Karen Katz, EVP of luxury retailer Neiman Marcus Group, would just as soon forget 2009.
“Luxury retail in general took the hardest hit during this recession,” Katz recently commented. “Our customers pulled back dramatically from spending… that being said, we are very happy to see that business is coming back. The customer is definitely back in the stores.”
Katz, who will take over as CEO of Neiman Marcus in October, hopes she has a recovery ahead of her. The company’s sales did indeed see an uptick in revenue for the first half of the year, but Neiman Marcus was forced to do something out of character: use discounting to prompt sales.
That’s always a risk for an upscale retailer, but Katz “remains confident the brand was protected as Neiman’s kept its focus on exclusive merchandise.”
Milton Pedraza, CEO of The Luxury Institute, believes Neiman’s discounting had “some short-term impact on the brand’s reputation for exclusivity,” but, he adds, “I think the brand clearly survived.”
With customers drifting away from luxury brands and stores in 2008 and 2009, Neiman Marcus and other luxury retailers were forced into territory that is typically occupied by its down-market competitors.
Saks, another luxury retailer, tried everything from store discounting to online sales and, in the first half of the year, implemented a new ad campaign designed to get customers to “think about” the value of their brand.
Saks Fifth Avenue has struggled but it, too, has seen modest increases so far in 2010. Saks CEO Steve Sadove, like Katz, is hopeful the worst is over, but he isn’t being bullish on the recovery just yet.
“We’ll continue to be cautious, Sadove told CNBC. “I think you’ll see a little bit more ‘opportunity buying’ in certain categories, like the shoes, like the handbags. I would say inventories will be growing a little bit less than consumption, but we’ll still continue to be cautious.”
For her part, Neiman’s Katz is looking at a future that includes more than just in-store selling.
“I believe that the intersection of traditional retailing, e-commerce retailing and social networking… all of that is going to come together in a very different way than we can see it today,” says Katz. “We are just starting to understand how powerful that intersection can be, so we’ll see where it evolves to.”