Geoffroy van Raemdonck on Culture, Interaction and Retail’s Volatility
As Geoffroy van Raemdonck sees it, there’s the world at large and then there is the Neiman Marcus Group.
“We live in a world of transaction, where people buy, buy, buy, and in a world of ‘likes’ as you go on social media, and say, ‘I like your post.’ But Neiman Marcus and Bergdorf Goodman are really about emotions and relationships,” said van Raemdonck, the chief executive officer of the Neiman Marcus Group.
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“We are a relationship business where we want to get to know you, and deliver what’s best for you. And we’re in a world of emotions, because our customers don’t need what they buy, but they desperately want it. There’s a desirability attached to it.” “
Speaking at the WWD Apparel & Retail CEO Summit in a conversation with James Fallon, WWD’s editorial director, van Raemdonck detailed his approach to steering the Dallas-based luxury retailer, which he said revolves around love. That’s really his metaphor for building strong relationships with customers, designers and brands through new and heightened interactions, experiences and services.
“Love is an emotion that we all understand,” van Raemdonck said. “In a customer service business and a customer-centric business we need love…to deliver the best to our customers. And that starts by loving ourselves internally, and loving our brand partners so that we can love the customer and the communities in which they live.”
What’s not clearly understood is whether Saks Fifth Avenue, through its corporate parent, HBC, will make a bid to buy NMG. There is speculation that Richard Baker, chairman of HBC, is attempting to round up financing for a deal.
Van Raemdonck declined to comment on the Saks speculation, but he did say that the owners of NMG — Pimco, Davidson Kempner Capital Management, and Sixth Street — eventually will look to monetize their investment through an IPO or through a sale.
“That is a fact, and that’s why we are always going to be prone to rumors and speculation,” van Raemdonck said. “What is important to know is that we have $1 billion of available liquidity. We are profitable to the tune of hundreds of millions of dollars, and our strategy is working. So there is no need for them, no urgency for them to make a deal,” van Raemdonck said, referring to the owners. “Our view is we focus on holiday. We focus on driving the business to a successful outcome for customers and associates, and we have investors who are supporting us,” through investments upgrading stores, technology and the supply chain.
It’s a particularly challenging time for NMG and other fashion retailers, though van Raemdonck explained how Neiman’s can weather the difficulties. “We have a very good sense of where the customer is. We’re seeing really two things. One is continued volatility. There is not a week that looks like a week of last year, and month-to-month, the patterns of customers buying across categories is different.”
According to van Raemdonck, NMG’s top 20 brands, overall, were up 60 percent last fiscal quarter compared to the pre-COVID-19 period, though some didn’t perform as well last quarter due to last year’s pent-up demand and some normalization in shopping patterns “We are seeing the aspirational customer spending less,” he noted.
He said he anticipates sustained volatility through the holidays, adding, “I think we’re going to continue to see some customers engage less in luxury because of the economic pressure and the political or world uncertainty and some of the horrible things that are happening.”
“The other element is promotionality. That’s not new but it’s increasing, specifically online. There is a customer who needs that trigger to engage and a lot of the online players are using that as a way to accelerate their business. We anticipate that to continue through holiday.”
To offset some of the industry’s promotional frenzy, “We’ve put a lot of our effort around our remote selling,” van Raemdonck said. “Twenty percent of all sales happen when the customer is not in the store. It’s a sales associate reaching out to the customer. That’s usually a full-price sale and usually multiple items because the sales associate helps you.”
In addition, van Raemdonck said NMG orchestrates lots of special events in the stores, typically “multisensory activations” involving brands and exclusive products. “Those are the antidotes to the promotionality. It is really the experience and focusing on things that you can’t have anywhere else.”
Running the luxury business during the pandemic was really difficult, and is still challenging, van Raemdonck acknowledged.
“There was so much hardship on our customers and on our people who faced a lack of social interaction and feared for their health. The world in which we all operate today is so volatile, and what was happening last year is not happening this year. What was happening last month is not happening this month. And so we really had to emphasize our culture — a culture of belonging, where everyone is expected to show up as their authentic self because in a world where we believe our customers and our associates have been put through a lot of hardship, if they have to then defend themselves, to hide who they are, they can not really deliver that love, that experience. And so the belonging is about: Don’t defend yourself, be who you are, and show your true colors.”
NMG’s culture has changed over the last several years, van Raemdonck said. “Five years ago, there was a dress code. You could not not wear a tie. If you were in the men’s department, you could not wear sneakers,” which van Raemdonck does sometimes on the job.
“The reality is, our customers are liking different things. And so we want our associates to be themselves and then the connection can happen.”
Van Raemdonck views the 2023 holiday season — which for many retailers has already started — imbued with volatility. To navigate that, “I want my leadership to come with a different point of view. I don’t want them to all say the same thing. I want to rely on someone who has less tenure, someone with more tenure, someone who has experience in our industry, someone who comes from a different background…The emphasis on culture coming from leading with love is what we call ‘unleashing the power of one.’ We believe in our people assets, and our culture is really a differentiating factor. It drives performance because when people show up at their best, they use what I call their ‘superpower.'”
Establishing a different culture takes a long time but it’s “a labor of love,” van Raemdonck said. “What’s important from the get-go is to be authentic, to walk the talk, being who I am, and showing that in moments of difficulty or in moments of strength, we make decisions that are considered.”
The culture at retail, how people embrace each other, or fight for making their budgets, is different from store to store, van Raemdonck said. In the culture building, his role is to “kind of set the rhythm. But at the end of the day, it’s everyone in the orchestra who make it happen.
“One element that I found probably most difficult to actuate is this notion of fail fast, take a chance, be agile. That’s our growth mindset, which is one of the pillars of our culture. If you accept that when you empower people, we will play the music maybe not exactly the right way but then we learn and we talk about it.”
Ironically, during the pandemic when stores were temporarily closed, it was the appropriate time to try new things, van Raemdonck suggested. “You open new doors, and there were a lot of successes we had that we didn’t really believe in up front.” NMG’s commissioned sales force “has been very, very much the ones who push the innovation and push the boundaries of doing what’s right for the customer,” van Raemdonck said.
Asked how customer expectations have changed since the pandemic, van Raemdonck replied that they have changed, saying, “The customer is very much looking for products still, but also for experiences. We and our brand partners create incredible access to those products. But beyond that the experience of the shopping is equally important,” van Raemdonck said, referencing NMG’s beauty services, cafés, restaurants, events, activations and exclusives.
“There is an element way beyond product,” van Raemdonck said. “The customer who shops across all channels spends five times more than a customer who just shops one channel, and a customer ‘in a relationship’ with a sales associate spends 12 times more,” he said. “The level of the experience gets stronger when you have a physical, human interaction. Customers actually entrust us to advise them on their luxury experiences way beyond what we sell.”
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