Upping Its Tech Game, Neiman Marcus Learned a Lesson or Two

The luxury retailer’s tech experience illustrates industry challenges and opportunities

Author: Andria Cheng

March 30, 2017

Fashion retailers were initially slow to adopt to emerging technologies, but many are now actively testing new ways to remain relevant and valuable to increasingly digital consumers.

The challenge is accepting the idea that along with the technology hits come some misses, too.

Company data

Neiman Marcus

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Luxury retailer Neiman Marcus is a good case study. The Dallas company, also parent of the Bergdorf Goodman luxury emporium, four years ago created its own “innovation lab” and began inviting tech partners to investigate ways to improve customer experience and enhance employee capabilities.

“We are trying to make sure people feel comfortable shopping online and get the best of the store, and (make sure) people come to the store and get the best of the digital world,” said Chief Technology Officer Rajeev Rai in an interview. “Their experience has to be seamless if you really seek to attract and retain the digital customer.”

Serving that digital customer right is perhaps even more crucial for Neiman Marcus than for many of its rivals. The company generates 30.1% of its sales online. By eMarketer estimates, that ranks the retailer ahead of its department store rivals, including Nordstrom, Saks, Macy’s and Lord & Taylor.


Top 5 Department Stores, Ranked by Ecommerce Sales (as a % of Total Sales)

1. Neiman Marcus - 30.1%
2. Nordstrom - 21.8%
3. Saks - 21.7%
4. Macy's - 17.9%
5. Lord & Taylor - 11.3%
Source: eMarketer estimates


It’s also critical as Neiman, like many of its luxury rivals and fashion retailers on all ends of the price spectrum, struggles to retain customers, especially millennials, who are more inclined to shop online, and who increasingly focus on buying experiences over buying material things. Neiman in March said it’s exploring a possible sale after reporting its sixth straight quarter of lower same-store sales. (Lord & Taylor and Saks parent Hudson’s Bay Co. is reportedly in talks to buy Neiman.)

You won’t get the sales unless you are experimenting and innovating.

“High income shoppers tend to shop more online at least in fashion,” said retail consultancy WSL Strategic Retail CEO Wendy Liebmann. Neiman Marcus and other traditional fashion retailers are “doing a lot of catch up there because that higher income shopper is in the digital space in a very strong way…. You have to be prepared now because there are so many technologies out there and shoppers are learning about them, too. Try and fail—it has to be the motif of how every retailer, including fashion retailers, does business. You won’t get the sales unless you are experimenting and innovating.”

And Neiman indeed has been trying and failing along the way.

Damaged Pumps

For instance, when the company noticed that only 85% of its in-stock shoe styles at Bergdorf Goodman (they sell such shoes as $965 Manolo Blahnik pumps) were on display, Rai’s team tried to solve the problem using RFID stickers to track inventory. But, Rai related at the WWD Retail 20/20 Forum this week, when it came time to test the system, Neiman discovered the RFID stickers were damaging the expensive lacquer of the shoes.

When testing the stickers in the lab, he said, Neiman used cheap shoe samples.

Neiman has since worked to fix that issue and saw the RFID implementation significantly improving its shoe-display level and purchase conversion.

But that wasn’t the only lesson. At a time when 3D printing was widely billed as an industry gamechanger, Neiman three years ago experimented with making 3D printouts of brides’ pictures for those who might want to “preserve the moment” and have them as keepsakes or give away as gifts.

But in a telling sign of why industrywide 3D printing never ended up taking off, Neiman abandoned the prototype after the company found it was taking too long and costing too much to just take the 3D images of the bride.

“We recognized that this wasn’t ready for scale,” Rai said.

And in another learning moment, the company dropped the trial use of digital signs on the wall, displaying shoe styles customers had selected on in-store iPads.

The goal was to make it easier for customers, so they would not have to remember specific models, but as it turned out, customers weren’t comfortable having their selected styles visible in the store. “You find problems in different stages,” Rai said. “We are constantly learning.”

Mobile Wallets? No Thanks.

Learning indeed. The Dallas retailer was also one of the first chains to try mobile wallets, and found that it was not popular with its customers. Rai said they like using their Neiman private label store loyalty credit cards and don’t find swiping the card any inconvenience at all.

The good news is that some trials result in successes. For instance, it worked with a startup to allow customers to record a digital “Memory Mirror,” to give them the ability to compare outfits and share them with family and friends for their opinions. Neiman is rolling out the same concept for sunglasses and makeup.

Like other retailers interested in artificial-intelligence-powered visual and image search, Rai said Neiman is also testing a system that allows customers to take product pictures, and then have its mobile app recommend similar products. While customers who use it “are amazed,” he said it would take a year or two before this “will become common practice.”

The company is also thinking about conversational commerce. Rai cites personal experience: When his wife was looking for a hands-free soap dispenser, she asked Amazon’s Alexa about it. Alexa responded with the top selling version and if she wanted to place an order.

“All she had to do is say, ‘Yes,” he said. “Order placed, product shipped and received. Conversational commerce is here now.”


Related stories:

The Line Between Tech and Retail Blurs Even More

‘If You Don’t Have an AI Strategy, You Are Gonna Die’


Photo credit: Flickr


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