Neiman Marcus Case Summary

Neiman Marcus (A)

Neiman Marcus, highly successful luxury goods retailer, is looking for new growth avenues to attain a target of 15% return on invested capital even though it has posted respectable profits for years now. NM traditional full line stores is present in nearly all of the viable markets, so opening a full line store does not provide the growth NM is looking for. Among the options available to NM management is a jewellery store concept called The Galleries.

Neiman Marcus has 5 ways to grow organically. The 5 ways are as follows:-

Customer by Customer: NM can increase the share of customer spending by putting better IT infrastructure in place. With the help of data mining they will be able to capture an incremental amount of wallet share. But this recommendation doesn’t have the potential to give them 15% RICE, though it can provide incremental revenue.

Building new full line stores: NM has traditional stores at all the viable locations and adding new traditional full line stores will not be able to give it the targeted growth figure. Also, with new full line stores filling the shelf space will be a problem.

Addition of space within existing stores: NM is already in process of increasing the % of total shop floor area dedicated to displaying merchandize. At some stores it is adding new floors to the existing structure to increase the floor space area for displaying product.

Design new retail concepts: This is one venue which can enable NM to achieve the desired targeted growth. NM has to develop and roll out new retail concepts and The Galleries is one such new retail concept. As these new retail stores will not sell all the products that a traditional full line store sells. Hence NM has to take extra care while deciding on which product category it will display in new retail concept stores. Also location of the store plays a significant role in generating