Neiman Marcus Looks to Fix Retail ‘Pain Points’ at Pop-Up Store

(Bloomberg) -- Neiman Marcus Group Inc., facing a department-store slump and failed IPO, is looking for ways to solve some of the retail industry's woes at a temporary shop in New York's SoHo neighborhood.

The store, launched by fashion magazine Marie Claire and Mastercard Inc., attempts to use technology to eliminate retail's “pain points” -- hassles like long checkout lines or inconvenient hours. Shoppers can peruse Neiman Marcus merchandise at the location, which is open until Oct. 12, though the department-store chain isn't funding the project.

With Amazon.com Inc. and other e-commerce sites threatening to take a bigger chunk of department-store spending, the idea is to fight fire with fire: create in-store technology that can ensure brick-and-mortar retail stays relevant.

“We have a team that scours the globe for new technology,” said Mimi Sterling, a spokeswoman for Neiman Marcus. “We're always looking for innovative ways to enhance our customer's experience. And it's through tech that we do that.”

In the shop's dressing rooms, there are touch-screen mirrors that let customers request a different size or color. Shoppers also can complete their purchases right then and there. And a crucial touch in a smartphone-obsessed culture: There are charging stations for mobile devices.

Fresh thinking is more critical than ever for the retail industry, which is reeling from a slowdown in mall traffic and a heavy reliance on discounting. Department stores across the U.S. have been closing hundreds of locations as they cope with the downturn. At Neiman Marcus, an upscale chain based in Dallas, same-store sales have declined for seven consecutive quarters.

The company scrapped plans for an initial public offering in January after two consecutive lackluster holiday seasons. Neiman Marcus also was seen as a takeover target, but Chief Executive Officer Karen Katz tamped down speculation in June, saying a deal wasn't going to happen.

Even with the retail headwinds, most shoppers are still visiting physical stores. According to Mastercard, just 8.4 percent of total retail sales have been conducted online so far this year.

Still, shoppers have increasingly high standards for convenience. And that's where the SoHo experiment comes in.

The shop attempts to seamlessly meld e-commerce with physical brick-and-mortar shopping. At the front of the store, there's a touch-screen display that operates 24 hours a day, letting customers buy merchandise even if they're just strolling by at night. Shoppers also can use their phone to book appointments with personal stylists.

The hope is that more retailers will embrace the approach. Mastercard said it's encouraging high-end brands to visit the store during the next few weeks and view the tech solutions.

Fixing the problems of physical shopping could help bring salvation to beleaguered retail companies, according to retail analyst Liz Dunn. They need to figure out ways to prevent an exodus of customers, she said.

“Removing friction points is a way to combat that,” she said. “We've all had the shopping experience where it's taking too long and they're not using technology seamlessly.”

Seeking Excitement

Leslie Blodgett, a longtime beauty executive, wandered into the shop from her SoHo apartment last week. Most retailers today lack excitement, she said, and the tech-focused approach could help enliven the industry.

“When I travel, which is a lot, I shop street stores and local stores,” said Blodgett, 55, who founded the makeup company BareMinerals. “With malls, unless there's something amazing happening, I just think it's going to drain my energy.”

Other upscale retailers, such as Rebecca Minkoff, have also started incorporating more tech into their stores. Minkoff offers self-checkout, a digital wall that takes orders for a free beverage, and five different settings for dressing-room lights.

Amazon, meanwhile, is moving in the opposing direction. It's shifting into physical stores from the online realm. In addition to acquiring Whole Foods this year, the company has been opening bookstores -- including one in Manhattan.

But Amazon has been slower to make inroads into luxury apparel. When it comes to integrating technology in that category, no one has the perfect solution yet, Dunn says.

“Everybody's trying to crack this,” she said.

To contact the reporter on this story: Alexandra Stratton in New York at astratton4@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Lisa Wolfson