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The Future of Luxury

A Conversation with Karen Katz, CEO, Neiman Marcus

An interviewed by The Robin Report; written by Michael Dart and Robin Lewis

Please note: We interviewed Karen as part of the Retail@250 series, several months before Neiman Marcus announced plans to look for an investor.

Some industry insiders have cast doubt on the future of retail’s luxury segment, saying consumers are becoming less brand loyal and less obsessed with stuff, and suggesting that brands are losing cachet as luxury items become ubiquitous. Yet Karen Katz, CEO of Neiman Marcus, remains deeply confident, as she pursues a strategy attuned to the times.

Karen spoke with us about the future of luxury, the tremendous change facing all corners of retail, and how to structure the organization of the future. She is certainly an informed observer. Karen was executive vice president of marketing, strategy and business development at Neiman Marcus before being named CEO in 2010.

Near Chaos

Some of the leaders we’ve interviewed for Retail@250 suggest that the current environment is essentially normal, because retail has always been in the throes of change. In contrast, Karen believes we’re in the midst of a truly revolutionary transition.

“There is near chaos in the industry because of the amount of transformation that needs to take place,” Karen said. “It’s all happening at such a rapid pace. The challenge and the opportunity is to get your leadership team to view what’s happening three dimensionally. The three dimensions are making sure we excel across customer, product and engagement in the present, staying fully alert to what could shift in the near term, and envisioning just how different the entire picture might be a decade from now. We need to keep one hand on the steering wheel focused on today and tomorrow, but we also have to keep an eye on the future. We have to apply what we are learning today to what could be unfolding 10 years from today.”

Karen believes retailers can find their way through the chaos by keeping their eyes fixed on their core consumer.

“We start with the customer and think about the ways she feels about service, pricing and experience, and then we figure out how we deliver that in a way that is technologically sound, digitally easy, and really delivers on the service component. That’s what our customer expects,” she said.

Casual Luxury

Among the most significant changes shaping the luxury industry, Karen told us, is what she calls “the phenomenon of athleisure.”

“There continues to be a push towards a much more casual lifestyle, even from customers who buy the best of the best,” she said. “For example, we’re now selling men’s sneakers at luxury prices. I think we have just scratched the surface of this casual luxury. It will continue to grow. We’re only in the first or second inning of this trend.”

Another big change: how to grapple with millennials, who many industry insiders believe are not brand loyal and don’t value stuff as much as their parents. Karen disagrees with this generalization.

“For people who sell luxury, it’s not yet clear what Gen Y and Gen Z are going to need because they are not yet in their power earning years,” she said. “There’s been a lot of analysis whether they only want experiences versus things, but in my mind it’s going to be an equal amount of both. Now she may want a different luxury buying experience than her mother’s. So that story will really play itself out in 2026, when these younger shoppers are at the height of their careers. We are watching all this very carefully, and we do know from our data that Gen X is acting very similarly to baby boomers in the way they shop, although they are more digitally focused.”

Soulful, Experiential, Social and Personal

Karen is also more optimistic about the future of stores than are some others in the industry.

“I would not count stores out,” she said. “We have 70 percent of our business in brick and mortar, and we are believers that stores are going to make a difference. But stores need to be reinvented. They are going to need a more pronounced social interactive quality, with more emphasis on the service experience in the store.”

Karen thinks the U.S. market has too many stores, and that many are too big—especially department stores.

“You can walk most of the big department stores and they feel so vast and soulless, with way too much product,” she said. “If you make stores smaller and inject a few things that give them more intimacy and soul, I think people will want to come to a store. At Neiman Marcus, we have small stores. And we want people to enjoy themselves while they are shopping, so we offer experiences, with restaurants and spas. We put a Champagne bar in the shoe department of the Beverly Hills store. We have a world-class art collection on display. We have memory mirrors; you stand in front of the mirror and it takes a 360-degree video of all the different outfits you try on that you can share with your friends, so it can be a very social activity. It all adds to the ‘OMG, you thought of me!’ factor.”

Karen says digitally connected experiences will be critical to any in-store initiative.

“Digital has become an integral part of the store shopping experience,” she said. “A large percentage of our customers do research online first and then come into the store. Or they’re receiving information from our sales associates who are all powered up with iPhones and our internally developed sales associate apps. Or they are receiving texts and emails from our sales associates with product suggestions based on what they have bought in the past.”

This level of personalized experience, Karen says, is essential to continue to deliver on Neiman Marcus’ brand promise—high-quality service and personal relationships in the digital age. So the company is exploring how to take personalization to the next level.

“We’re not selling commodities, we’re selling emotion,” Karen said. “So we’re thinking about how to satisfy emotional needs via data analytics. There are so many ways you can become more present in your customers’ lives. Imagine, based on the permission you give us to be in your life, that your alarm goes off on your iPhone, and the first thing you get is a text message from Ken Downing, our fashion director, who is so well known with our customers, suggesting what to wear that day. How can we do this? We have access to the weather in your zip code and access to your calendar, so we know what your day looks like. And we have a pretty good idea of what you’ve bought at Neiman Marcus. That level of personalization is not that far off. Customers trust Neiman Marcus and they want us to help them dress distinctively, with expert insight into what’s fashionable, and what goes with what. It’s just a matter of time before they allow us to have a much bigger part in their lives.”


Karen say a major strength of Neiman Marcus is its organizational structure, which is customer-focused above all else.

“Our head of e-commerce leads every touch point, in store and online,” she said. “We work to have this perfect connection between everything digital and everything in the store. No one is territorial, because we all share one purpose. We look at customer spend from a 360-degree perspective, and apply that to everything, from what we buy across channels to evaluating inventory. We have a head of customer experience to provide a channel-agnostic ultimate customer experience.”

The reason Neiman Marcus has made these organizational decisions is Karen’s belief that much of the company’s business is digital-first, and that will continue to grow.

“I believe that the starting point for our customers is our site,” she said. “Mobile sites have to be really strong because that’s where she starts with our brand. We hope it excites her to engage with the product or bring her into the store if she lives in one of our markets.”


by Michael Dart and Robin Lewis

May 8, 2017


28% of Consumers Watch Live TV

Male hand holding TV remote control.

A Business Insider article reports that Cox Consumer Insights, “discovered that only 28% of consumers watch live TV.” Cox attributes this to the “growing popularity of Hulu Plus,” but also says that 53% of people watching content that isn’t live — was from DVR and on-demand offerings.

So, does the technology behind increasingly popular video streaming services—think both Amazon Prime Instant Video access and its Fire Sticks—actually make cutting the proverbial cable cord cheaper or easier than all-in-one telecom services? Not really.
But maybe the most amusing part of the post is when Cox gets tied up a bit in logical knots by trying to criticize cord cutting’s reliance on the internet — which Cox itself also provides:

We hate to say it, but it sometimes happens: your WiFi signal drops or your Internet temporarily cuts out. Internet-free hours can be stressful, but we think they can be quelled by a little channel surfing.


What Book Did Bill Gates Read This Year?


Drake Baer of Business Insider Puts This Book at the Top of His List

In “Thing Explainer” Randall Monroe describes how everything from rockets to smartphones to the US Constitution work — using just the 1,000 most commonly used words in English.

Gates says that it’s a “brilliant concept,” because if “you can’t explain something simply, you don’t really understand it.”

And Monroe, a former NASA roboticist and creator of beloved web comic XKCD, is just the guy to do it.

One of his favorite explanations is why microwaves (which Munroe calls a radio box) cook frozen foods unevenly:

When you put iced food in a radio box, after a while, parts of it start to turn to water. But since radio boxes are really good at heating water, those parts start to get hot really fast. They can even get so hot they start turning to air—before all the ice is even gone!”

Not only does the book give you a better understanding of how the objects in our lives work, but it’s a lesson in making complicated ideas relatable.

It’s “a wonderful guide for curious minds,” Gates says.



How to Make the Most Out of Your Marketing Plan


Most small businesses have a very small marketing budget. While larger businesses have the ability to invest massive amounts of resources into their marketing efforts, most small businesses don’t have that luxury. The key for smaller businesses is to figure out how to get the most bang for their marketing buck, which is what Linda and Mike Boyd of the Denver-area Instant Imprints franchise have done.

Instant Imprints is a nationwide franchise that combines screen printing, embroidery, signage and promotional products all under one business umbrella. Owner Linda, and her husband, Mike, who is in charge of business development, have been perfecting their marketing plan for the past four years. Mike Boyd said the key to coming up with a good strategy is not being intimidated by the marketing process. “For many years we let what we didn’t know about that discipline stop us from doing anything,” Mike Boyd told Business News Daily. “Once we stopped trying to figure out ‘marketing’ and instead did things that would make us more visible to the people who wanted to be our customers, stuff started to happen.”Here are the points Boyd said he and his wife focus on when creating a cost-effective marketing plan.

Don’t waste time doing the things you aren’t good at. Boyd said the first step in creating a successful marketing strategy is to implement only those things you feel comfortable doing. For example, he said he and Linda are not sales people. So while outside sales is a favored action in their industry, it isn’t something they’re good at, so they don’t include it in their marketing plan. “We instead do more of what we can do well and consistently,” Boyd said of where they devote their resources. For them, that includes weekly emails, direct mailings and pay-per-click campaigns. Use promotions to make customers feel special. One way the Boyds let customers know they are valued is with their “steal a card” program. Every time they get a business card from someone they meet — whether it is a customer or at a networking event — theyturn it into a luggage tag and send it back to the person. He said they also include a note about how they can provide suggestions for useful promotional items — like the luggage tag — for them to give to their own customers. “It is a little self-serving, but at the same time it gives them a gift,” Boyd said.

Be a business leader. The Boyds have also worked at acquiring new customers by becoming active in the local networking organizations, such as BNI and the chamber of commerce. “We knew that sitting within the four walls of our shop and waiting for the next customer to find us wasn’t a good plan,” Boyd said. “You need to become a business leader in your community.”Say thank you. One way the Boyds focus on gaining repeat customers is by always saying thank you. Since the business’s inception in 2004, the couple has sent thank-you notes to every single customer after each purchase. Not only does it leave customers with a good impression, but Boyd said it also serves as a reminder to them that there may be something else they want to order.

Change what doesn’t work. Besides focusing on what they do best, Boyd said small business owners can’t be afraid to alter their plan when some aspects aren’t working. “All of our tactics haven’t survived,” Boyd said. For example, he said they originally participated in a business Welcome Wagon program that introduced them to all the new businesses in their community. While it helped them meet a lot of new people, Boyd said it never turned into actual sales. So instead of spending the money on that, they repurposed those funds to a Google Adwords pay-per-click program. “We have had that kind of evolution,” Boyd said.

In the end, Boyd said their efforts are paying off. The couple has increased their per-order sales by more than $150 since 2012 and has already set sales records each month of 2014.”We are on a wicked pace this year,” Boyd said.
What small business owners need to remember about creating a marketing plan is that it needs to revolve around making themselves more visible to those they don’t already know and keeping customers in the fold after a sale is made, according to Boyd. He said that’s why their weekly emails and thank-you note program are so successful. “That really makes an impression on customers,” Boyd said. “They don’t expect you to carry on the dialogue after the transaction.

Originally published on Business News Daily.

Written by Chad Brooks,Senior Writer


How Color Affects Advertising

JAVA JOLT_BLOCKS copyOur creative director, my wife and partner, Deborah Irwin Pond, is a doyen of color in the marketing and advertising agency field. She sees things in colors that linear minds like mine cannot discern without being carefully guided. Her sensitivity extends to understanding how colors affect people and therefore how they should be used in creative advertising and marketing.

For example take our website. One of our objectives in creating the site was to convey a feeling of trust and strength. We want our advertising and marketing clients to feel comfortable with the advertising and marketing advice we give them. In the world of color and emotional impact in advertising, our Augusten Blue does exactly that. Not all the time but most of the time with most people.

For another example, take a look at the little cowboy with the big white hat that’s located on our WORK page. Deborah created this image in doll form for a Psychiatric Center. It was used to communicate with children who had been abused. It began the process of communication through the elimination of fear. Again, you see the generous use of blue with its message of trust and strength. However, Deborah combined that with a white ten-gallon hat. Why white? Because white is the color of purity and cleanliness – an emotion that these children are attempting to resurrect in their consciousness. There is also another quality to this little character. It speaks to the idea of safety and trust. Can you guess what it is? Call Deborah. She will fill you in.

Conversely the marketing color choices for the Calypso Resort Community (also on our “Work” page) reflect warmth and cheerfulness. These emotions are associated with good times and relaxation. Want to know more about how different colors in advertising and marketing can affect your business? Contact us at hello@augustenadv.com. We will give you the lowdown.


Are Long-Term Ad Agency Relationships Good?

We Build RelationshipsIn our business, one of the great things that happens is the creation of a long-term client-ad agency relationship. It starts with doing a good job, making the right recommendations, creating profits for the company you represent. But it becomes much more than that as the years go by.  Over time, the ad agency’s emotional investment becomes stronger and stronger and the ties to the client become tighter.  In fact, all of a sudden, ad agency personnel find themselves in the position of working with the company longer than most of the client’s employees.

The most successful long-term advertising relationship we have had is with Hogan Homes in Victoria and later in Corpus Christi, Texas.  Today, Hogan Homes is the leading home builder in South Texas having built over 6,000 homes.

We still remember the day when Al Hogan visited our first office in Houston. He and his sales manager, Nelson Holz, wanted to be persuaded that we would be the best choice to help build his 11-year old company into the leading home builder in South Texas.  Our record of representing home builders and real estate developers was enviable even then but it had been carved mainly in large metropolitan areas e.g. New York, Philadelphia, Miami and Houston. Victoria, Texas was another matter entirely.  But Al and Nelson handed us the challenge and we ran with it.  Did we succeed?

Thirty-five years later, we received this email from Al.

“For 35 years I have collaborated with Ed and Debbie on market strategies, public relations issues, industry award presentations, and industry awareness of my company Al Hogan Builder, now Hogan Homes Texas.

Time seems to have flown by which I guess shows how much fun we had working together! They had a special place in our company’s success and have helped us work through the economic turmoil of the ’80’s and ’08 Great Recession.
I am very grateful for their assistance and friendship.

Al Hogan

Thank you Al Hogan – for everything


How is Social Media Advertising Changing?

plumbing-social-mediaSOCIAL MEDIA EXAMINER, an excellent source of social media advertising information, issues an annual report on how marketers and advertising agencies are using social media advertising to build their businesses. Here’s a quick summary of Social Media Examiner’s primary findings from their 2015 report:

• Twitter, YouTube and LinkedIn hold the top spots for future advertising plans. A significant 66% of marketers plan on increasing their use of these social networks.

• Marketers want to learn most about Facebook. While 93% of marketers are using Facebook, 68% want to learn more about it and 62% plan to increase Facebook activities.

• Video becoming important. A significant 57% of marketers use video in their marketing. However, 72% want to learn more about video marketing and plan on increasing their use of video.

• Podcasting on growth trajectory. Only 10% of marketers are involved with podcasting. Yet 26% plan on increasing their podcasting activities and 43% of marketers want to learn more about podcasting.

• Facebook and LinkedIn are the two most important social networks for marketers. When allowed to only select one platform, 52% of marketers selected Facebook, followed by LinkedIn at 21%.

• Only 45% of marketers think that their Facebook efforts are effective.

• Tactics and engagement are top areas marketers and advertising agencies want to master. At least 91% of marketers want to know the most effective social tactics and the best ways to engage their audience with social media.


Digital Dominates Marketing

When I was a young man in this business I attended a weeklong seminar in New York that emphasized how marketing executives had to grab hold of the computer revolution and take it away from the accounting department’s sole ownership.

In a recent article, Harvard Business Review outlined just how far that revolution has come in the digital age. The article notes, “Today, digitally recorded data describe nearly everything about our world … and it’s the marketing department that’s become the central depository (for this data).”

I’ve been around long enough to have lived through this revolution so, in a way, looking back on it, I’m surprised at just how rapidly everything has happened.

Everyday, nearly first thing, I check analytics for those clients we represent. I can determine who their customers are, where they come from, whether they like football or fütbol, and whether they use a desktop or a mobile to access information. I can use that data immediately.

Yes, advertising has changed dramatically. It’s much like a train that has entered a tunnel; a steam engine going in, a bullet train coming out. What will it be tomorrow?

Edward M. Pond
Augusten Advertising


Advertising Trends?
How about this one?

The trade magazine Advertising Age has reported that the Atlanta office of BBDO “ … is shifting its focus away from TV production and toward content and analytics as marketers seek a different mix of services.” The publication also reported, “When the transition is complete, more than half the staff will be devoted to analytics, small screen content production and digital creative.”

The advertising world of Mad Men may no longer exist. Have the nerds taken over?