Neiman Marcus Is Shuttering Its Hudson Yards Store - 3 Leadership Lessons Retailers Can Learn From Their Failure

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Imagine a prominent retailer telling employees they must reimburse their company for health insurance premiums paid during furlough . And all while their CEO stands to receive a $6M bonus.

That would be Neiman Marcus CEO Geoffroy van Raemdonck.

Neiman Marcus is in the news again because they recently exited bankruptcy. This short-lived celebration comes on the heels of Neiman Marcus’ announcement to close their Hudson Yards location, arguably one of their biggest, most prominent stores.

So where does the Marie Antoinette impression come into the picture?

Exhibit A: van Raemdonck’s opulent Dallas-based mansion lining the pages of luxury publication Paper City’s September issue.

While everyday employees of Neiman Marcus scrounge to earn a living with fewer shoppers coming in the doors and a lack of events being held for people to dress up for, their CEO is shown lavishly lounging amid Andy Warhol artworks, 18th-century French and Italian furniture, and silk walls.

What's truly interesting is winding the clock back to early 2020 when Neiman Marcus talked about going bankrupt. What evaded many in the public eye, even many inside the Neiman Marcus ecosystem, was that bonuses totaling nearly $10M were earmarked for just a few of the top executives in Neiman Marcus. The CEO received $4 million himself. 

Now, while bankruptcy, layoffs, and oh yes, let’s not forget a global pandemic threaten the future of Neiman Marcus, its leadership gives us three key lessons I believe any retailer can learn from for the future.

3 Leadership Lessons For Retailers Courtesy Of Neiman Marcus

1. Manage the Optics.

If you helped your company get out of $400 billion in debt, then I suppose you may deserve a bonus for that. That said, I don’t think I need to walk you through how awful the optics appear for Neiman Marcus.

For a CEO to receive that size of a bonus while demanding out-of-work employees to redirect their limited income toward protecting the company’s margins is questionable at best.

Certainly, people are on edge given the current economy, but it poses a significant question for customers and employees. They’re wondering, “Is this action or response something I’m willing to take from this retailer, even one that I've loved for a long time?"

In the case of van Raemdonck, I don’t begrudge him for having a beautiful place to live, but my word, with Neiman Marcus exiting bankruptcy, did anyone advise, "True leadership is to show unity with your crew. You probably shouldn't be featuring your mansion right now." 

Later in an article in the New York Post it says Neiman is giving rehired staffers just two months to pay the premiums that would normally be deducted from paychecks and letting others go.

Apparently Neiman Marcus was paying their employees’ health insurance premiums while those employees were on furlough. Now it is reported that Neiman Marcus is expecting that money back while other retailers such as Macy's made similar payments for furloughed employees, and no one is asking for reimbursement.

This is an unfathomable, confounding decision by Neiman Marcus, one I’ve never seen before in almost 30 years working with some of the top retailers in the world. Furloughed employees with Neiman Marcus who can't afford their health insurance premiums are reportedly being told to take out loans to cover the costs.

What does that say to other associates of Neiman Marcus? What does this ultimately communicate to their customer base?

That leads us to closing the Hudson Yards location — an $80 million store with close to 180,000 square feet that opened a little more than a year ago. It’s located in one of the newest eye-popping areas of Manhattan. 

What would it take to keep such a prominent location up and running to weather the fallout of a post-pandemic marketplace? A lump sum of $10M, to use a random number, would go a long way toward long-term success in the Hudson Yards location.

It all comes back to how you’re presenting your brand, your company to your team members, and your customers. If you say, “We’re going to get through this together,” then that’s what you should be doing.

Be wary of those moments when your intentions and follow through don’t communicate the company culture and retail leadership you promote. 

Bottom line? Your success as a leader in retail is directly tied to your trustworthiness.

2. Give a more personal touch.

Mere weeks ago van Raemdonck shared this sentiment, "Stores are still really important. It's where the relationship gets created with the customers." (Textile Future)

As someone who has spent the past 26 years unabashedly promoting brick-and-mortar retailers, I couldn't agree more. 

Yes, we have to have online tools. Yes, we have to use BOPIS (buy online, pick up in store), curbside service, and other mobile order options because of the COVID-19 pandemic. 

However, what makes a retail brand great comes down to its in-store connection with customers. 

Neiman Marcus made the strategic decision — a flawed decision at that — to “substantially” reduce headcount to pivot to more digital tools. To me, that was a head-scratcher because a brand with fewer people on the floor is less likely to provide exceptional customer service. 

No matter what technology they invent, nothing will outdo human face-to-face interaction.

Giving a more personal touch means valuing your employees as your most important asset. Retail Sales Strategy during or after Covid still needs to revolve around the leadership philosophy that when you make employees' day, they’ll make your customers’ day. It’s risky business to have fewer faces on your sales floor when selling premium items. 

Now is the time to double down on customer experience.

Unfortunately, it doesn’t seem like that’s where Neiman Marcus is heading. It’s unclear whether their decision to reduce headcount is designed to streamline staffing, reduce costs at any cost, or to better align with a new vision for the company. 

But make no mistake, luxury is a bespoke experience — it is not meant to be one-size-fits-all. 

Whether you’re a mom and pop boutique retailer or a global titan in the retail space, your customers deserve a great connection. 

Shoppers come into your store for an experience with human beings. All of the latest technologies are great for ease of commerce, but you can’t ignore building rapport and engaging a stranger. 

Your employees need to have the knowledge and communication skills to engage your customers in a welcoming, relaxed way, especially while everybody's wearing masks during the pandemic.

Part of your sales training needs to prompt each employee to actively seek connection with your customers. 

One of the biggest mistakes I see luxury brands making is in training their sales staff to be reserved and aloof with customers.  Many are saying to themselves, “We don’t approach the customers. We wait for them to approach us.” 

What that does is makes your customer feel unseen and inferior, which is accurately translated as a conceited approach and a big turnoff for many potential customers, especially younger consumers.

And we all need younger customers. 

The best products demand the best customer experience. Being a luxury brand opens the doors to create a remarkable experience for anyone who enters your store.

Create the relationship with your employees and they’ll create one between your merchandise and your customers. 

Miss that and you have a whole store full of merchandise waiting to be picked for online orders.

3. Be brilliant with the basics!

Nowhere did I see this opportunity missed as much as when I shared a visit to the Neiman Marcus flagship store a few years ago. It was around the holidays and I happened to be in the area. I thought, "Oh, let's see what this beautiful store looks like."

I filmed a video after my shopping experience buying a leather jacket at Neiman Marcus. Now to be honest, I went in there just to look around not be a secret shopper, but the experience was disappointing. There was no service in the men's department, not even a greeting as I checked out jackets that were several hundred to a thousand dollars or more. 

No one guided me to try on the jacket. Total silence. I did like the jacket; the color looked good on me, so I ended up buying the jacket, despite the retail experience.

After checking out, as I’m headed toward the door, a team member mentioned, “That jacket would look really good with a pair of black jeans." Not a great time to suggest an add-on right as I’m walking out the door.

I asked, "Oh, do you have black jeans?" "No." The last-minute mention ended in a dead-end, and that experience likely cost them several hundred dollars because I liked his suggestion.

What to avoid saying to your employees? That it is ok to wing shopper engagement. 

Now in case you think I have a bone to pick with Neiman Marcus, I should tell you I’ve been a loyal customer. In fact, I told the story of a purchase of cufflinks at Neiman Marcus in Newport Beach, California as part of my #hope4retail project

See also, Retail Store Tour - What Your Luxury Customers Are Missing

In Sum

So many retailers - maybe even your store - are suffering because they don’t understand how to be brilliant with the basics.

Again, it doesn’t matter what your widget, organization, or location is, a well-trained, engaged salesperson is the ultimate key to a great sale. 

Selling is a transference of feeling; because I feel good about my job, the product, and helping other people, I can share that enthusiasm and make a connection.

Miss that and bring out the sale racks.

All of the sales apps, tools, and automations in the world can’t compare to an in-person, ready-to-serve-you sales associate. Being brilliant with the basics starts with human connection. 

That’s what will put your customers at ease heading into 2021 and beyond.

Instead of just walking through the store and glad-handing employees, why not spend a full 30 minutes observing your sales floor? And no, a secret shopper getting paid $5 to walk your store isn’t an accurate review nor is a survey on a receipt. 

You need to delve into what a new customer’s experience is from the moment they step inside your store. What looks familiar to them? What are they expecting? What do they come away with from their visit? How is your sales staff engaging a shopper?

I hope Neiman Marcus turns it around and builds an even better brand for the future. But I don’t see how their CEO will last long in this role after the past couple weeks.

Regardless of their success, what I know is that your retail environment will be significantly stronger if you manage the optics, provide a more personal touch, and be brilliant with the basics. 

Focus on those three, and you will be amazed at how well your store shines as we head into the holiday season.

Being brilliant with the basics starts with great sales training. Get the #1 retail sales training in the world from Bob Phibbs the Retail Doctor. Visit to learn more.

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