Ultraluxury: Why Aren't You In It?

From cars to hotels, ultraluxury is the new normal for many.

If I were running the upscale department store chain Neiman Marcus, I would tell people, “We own this recovery!” In the third quarter of 2011, Neiman Marcus announced that their profits nearly tripled compared to profits during this time in 2010. If you know this chain, you know that even upscale folks consider Neiman Marcus a luxury to ultraluxury department store. Frankly, they never succumbed to cheapening their brand or brand promise. They know that quality sells even better in a recovery. As a 104-year-old company their confident quality course is time-tested.

CEO Karen Katz says they owe their most recent growth to their genuine passion for customer service and their aggressive online store. Katz insisted on tackling the digital shopping experience by creating not just one but three iPad shopping apps. In Katz's words, “We have seen a staggering amount of business coming from people using their iPads.”

As you know, this book is about outperforming your lazy competitors, which seems to be a Katzian mantra. Katz is ever vigilant about the activities of her competitors—but not the big stores. Since Neiman Marcus is a strong, reliable brand, worthy of commanding respect from other large retailers, Katz isn't worried about them. Instead, she is wary of the eager start-ups like Moda Operandi and Gilt Groupe. Those smaller forward-thinking companies are nimble enough to tweak their business models overnight.

Katz has the same open-minded approach when it comes to deciding which new brand names penetrate the shelves of her stores. According to Katz, “On any given week, I get about five young entrepreneurs that have a product they think would sell at Neiman Marcus, and we try to be very open because you never know when what they are bringing you could be the next Gucci or the next Prada.”

If you're big, it's wise to be a little bit skittish of the smart little guys.