Evan Smith: If Stanley Marcus were around to celebrate the hundredth anniversary of the founding of Neiman Marcus this month, would he recognize the 2007 version of the company?
Burton Tansky: Yes, he would, and he’d be pleased. We’re larger than he ever imagined his company could be, but the idea of quality, of serving the customer, is very much alive. It’s what we’re all about.
ES: What’s changed since the company was sold two years ago to the private equity firms Texas Pacific Group and Warburg Pincus?
BT: The sale didn’t change our strategy whatsoever—not one iota of how we operate. We went from public to private and didn’t miss a beat. We’re working off the strategy that we developed before the sale, the five-year plan that was in place. Our expansion program is exactly the same as it was. We’ve pushed to open more stores. We’re exactly on target.
ES: How many stores now?
BT: Thirty-eight, soon to be 39.
ES: The thirty-ninth will open in—
BT: September. In Natick, Massachusetts, west of Boston.
ES: What other expansion plans are in the works?
BT: We’ve announced another 5 or 6, so that will take us to 45. And we continue to look for opportunities beyond that.
ES: What factors go into that sort of decision?
BT: It’s a simple process. We study the demographics of the community to determine the wealth factor: Are there enough people with the kind of income we need to support a store? Then we study the psychographics: Do the people who fit our demographic profile have a lifestyle that includes the products we sell? They have to have an interest in fashion. They have to travel. Demographics and psychographics work together. If they come out positively, the possibilities go up. Also, we work only with top developers, which allows us to go into the best centers in the towns we deem “high potential.” And it’s important that other stores in the center are compatible with who we are in terms of quality and service. A good example would be Nordstrom. Nordstrom only serves customers up to a certain level—we go beyond that—but they have very high quality and service and are very good operators. Together we form a strong alliance.
ES: Is there a market where the demographic piece is right on but where you’ve looked at the psychographic piece and said, “Probably not for us.”
BT: Actually, there is: Seattle. But it corrected itself. The psychographic factor was far too casual until three or four years ago, when we saw a real change. People were starting to dress differently. As a result, we’re opening a store there, probably in two years.
ES: I imagine you had similar conversations about Austin before opening there in March.
BT: Austin had similarities to Seattle because of the high-tech community and the casual lifestyle, but it was important to us: It’s in our backyard, and it’s part of the great state of Texas. We needed to allow it to grow. It’s grown so well.
ES: Other than Nordstrom, who else do you see as a competitor?
BT: Our designers, who are very important to us, are also retailers. We compete with them in a number of major cities throughout the country, but they continue to sell with us, and there are certainly enough customers that our business with them has grown substantially. There are also specialty stores in every city, most owned by somebody in the community. On a national basis, I would say Saks Fifth Avenue is a competitor.
ES: What would you say are the chief strengths of Neiman’s at this point in its history?
BT: Everything is of a certain quality: the quality of our merchandise, the quality of the way we operate our stores, the quality of our management team. We have an unrelenting interest in seeing that the customer is served well. There’s nothing we won’t do for a customer that falls within reason; even if it’s unreasonable, we do it. We’re able to offer a customer an exciting experience every time she comes into one of our stores. So the environment, the assortments, the service—that’s the trifecta in terms of our interaction with our customers. Our relationships with our customers develop over time. We have an outstanding sales associate group whose responsibility is to build relationships. From those relationships comes loyalty. Our interest is in building customers for life, not for one day or one hour.
ES: How selective are you in hiring these folks?
BT: We’re very, very selective. A few years back we established a test by interviewing a number of our best sales associates from around the country to try to understand how they view their own strengths. We compare new applicants against that test to see if, in fact, they have the personality, intelligence, wherewithal, and passion to be successful.
ES: And those attributes are … ?
BT: Devotion to the customer, good communication skills—things that you would expect. It’s proven to be very helpful. Our turnover is low. People enjoy working here.
ES: How important is a background in retail?
BT: It’s not necessary. In some cases it’s helpful, no question, because many applicants are already well trained and skilled at working with a clientele. But the most important thing is to bring in someone who has a retail personality: outgoing, interested in people, interested in serving customers, interested in following through and developing a relationship. Someone who will develop a passion. Because this business, like any business, depends on people who see what they do as a career rather than a job. Those are the people we care about. We bring them along, and, if they wish, they have opportunities to move to assignments in other areas of the store. And we train them well. A new entry into our company initially gets about 160 hours of training; over the year, all of our sales associates get about 200 hours of training. Every week