What does Neiman Marcus Group chief executive officer Geoffroy van Raemdonck mean by “leading with love”?
“It sounds boring but it’s an emotion that we all understand,” said van Raemdonck during his conversation with James Fallon, chief content officer for WWD and the Fairchild Media Group during the WWD Apparel and Retail CEO Summit.
“We live in a world where it’s all about transactions,” van Raemdonck said. “You see something online, you buy it. You see something on a social post, you buy it, and you put in a ‘like.’ Luxury is not about that. Luxury is about emotions. It’s about connections. And so coming into my role, the philosophy of leading with love became a cornerstone of my leadership, and today it is a cornerstone of how we all operate at the Neiman Marcus Group.
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“We set out a strategy to transform Neiman Marcus from a department store into a luxury relationship business, and the way you do luxury is through emotions and relationships and it’s about connections” with customers, brand partners and sales associates, the CEO said.
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Van Raemdonck maintained that leading with love, essentially his metaphor for building stronger and emotional ties with customers and vendors, leads to tangible benefits to the business, including increased customer loyalty and encouraging and getting luxury brands to work with NMG on exclusive products and activations.
Van Raemdonck said that when he joined Neiman Marcus Group in February 2018, the retailer had been declining. “The history of Neiman Marcus and Bergdorf Goodman is deeply rooted in exceptional customer experiences and outstanding customer service, but it had eroded to be more transactional,” the CEO said. “So we really refocused on creating those relationships, creating those emotions, those moments that have the customer who doesn’t need the product, but desperately wants it, saying, ‘I want it and I want it again from you.'”
To transform how the Dallas-based retailer presented itself to shoppers and vendors required, as van Raemdonck said, “taking care of your organization,” meaning having the right people in the right place, and empowering them “to connect authentically with the customer or with the brand partners.”
He said a “customer-centric, integrated” business model was implemented, allowing customers to buy in stores, online, and through “remote selling,” enabling sales associates equipped with a new digital selling tool called Connect to personalize their dealings with customers and communicate the way customers wanted, be it by email, phone calls, or texting. Associates can also send photos depicting items and outfits and set up in-person appointments through the Connect clienteling tool, which was piloted successfully, then rolled out. It’s helped Neiman’s reach the point where it’s generating $1 billion in sales through remote selling.
An employee survey at the end of 2018 revealed that employees wanted flexibility and career development, and wanted to have impact, van Raemdonck explained. “A culture of belonging” emphasizing “the power of one” was created where employees could be their “authentic” selves. “When you have diversity in your organization, a diversity of thought with people in the room who disagree, who challenge the truth and then unite behind it, it makes you stronger,” van Raemdonck said.
If customers could shop any way they wanted, then flexibility should be afforded to the sales associates, van Raemdonck suggested. “As a former consultant, I thought we should pilot the idea of remote working and flexible working, and we should pilot a new client selling tool that allowed associates to communicate in various ways to their clients. So that’s really how the ‘power of one’ came to be… It is the right thing to do, to empower your teams to be at their best.”
Most importantly, van Raemdonck said, it helped NMG fulfill its strategy and achieve goals. He said that the first three quarters of NMG’s last fiscal year, which concluded at the end of July, showed gains from the year before, though the last quarter of the fiscal year was relatively flat. He also said that the distribution of top luxury brands grew significantly last year.
In terms of where people work from home wherever that might be, or from NMG offices in New York City or Dallas, “Everyone needs to choose what’s right for them” to reach their full potential,” van Raemdonck said.
“We’re only as good as what our teams provide to our brand partners and to our customers. So for us, it is strategic. It’s not just nice to be working from home. For us, it’s bigger than that. It’s the way of working. Basically it’s a ‘give and a get.’ The give is that you have flexible hours, and you are empowered to work the way that you have the best impact. The get is that we require you to be present. So when you are in a conversation, you are fully engaged in the arena, and we’re going to hold you accountable.”
Van Raemdonck said NMG’s work policies are appreciated by employees, and are working. “We actually see it in the statistics,” he said. “Employee engagement is up 34 points compared to pre-COVID. So we moved from being a good employer to a great employer. Retention is significantly up. Timing to recruit is down 34 percent and we have increased the tenure of our sales associates by one year over the last 18 months. It moved from nine years to 10 years. These are all economic indicators, because at the end of the day, when you have the best team that is more engaged and stays with you, it really pays off in the dividends.”
Van Raemdonck acknowledged that those water cooler conversations are no longer easy to have. However, he also said that he stays engaged with team members, including sitting down over coffee with about 500 associates each year. Other senior leaders do the same thing, he said.
Van Raemdonck acknowledged that there is “a slowdown” in the luxury sector.
“I think part of it is the macro environment and the political environment. Part of it is we need to remember that we all had outsized growth compared to 2019, and there’s a little bit of a normalization. What we are seeing is continuous improvement in our performance and the brands that we have. So I’m confident that the holiday [season] is going to be neutral or positive, but it’s not going to be a deterioration from where we are. That’s my sense… We launched the holidays earlier this year, with the notion of we want to activate every single day at full price and as early as possible for the holiday period that starts before Thanksgiving and goes through the New Year. I think the level of events we have, the activations, the personal engagement, is higher than ever. The collaboration from the brands is higher than ever. Brands invest tremendously with us in inclusive experiences that generate $1 million in one day, multimillions in three weeks, and then have residual effects.
“It’s a lot about how does someone connect with me for something really special for me? And obviously we have great things. We had Mr. [Giorgio] Armani in our store. We had Christian Louboutin, and then this morning we had Brunello Cucinelli, all at Bergdorf’s. Those moments are very special. And even if you’re not there, they create a halo for the whole organization.”
Van Raemdonck did address the elephant in the room — the impending takeover of the Neiman Marcus Group by Saks Global. In July, after a years-long pursuit and endless speculation, a definitive agreement for Saks to buy NMG for a total enterprise value of $2.65 billion was reached. Amazon is an investor in the deal, as are private equity giant Apollo and Salesforce. Authentic Brands Group, which recently formed a joint venture with Saks Global to grow luxury brands, said it would make a minority investment in Saks Global, after the deal for NMG closes.
“We made a decision, and a proactive decision, to sell to the parent company of Saks and to be integrated into Saks Global,” van Raemdonck said. “We are working on all the last steps to get to the closing, and until we close, we operate as two distinct competitors in the marketplace.” Once the deal is closed, van Raemdonck said, “I think there is a going to be a great group that will bring value to all the constituencies.”