Neiman Marcus 2006 Annual Report Download - page 9

• 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.
We maintain an active calendar of in-store events to promote our sales efforts. The activities include in-store visits and trunk
shows by leading designers featuring the newest fashions from the designer, in-store promotions of the merchandise of selected designers
or merchandise categories, often through events conducted in connection with our loyalty programs, and participation in charitable
functions in each of our markets. Past trunk shows and in-store promotions at our Neiman Marcus and Bergdorf Goodman stores have
featured vendors such as Chanel, Giorgio Armani, Oscar de la Renta and Manolo Blahnik.
Through our print media programs, we mail various publications to our customers communicating upcoming in-store events,
new merchandise offerings and fashion trends. In connection with these programs, Neiman Marcus produces The Book® approximately
eight to nine times each year. The Book is a high-quality publication featuring the latest fashion trends that is mailed on a targeted basis to
our customers and has a yearly printing in excess of 4.0 million. Our other print publications include The Book for Men, the Bergdorf
Goodman Magazine and specific designer mailers. Recently, we added The Addition®, which identifies for our younger, aspirational
customers, as well as our core customers, "must have items" for the current season.
We also believe that the online and print catalog operations of Direct Marketing promote brand awareness, which benefits the
operations of our retail stores.
Loyalty Programs. We maintain a loyalty program under the InCircle® brand name designed to cultivate long-term
relationships with our customers. Our loyalty program focuses on our most active customers. This program includes marketing features,
including private in-store events, special magazine issues, as well as the ability to accumulate points for qualifying purchases. Increased
points are periodically offered in connection with in-store promotional and other events. Upon attaining specified point levels, customers
may redeem their points for a wide variety of gifts ranging from gift cards to designer merchandise and trips to exotic locations.
Approximately 50% of our revenues at Neiman Marcus stores during each of the last three calendar years were generated by our InCircle
loyalty program members. Beginning in calendar 2006, we transitioned customers in our previous Bergdorf Goodman loyalty program to
our InCircle loyalty program.
Proprietary Credit Card Program. We maintain a proprietary credit card program through which we facilitate the extension of
credit to customers under the "Neiman Marcus" and "Bergdorf Goodman" names.
On July 7, 2005, HSBC purchased our approximately three million private label Neiman Marcus and Bergdorf Goodman credit
card accounts and related assets, as well as the outstanding balances associated with such accounts and we entered into a long-term
marketing and servicing alliance with HSBC that expires in June 2010. Under the terms of this alliance, HSBC offers credit cards and
non-card payment plans and bears all credit risk with respect to sales transacted on the cards bearing our brands. We receive ongoing
payments from HSBC related to credit card sales and compensation for marketing and servicing activities (HSBC Program Income).
During fiscal year 2006, we outsourced various administrative elements of the proprietary credit card program, including the processing
of data with respect to our proprietary credit card program to HSBC as provided for in the program agreement with HSBC. We continue
to handle key customer service functions, primarily customer inquiries and collections.
6