Well, they have to make it truly luxury. This is what killed Joseph
a bank. If you a call. When Men's Warehouse bought them, they
started to discount. They got on that slippery slope and they admitted that they
killed a luxury brain. You know people are smart shoppers. Now you need
to really have luxury. You need to really do luxury, and you know
you need to protect it by not discounting. You're listening to Carrie Let's's Financial
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and watching the Financial Survival Network. I'm your host, Carrie Let's. Hey.
Recently big merger and the luxury retail tail end of the market Sacks and
Nieman Marcus Sacks is no longer a SAX. It's owned by Hudson Bay Corporation.
I guess out of Canada. The interesting aspects of this merger, the
upcoming merger, It's not completed, yet it needs to get a couple of
approvals. Is that the other partners and junior partners involved. Number one is
Amazon and number two is Salesforce dot com. Our good friend Carl Gould is
with us. You find him at Carlgould dot com and if you've got a
question for him or myself, you can shoot me an email KL at Carrie
Lutz dot com. Carl, Welcome back. So it looks like all the
turmoil that occurred in the lower end retail segment that's kind of been rationalized by
Amazon. It's spreading to the luxury segment, which has been in the past
somewhat recession or consumer depress and resistant. What does this mean here, Well,
I think this is a pretty smart move by all involved because Walmart occupies
the value segment. Target occupies the mid sector mid segment of the sector,
and now we have somebody who is going after the luxury sector. So this
is a pretty smart move to create a powerhouse in that area. Bringing Amazon
in tells me that they're going to have a significant e commerce play and this
is really smart for Amazon to have a network of stores that can now solve
the last mile delivery problem for that. And we should mention that Nieman's went
bankrupt in twenty twenty, not really from an operational standpoint, but they were
owned by some hedge fund I believe, and the hedge fund leveraged it to
the hilts to basically take their investment out and get their profit up up front,
and then they kind of left it to the wolves. Yeah yeah,
And and look, retail is in a transformative you know period right now,
and it needs to find what it's going to be going forward. So that
was not the time to burden it with a lot of debt and pull cash
out. But you know, with it what they want, you know.
Yeah, yeah, so yeah, you know, like the hedge funds only
care about one thing and that's them. Look, and that's their job.
I'm not belittling it. But when it comes to a social consciousness or social
conscience, I should say, and they don't have any right right So for
sure, well, this this is a smarm move or in a stunt,
it's a smarm move for salesforce. And one salesforce comes in that tells me
that they're going to look to build an online community, they are going to
be looking to really add higher level services to the customer base, and all
of this works if they created they create a renewed and reinvigorated shopping experience.
If it's still boring to go into the stores, this is not going to
work. But if they create a great shopping experience, and this has a
lot of lakes. Once upon a time, when I was a working stiff
and I used to have to go to an office, I couldn't have the
luxury of working out of my own home. I was a Nieman shopper and
I even had my own personal shopper there, Mary Alina. I hope she's
still doing well in the White Plane store. And you know, I used
to spend you know, they the nickname of Nieman Marcus is needless markup.
And you know, I was spending a fortune, you know, buying four
or five suits and jackets a year and all the other stuff. And then
one day I went there on sale and saw all the stuff I had bought,
you know, friar was like forty or fifty percent off. And then
I became a Niemen sale shopper. And then one day I up to their
outlet and Woodbury Commons in New York, and I found that, hey,
they don't have the latest and the greatest, but who cares. It's jackets
mainly I was in the jackets. Then it was in insursuits, and I
became a Niemen's outlet shopper. And then one day I was looking on eBay
and I said, wait a second, they got all that stuff there,
and it's a half of what it is at the outlet. And I became
a Niemen's eBay shopper, which I'm sure they loved, right, I mean,
and we're both boomers. I guess I'm a boomer. Maybe you're an
exert. You know, the whole concept of the workplace, evolution of hybrid
work home, all these things are making everything different now and how does it
work here? Well, they have to make it. Truly loves you.
This is what killed Joseph a Bank. If you a call. When Men's
Warehouse bought them, they started the discount, they got on that slippery slope
and they admitted that they killed a luxury brand. You know, people are
smart shoppers. Now you need to really have luxury, you need to really
do luxury, and you know you need to protect it by not discounting.
You know, during the auto crisis of two thousand and nine thirteen, Lexus
went out of its way to say, we are not going to discount on
automobiles, even if we sell less, because we were going to protect our
brand, and Lexus as a result, bypassed Cadillac and they became known as
the standard. And so if you truly give a luxury proper and you protect
your pricing and you protect your customers, they will respond and they'll respond positively.
But yeah, if you start discounting, everyone's onto that. The internet
already handles that part, you know. Yeah, well the only thing that
isn't discounted is the tailoring. Right when I paid full price, the tailoring
was included. Then when I started being a sales shopper, that was the
end of it. They charge you for the tailoring. And now, you
know, my tastes have changed, and I think that is what's happened a
lot, is that we're more casual. You know, I was an attorney.
I remember the day I was in a suit and tie every day,
every law off as I went to, everyone else was a suit in a
suit and tie. Then they started dressed down Fridays and then it was like
if you got caught in a suit or a jacket and tie at your law
firm. They knew that you were out there looking for a new job and
you were going to pay rice. I mean, it's just an evolution of
things. And yeah, you know, you go to other countries and they
still have the formality in Asia. You know, you go to Japan,
to China and they're all wearing suits. Now grant that they can make them
custom for ten percent of what a fancy suit at Neeman's costs. But everything's
changing here and now you can even get those suits made yourself. Not as
cheap as going there, but you can order it online and get your measurements
done and then they send you some reasonable effect simile for a fraction of the
cost. Yeah. I look, they're going to have significant challenges ahead of
them to prove that it's worth going back to their storms. Because you know,
there's two economies out there, Perry. There's the standardized economy and there's
a customized economy. And the standardized economy is anything that you know it's going
to work, you know it's going to fit it. You don't need a
consultation, you don't need to speak to an expert. You could order it
and buy it. And that's that's what the internet is great for. I
don't need to go out and shop for the paper. I know what I
want, I know it works, I buy it. Well. When I
need an experience, or I need consultation, or I need somebody's expertise,
that's where they have a chance. And if you look at Apple Storms,
if you look at even Microsoft stores, and you look at this, you
might. But the point is is that the interactic they're engaging, and you
want to go there, Shields Sports Store. I'm out here at Colorado.
I went into a Shields Sports store. They have a ferris wheel, bowling
alleys, an arcade, and they have a cafe inside of their store.
The place was packed with people of all ages experiencing things and buying. And
that's where you know, and Neiman Marcus isn't going to go in that direction,
of course, but they do have to make it interactive, and they
have to make it an experienced for their shoppers. And the other Thingnimon's used
to do. They used to buy me lunch in their restaurant for my birthday.
So in the hopes, of course that I'm going to drop more money
still and hey, you know, I'm not even talking about knockoffs now.
But I pride myself on my internet shopping prowess here, and if I really
want something badly, I'm going to find it out there somewhere, even if
I got to go to halfway around the world, Carl. So it's a
global anatomy. One thing I will say, Nieman's stores are always clean.
They're always orderly. It's not like you go into like certain other stores and
the stuff's piled up. But look, the most problem one of the most
profitable chains, Nordstroms. They've been closing stores every major retailer out there luxury
otherwise, maybe the luxury boutiques they can afford, like a Louis Utah to
maintain a store even if it loses money, Ralph Lauren, they can do
that. But the department store is they got to make money on every square
foot right exactly exactly, and you make money on that square footage in different
ways, and so they are going to have to reinvent the experience. Otherwise
this is just a bunch of you know, this is just a bunch of
companies coming together to lose money together. It's branding. Here, let's talk
about branding. You're a master brander, and you know the Niemen's brand.
They also owned Bergdorf, Goodman and Sachs brand. Actually, Sacks is not
as good a brand as Niemen, never was as profitable in their heydays.
But remember the Niemen's catalog and you used to run to it and they'd had
his or her flying saucers. Isn't her helicopters, isn't her as Rolls Royce's.
You know, we don't have paper catalogs for the most part, but
they might still send them. But I'm not on their list anymore. But
you know, it was an experience just to get the catalog even though nobody
bought that stuff, right, nobody bought it so well, look, Harley
Davidson makes more profit dollars off of their apparel than their motorcycles. Hey,
they're a motorcycle company that sold you on the lifestyle. They became a lifestyle
brilliant, brilliant, brilliant. Right now, there's a lot of different parways
Niemen and Sacks and Bergdoff could go, but they've got to they have to
reconnect with that, with that shopping and turn that into an experience. I
suspect they'll be consolidation. I suspect that they you know, you're going to
see smaller stores and less of them. But if they are, if they
are a great place to go, or they're intriguing, or there's specials that
you don't get anywhere else, it's gonna work. Hey, talk about experiences
you've been on an airline lately. I mean, I'm flying off to Vegas
today for the Freedom Fest conference. It's kind of a libertarian get together.
I have a lot of friends there, friends in Vegas. So I get
an update from Jet Blue at eight twenty seven am, talk about experience.
Here, your flight is delayed and now is departing at eight forty one instead
of eight ten. Then at ten thirty nine I get another text. Flight
is back on schedule, back on time, it's leaving at eight ten.
Then I get another one like just as we're speaking here at one sixteen,
update your flight it's delayed and now the party get nine to twelve. Now
should I be happy? I guess I should be happy. They're keeping in
contact with me. But now they are trying. Yeah, they're trying,
but but now they're they were back on schedule. So it's like Okay,
I got to change my right, I got to change my time frame now,
but then it's back and now it's not. Now. I don't know
whether you trust them or not, and whether like fifteen minutes before it's uh
uh, it's back on time. Come on down. I'm like, you
know, fifty miles from the airport here. Hey, you know they are
trying, and you know most of the airlines are doing similar things now,
but still when their service stinks, Carl, their service still stinks. They
still have to look, you know, when you have an ol adopoly or
a monopoly, when you don't have to have as good as SERTs. The
worse the brand, the better the service. The better the brand, sometimes
the worst service, you know. Oh yeah, yeah, well we're oping
for is a little bit of both. Yeah yeah, well, hey to
talking about the airlines like, you know, they have to care to some
extent because you get sued and the regulator is going to be breathing down their
throats, right, breathing down, no question about, no question about.
On the other hand, they've got power, especially the top three and the
top you know, the three biggest airlines in the country are in order,
Delta America and United And you know, a lot of the problems they have
are due to the government. Because the mandatory retirement age is sixty five.
They tried to raise it to sixty seven. They haven't been able to do
that. I have friends, accomplished pilots that you would trust your life to
that you have, and they had to get out at sixty five, although
they're allowed to fight fly charters. And then you know, the government at
the same time increased the minimum of flying time that these pilots had to have
to be on these planes, which I think is a good thing. But
something's got to give here. And in the end, the airlines, you
know, they got insatiable demand right now, but that could change on a
dime, and good Yeah, you know, what are you supposed to do.
I mean, they're really stuck and all they could do is push their
catch up. Yeah, it's going to take a while for them to catch
up because the demand is off the off the charts right now. Totally,
totally, totally. Just as as I like to say, these are first
world problems, but they're also third world problems because the third world is serviced
by the first world and as a result, our problems become their problems,
and their problems become our problems. And I guess there's an analogy to it.
Like in retail. You know, brands are still valuable, but brands
have to put forth value. I mean yeah, like and that's so.
Yeah, go to pon Bea. Women are buying you know, five hundred
thousand dollars dresses, you know, so obviously you don't have to sell too
many of them to make your rent. But you know, with the costs
with inflation and everything else going up, you know, they're forcing these stores
and everybody else to consolidate. Yeah, for sure, for sure, and
we're going to see more of that. So all right, so thanks Carry
consolidation. But hey, AI, let's see. They also mentioned in the
press release about niemans. I'm meant to address us with you because we have
talked about it before. AI, all right, that you're going to have
instead of mary Alina, my personal shopper, you're going to have virtual or
artific AI mary Alina who will be saying, hey, Carry, I got
this great jacket for you here and it's on sale. Let me send it
out to you now, right right, there's going to be and right now
you've heard AI companies have been there. Someone just cut a deal for Burt
Reynolds's voice and another major stars. Boy, MARYL, I think Marilyn Monroe
as well. Yeah, right, right right, you know, and there
and so you'll have Marilyn Monroe as your personal shop. You'll have Burt Reynolds
as your concierge. You know, if Marilyn Monroe thinks I'm worth her time,
then hey, she can shop for me any day of the week.
Carl, Right, exactly, exactly. Hey, appreciate you coming on helping
us unpack these changes that are happening. They're happening so fast, and really
there's nobody at the wheelhouse managing these changes, which is what capitalism's all about.
Hey, Carl, tell us where we find you again? How we
connect with you on the web? Sure, on the web Carlbool dot com
or Carl three sixty c A R L three six zero dot com. All
right, and the links in the show notes of this interview on Financial Survival
Network dot com. When you're there, just click through you get right to
Carl's And while you're there, please sign up for your free newsletter. Barl.
I always love talking to you, always love getting your perspective. We'll
talk to you again real soon. Thanks, Kerry really appreciate it. Thanks
for listening to Carrie Letz's Financial Survival Network, your solution to today's trying times.
For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network
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