what they need to buy each season to update their wardrobe. We have determined our most powerful voice is that of a fashion insider,” Katz said.
Whether the company’s online communications with its customers will lead to increased sales is still up in the air. “That’s really the million-dollar question,” Katz acknowledged. “How to ultimately monetize social media and turn it into real revenues?”
In the end, Neiman’s ultimate goal is to make it possible for customers to purchase its goods “anywhere, anytime, anyplace,” Katz said.
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