Neiman Marcus Case
Neiman Marcus (A) Analysis of Growth Strategies
Executive Summary
Neiman Marcus (NM), which mainly serves the high-end retail market, is currently facing a tough future. Although it currently enjoys high profit margins and has made significant improvements in its existing brand performance, its growth has plateaued. NM believes that there is only limited potential for growth of its current full-line stores while maintaining its exclusivity. As a result, it is considering other growth opportunities. The strategic goal is to increase its revenue by at least $150 million over the next 6 years while maintaining its attractive profit margins of 15%. Of the number of possible growth options, we recommend NM to grow via the Galleries concept. We believe that this concept is in line with its current core strength of creating and maintaining customer loyalty with luxury customers. Moreover, it can benefit from its existing customer base, efficient sales force and brand name. Our financial analysis further shows that the concept has the potential to match the revenue and profit goals. However, NM needs to carefully choose the gallery locations since there are some risks associated with direct competition with existing leaders and confusion among its current customers about the shift in brand-focus.
Growth Options
Neiman Marcus (NM) serves the high-end retail market mostly in US. Before analyzing the range of growth options available to NM, we performed a SWOT analysis [Exhibit 2] to understand NM’s current competitive situation.
NM clearly targets the affluent US population and intends to serve the luxury market. The company’s goal is to create a personal shopping experience for its customers, and that involves having a highly competent sales staff as well as setting up a unique buying experience. One of the biggest competitive advantages for NM is the customer based marketing programs and events, like the InCircle programs which enhances customer loyalty.
Executive Summary
Neiman Marcus (NM), which mainly serves the high-end retail market, is currently facing a tough future. Although it currently enjoys high profit margins and has made significant improvements in its existing brand performance, its growth has plateaued. NM believes that there is only limited potential for growth of its current full-line stores while maintaining its exclusivity. As a result, it is considering other growth opportunities. The strategic goal is to increase its revenue by at least $150 million over the next 6 years while maintaining its attractive profit margins of 15%. Of the number of possible growth options, we recommend NM to grow via the Galleries concept. We believe that this concept is in line with its current core strength of creating and maintaining customer loyalty with luxury customers. Moreover, it can benefit from its existing customer base, efficient sales force and brand name. Our financial analysis further shows that the concept has the potential to match the revenue and profit goals. However, NM needs to carefully choose the gallery locations since there are some risks associated with direct competition with existing leaders and confusion among its current customers about the shift in brand-focus.
Growth Options
Neiman Marcus (NM) serves the high-end retail market mostly in US. Before analyzing the range of growth options available to NM, we performed a SWOT analysis [Exhibit 2] to understand NM’s current competitive situation.
NM clearly targets the affluent US population and intends to serve the luxury market. The company’s goal is to create a personal shopping experience for its customers, and that involves having a highly competent sales staff as well as setting up a unique buying experience. One of the biggest competitive advantages for NM is the customer based marketing programs and events, like the InCircle programs which enhances customer loyalty.