Neiman Marcus 2005 Annual Report Download - page 8

Industry Overview
We operate in the luxury apparel and accessories segment of the U.S. retail industry and have arrangements with luxury-branded
fashion vendors, including Chanel, Prada, St. John, Gucci, David Yurman, Theory, Ermenegildo Zegna, Manolo Blahnik and Giorgio
Armani, to market and sell their merchandise. Luxury-branded fashion vendors typically manage the distribution and marketing of their
merchandise to maximize the perception of brand exclusivity and to facilitate the sale of their goods at premium prices, including
limitations on the number of retail locations through which they distribute their merchandise. These retail locations typically consist of a
limited number of specialty stores, high-end department stores and, in some instances, vendor-owned proprietary boutiques. Retailers that
compete with us for the distribution of luxury fashion brands include Saks Fifth Avenue, Nordstrom, Barney's New York and other
national, regional and local retailers.
We believe that the following factors benefit well-positioned luxury retailers:
• attractive demographic trends, including increasing wealth concentration and an aging baby boomer population;
• growing consumer demand for prestige brands and exclusive products;
• retail consumption patterns of affluent consumers that are generally less influenced by economic cycles than middle or
lower income consumers;
• higher price points and limited distribution of luxury merchandise, which have generally protected high-end specialty
retailing from the growth of discounters and mass merchandisers;
• aggressive marketing by luxury brands; and
• consumer trends towards aspirational lifestyles.
Customer Service and Marketing
We are committed to providing our customers with a premier shopping experience through our relationship-based customer
service model, with superior merchandise selection and elegant store settings of our stores. Critical elements to our customer service
approach are:
• knowledgeable, professional and well-trained sales associates;
• marketing programs designed to promote customer awareness of our offerings of the latest fashion trends;
• loyalty programs designed to cultivate long-term relationships with our customers; and
• facilitating the extension of credit to our customers through our proprietary credit card program.
Sales Associates. We seek to maintain a sales force of knowledgeable, professional and well-trained sales associates to deliver
personal attention and service to our customers through our relationship-based customer service model. We compensate our sales
associates primarily on a commission basis and provide them with training in the areas of customer service, selling skills and product
knowledge. Our sales associates participate in active clienteling programs designed to maintain contact with our customers between store
visits and to ensure that our customers are aware of the latest merchandise offerings and fashion trends that we present in our stores. We
empower our sales associates to act as personal shoppers and in many cases, as the personal style advisor to our customers.
Marketing Programs. We conduct a wide variety of marketing programs to support our sales associates in the communication
of fashion trends to our customers in order to create fashion excitement and enhance our customer relationships. The programs include
both in-store events and targeted, brand-consistent print media communications.
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