No industry has experienced the disruption of digital transformation more than retail. Amazon.com has upended virtually every segment of this venerable industry, well beyond the bookstores that constituted the online retailer’s original target.
The luxury segment of the retail business is by no means immune. Furthermore, it has an additional layer of digital disruption, as the self-service nature of e-commerce goes contrary to the high-touch essence of luxury retail.
The result: not only must luxury retailers bet their very existence on digital transformation, but they must do it without jeopardizing the core of what makes them special to their customers – a tall order to be sure.
Neiman Marcus: Beyond Omnichannel
Neiman Marcus Group, which in addition to its flagship stores owns luxury retailers Bergdorf Goodman, mytheresa.com, and Last Call, faces just such a bet-the-company predicament. Now with this year’s all-important Black Friday, the retailer continues to drive innovation.
I interviewed Rajeev Rai, Chief Technology Officer and Vice President of Neiman Marcus. “Retail itself is going through a tectonic shift,” he explained. “We’re constantly reinventing ourselves to be relevant in this ever-changing world.”
Retailers have been reinventing themselves ever since Amazon became a serious competitor, of course – so what’s new this year? “Our core theme: we’re thinking about the customer of the future, in addition to the store of the future,” Rai said. “The traditional notion of a store is getting dissolved. The new store is everywhere customers are.”
In other words, Neiman Marcus views their digital presence as the ‘door to the store’ – even beyond the omnichannel strategy that most brick-and-mortar retailers have already adopted.
Omnichannel has been the hot buzzword in retail for a few years now. An evolution of the earlier notion of multichannel, which recognized that customers may shop in person one day or via the web on another, omnichannel reflects the fact that from the customer’s perspective, there’s only one channel with different touchpoints, depending upon the customer’s preference.
For Neiman Marcus, however, omnichannel doesn’t go far enough. “We want ‘seamless retail,’ not just omnichannel,” Rai explained. “Omnichannel has been a much-abused word. Experiences are what we need to drive for the customer.”
To achieve this level of seamlessness, Neiman Marcus is implementing an ‘any/any/any’ approach, meaning any device, any channel, or any touchpoint, where touchpoints might include Facebook Messenger or any number of other social media platforms.
Regardless of the digital underpinnings, Neiman Marcus realizes that it must maintain its position as a luxury brand. “Any/any/any has expanded,” Rai said. “Luxury retailers’ digital presences are expected to be available, fast, relevant, personalized, targeted, and dynamic.”
Personalization at Speed
Personalization has been an important capability of retail web sites since the 1990s. Today, retailers like Neiman Marcus continue to raise the bar on this technology. “How do you ensure the customer experience is maintained regardless of channel?” Rai asked. “The customer’s intent right now is the pinnacle of personalization.”
Determining that intent is, in fact, a Big Data challenge in its own right. “We know a lot about our customer. Her location, her search keywords,” Rai said (he always refers to customers as female). “We’re leveraging digital exhaust and information from other locations, for example, in the store. We use AI to triangulate all the information.”
‘Digital exhaust’ refers to the data that stream from the daily interactions people have with their devices as they interact with various sites, apps, and other touchpoints. To leverage such information in real-time in order to achieve the highly personal touch Neiman Marcus promises its customers requires the application of artificial intelligence, or AI.
Neiman Marcus must balance the power of AI-driven personalization with the performance its customers expect from their interactions with the retailer. “We use AI to stream content to the device and machine learning [one type of AI] to understand customer behavior,” Rai explained. “We’re using the Instart Logic platform to serve personalized, dynamic content at speeds so that we’re one of the top web sites in the world – not just serving content but getting that content to the customer’s device.”
Combining AI and the Personal Touch
The customer’s experience on her device of choice may be perfectly personalized and blisteringly performant, but there’s no escaping the fact that devices lack the personal touch.
To augment the missing human element, Neiman Marcus is putting AI-driven capabilities on the devices its sales associates use in the store. “In the past, sales associates could remember ten customers very well,” Rai explained. “Give an AI-powered device to the associate, and now they can know 60 customers intimately. That’s the power of AI.”
With these new capabilities, sales associates can provide the personal touch even after a customer leaves the store. “We give a smart list to each associate today. These are the people you should call, text, or email for these reasons,” Rai added. “There’s a direct correlation between conversion and these technologies.”
Whether to interact with personalized software, a sales associate via a device, or in person in a store is always up to the customer. “We put AI behind that human touch,” Rai explained. “When the human isn’t available, we give her the luxury service she appreciates in the store. Instart Logic has helped us deliver dynamic, personalized content with AI built in.”
Connecting the Past to the Future
The technology continues to advance and the competitive landscape is very different than just a few years ago, but some things never change. “The customer has always been at the core of Neiman Marcus,” Rai said. “We’ve been successful for 110 years in our stores. We must continue to bring our extensive knowledge of luxury fashion and brands to the customer on our web site.”
The customer herself is also changing – and Neiman Marcus is committed to staying one step ahead. “We’re redefining what luxury means for Generation X and onward,” Rai pointed out.
He’s the first to admit, however, that he doesn’t have all the answers. “We’ll continue to experiment,” he said. “In the 2000s we were building a foundation. Over the next few years, we’ll run lots of experiments to understand what works, then repeat to see what sticks.”
Taking such an iterative approach is a digital best practice for dealing with disruption. Neiman Marcus has its work cut out for it, but with Rai’s help, it’s on the right track.