Information Technology Budget For Neiman Marcus example essay topic

Saks, Neiman Marcus, Nordstrom Introduction The retail industry is very large and full of many different strategic groups. There is a strategic group that focuses on the finer tastes in life and caters to a more upper-class market. Three dominant members of this group are Saks Incorporated, the Neiman Marcus Group, and Nordstrom. Through e-commerce strategies we will be able to see the similarities and differences in these firms core competencies and business strategies. Background Since 1998, Saks Inc. has opened forty-seven new stores.

There capital spending has increased to over $1.4 billion and they have upgraded or remodeled the majority of their stores. (Saks pres. P. 7) Saks has eighty-eight million dollars of cash on hand and a credit line of seven hundred million dollars. (Saks pres. P. 8) Saks Inc has also reorganized into two distinctive groups; the Saks Department Store Group (S DSG) and the Saks Fifth Avenue Enterprise (SFA E). Saks Department Store Group targets the traditional department store. Their motto is "The Best Place to Shop In Your Home Town". (Saks pres. P. 4) The Saks Fifth Avenue Enterprise targets the luxury marketplace.

Their motto is "The Most Inviting Luxury Experience". (Saks pres. P. 4) Both divisions of Saks are better strategically positioned to target their group of customers. As mentioned, Saks is divided into two divisions. The Saks Department Store Group's strategies are having merchandise incentives, an enhanced shopping experience, and focused marketing. (Saks pres. P. 22) These strategies present customers with ideas of what they need to have or what is in style. The idea is a floor presentation that places the customer in a situation where they feel they would lead a better life if they owned the item being displayed to them.

(Saks pres. P. 23) One of the key aspects of this strategy is product differentiation. Saks stores must be able to offer customers items that they want and need but that are not available at other stores such as Neiman Marcus or Nordstrom. (Saks pres. P 24) Saks second division, Saks Fifth Avenue follows closely to the previously mentioned strategy. Saks Fifth Avenue focuses on luxury products and style. Saks strives to give a customer-focused experience and target certain clients.

(Saks pres. P 36) If Saks Fifth Avenue sees a product growing, they want to be the first entrant to exploit it. (Saks pres. P. 39) Neiman Marcus is a company that is ninety-five years old that offers high-end luxury goods to customers. (NM pres. P. 4) Neiman Marcus makes up three businesses that are in the retail store group. These include Neiman Marcus Stores and Bergdorf Goodman as well as a direct marketing segment referred to as Neiman Markus Direct. (NM FAQ) Neiman Marcus focuses on specialty retail, direct-to-customer, online sales, and brand development.

(NM pres P. 5) Their retail strategy is severing the affluent customer. (NM pres. P. 12) Their merchandise strategies include increased penetration of fine apparel, cosmetics, men's sportswear, and jewelry. (NM pres. P. 15) The final firm is Nordstrom. John W. Nordstrom founded Nordstrom in 1901 in Seattle Washington. (Nord hist.) Today, Nordstrom has grown into a fashion retail chain that is nation wide that offers families the finest shoes and apparel. Nordstrom's philosophy is offering the customer the finest service, selection, quality, and value.

(Nord today) E-Commerce This strategic group of high-end retailers has been in business for many years now. In order to stay competitive, they must they must adopt new technologies and develop e-commerce strategies that utilize low cost equipment and web based transactions. Saks Inc. has done just that by creating web This is Saks Inc. website that allows e-customers to browse and shop online. It features colorful pictures of merchandise that is arranged into groups by gender and occasion. The website also features a shopping cart so that a e-customer may purchase goods online.

The site is tailored so that a user can set up an account with Saks Inc. to purchase goods and also make payments to their own account. The site is easy to navigate, but should have some kind of search function on the home page. This is the only drawback to the site that can be seen. Saks does offer a live help feature which could be helpful for the e-customer.

Saks Inc. is also implementing other technologies to help lower costs. In both segments of Saks, point-of-sale cliente ling is being implemented along with a locator system for specific goods throughout the company. (Saks Pres. P. 15) Saks Inc. is also conducting data warehousing, the storing of data about specific customer preferences in this case, in order to conduct better customer relationship management. (Saks pres. P. 15) PLU scanners are also being implemented to lower inventory costs along with alert technologies to combat everything from theft to low levels of goods in inventories. Saks Inc. is also setting up gift registry kiosks for convenience to the customer. (Saks pres. P. 16) Saks technology strategy is to bring the business as close to the customer as possible while still creating a personal experience.

The goal is to reduce costs and be more efficient. Neiman Marcus's strategy is very similar. The Neiman Marcus e-commerce efforts have been placed into a segment named the Neiman Marcus Direct that offers catalogues and web transactions. (NM FAQ) They too offer a website for e-customers to purchase goods. Their website was launched in October of 1999 and is real time. (NM FAQ) Their site also groups similar products together according to gender and preferences.

The Neiman Marcus website does offer a personal account to keep track of transactions and account information. The site does offer a search function that is pleasing to see. Neiman Marcus's website looks professional and flows very well. A user can find an item in less than 5 clicks. Neiman Marcus's new technologies do not stop with their website. The Information Technology budget for Neiman Marcus is $181 million dollars.

This is an extremely large budget for information technologies to be used over the course of four years. It accounts for a significant percentage of their total cash flow. With this budget, Neiman Marcus plans to launch an Oracle based system to handle financial and procurement statements. All point-of-sale systems, such as registers, will be upgraded as well. The Horchow. com website will also be implemented from this budget. Extensive "data-mining" will be used to see exactly what data Neiman Marcus has and turn that data into useable information.

(NM pres. P. 38, 39) Neiman Marcus is also the first company to start research into a new speech recognition system that is much smarter than previous releases. This system will let customers access information from any location at any time by using their telephone. (NM Speech) Neiman Marcus is taking a much more aggressive approach to technology then Saks Inc has due to the incredible budgeted funds. The two firms have the same strategy of lower costs by using technology and bringing the business closer to the customer while still keeping a personal experience. The final firm is Nordstrom. Nordstrom's online efforts were launched in 1999 and gave birth to the world's largest online shoe store.

(Nord Dell) Nordstrom. com offers the same amenities as the previous two sites. The site is a bit more cluttered and does not look as professional but is still easily navigated. Goods are grouped according to gender and type. The site does also offer a search function to locate goods.

There is a personal account and an express checkout for e-customers. Nordstrom did do one more step then the others. They offered a live help service to assist e-customers. There is very little information about Nordstrom's other technology efforts. Nordstrom has recently implemented a Perpetual Inventory system that focuses on the point-of-sale and does away with paperwork. The Perpetual Inventory system is designed to be a merchandising system that allows company buyers to make better decisions on what products to buy for the Nordstrom stores.

(Nord pres. 6) Overall, Nordstrom is reducing costs with technology via their Perpetual Inventory system and they are bringing the ease of the web to their e-customers while still giving the e-customer a personal experience. Conclusion This strategic group of high-end retailers has near same e-commerce strategies. Each firm has implemented a website for online purchases and is using new technologies to reduce operational costs.

What differs between firms is the aggressiveness of that strategy. Neiman Marcus has issued a enormous budget to be spent on information technologies over four years. They are setting the foundation for lowering costs while maximizing efficiency. While their website does not have live help, it does offer every feature a e-customer needs to successfully shop at Neiman Marcus. Saks Inc. has done many of the same things as Neiman Marcus. Saks Inc is using new technology to track inventory throughout the company and has upgraded many of its systems.

Saks Inc. website also gives customers a personal touch while still selling goods in a online setting. Nordstrom also has a website, but has not fully committed to new technologies. Yes, Nordstrom now has a system set up for point-of-sale transactions, but they are doing no data mining or organizing information to help them better suit customers tastes and preferences. Nordstrom's efforts in technology are focused at basic inventory and doing away with paper.

Neiman Marcus has the strongest e-commerce strategy followed closely by Saks Inc. Both companies are upgrading current systems to lower costs and focus on the customer. Nordstrom is a bit behind with using technology, but is catching up.

Bibliography

Neiman Marcus Frequently Asked Questions (web) Neiman Marcus Homepage (web) Neiman Marcus Presentation, 09/04/2002, (web) Neiman Marcus Speech (web) Nordstrom History (web) Nordstrom Homepage (web) Nordstrom Mainframe, 10/18/2001, (web) Nordstrom Presentation, 2001, (web) Nordstrom Today (web) Nordstrom with Dell (web) Saks Inc.
Homepage (web) Saks Presentation, 9/6/2002, (web).