Mark Lennihan/AP
- Neiman Marcus is only going after millionaire shoppers who spend upwards of $27,000 there per year.
- The company has said that the top 2% of its customers drive roughly 40% of its total sales.
- Neiman Marcus was an early pandemic casualty, filing for then emerging from bankruptcy in 2020.
Neiman Marcus is no longer bothering with the idea of aspirational luxury.
Top shoppers at the high-end department store spend a total of $27,000 every year, and it's those customers the brand is focused on now, Geoffroy van Raemdonck, CEO of the store's parent company, told Fortune in an interview published Friday.
"We've decided that we are no longer about market share, and we are no longer about selling everywhere on the price spectrum, from clearance to high-end jewelry," van Raemdonck said. "The business value of this approach is we get to know our customers better. The economic value is I avoid churn, and the price is no longer the main consideration."
Neiman Marcus and its sister company, Bergdorf Goodman, have long been a shopping haven for the ultra-wealthy, and its that clientele the company is focused on wooing — the retailers saw 90% retention among its top customers during the 2022 fiscal year.
Unlike other retailers with highly loyal customers — Walmart, for example — Neiman Marcus' customers are highly affluent: the top 2% of the group's customers drive roughly 40% of its total sales, and 80% of those customers are worth at least $1 million.
Van Raemdonck told Fortune he's not particularly worried about going after such a small piece of the consumer pie.
"There is a very large number of high-net-worth individuals, people worth more than $5 million to $10 million. And 2% of our customers are still a fraction of that population in the US," he said. "I see much more risk in having a one-time transaction where I don't know if you will ever come back."
He added that many Neiman Marcus' customers shop there 25 times per year.
Like many of its fellow department stores, Neiman Marcus had operated an outlet chain, Neiman Marcus Last Call, where shoppers could find discounted designer wares. But the company closed the stores after filing for Chapter 11 bankruptcy in the early months of the pandemic. Neiman Marcus emerged from bankruptcy in September 2020 with a new strategy to appeal to only the wealthiest shoppers.
"We made a clear choice that we're going to do one thing and do it well," van Raemdonck said. "We believe luxury is about uniqueness and emotion."
It's a strategy that could position the company well amid an economic downturn: amid the record inflation of 2022, affluent shoppers continued to spend, even as their lower-income peers began to cut back.