Magical Thinkers

By Kristina Zimbalist

VITAL STATISTICS:

NAME KAREN KATZ

CURRENT JOB PRESIDENT AND CEO, NEIMAN MARCUS

FIRST JOB BUYER AT FOLEY'S IN HOUSTON

INSIDE TRACK TURNED NM'S WEBSITE INTO A RETAIL JUGGERNAUT

CLAIM TO FAME SHOPS AT TARGET TOO

NAME NEVA HALL

CURRENT JOB EXECUTIVE VP, STORES AT NEIMAN MARCUS

FIRST JOB SNACK BAR ATTENDANT AT A SWIM CLUB

INSIDE TRACK USING TECHNOLOGY FOR PERSONAL SHOPPING

CLAIM TO FAME HAS WORKED IN ALMOST EVERY DEPARTMENT AT NEIMAN MARCUS

NAME ANN STORDAHL

CURRENT JOB EXECUTIVE VP, WOMEN'S APPAREL AT NEIMAN MARCUS

FIRST JOB PART-TIME NURSE'S AIDE

INSIDE TRACK SHE'S A FRONT-ROW FIXTURE

CLAIM TO FAME GROWING UP, SHE MADE HER OWN CLOTHES

Like most things of consequence--summit meetings, megamergers, the creation of the latest I-technology--true power shopping takes place in hushed quarters behind closed doors and outside the purview of the average eye. And so on a recent Thursday at the Neiman Marcus store in downtown Dallas, what might have come across as a pristine but lightly traveled main floor was in fact a bustling $4 billion juggernaut in action, the unseen hum of luxury being served up like nowhere else.

No worries, for instance, that cases of Cartier estate jewelry and other gems appeared underperused. Some big-spending customers never even enter the store, opting instead to shop by phone with their sales associate, who will call to tip them off on, say, the arrival of the extremely rare red-diamond necklace that would crown their collection. Or the associate might call about the $150,000 Buccellati diamond and 18-karat yellow-gold cuff, which would just match the piece they bought last spring. Across the way in handbags, the season's Chanel bags didn't even make it to the floor. They never do. Long before the stock arrives, associates have matched bag styles to customer tastes and, notifying customers by phone, sold out of the goods.

And upstairs, near the brand-new Armani wing, where a customer or two browsed suits, the fitting rooms, which double as sales associates' offices, were abuzz with personal fittings. Any free time for associates would go to calling clients to inform them of the perfect snug Balenciaga jacket or lavish Nina Ricci ball gown to fill out their holiday wardrobes. Of course, part of this is standard luxury protocol at Neiman Marcus, where you will rarely find a knit that isn't cashmere and where the shoes are Manolo Blahnik but in exclusive styles a customer won't see anywhere else. But another part is the early stages of a very deliberate step-up in luxury for the place that over the past 100 years has set out to define it. And the world is primed for what Neiman Marcus Stores president and ceo Karen Katz calls "high luxury": the number of households worth more than $5 million is greater than ever before, and the consumer has an increased appetite for all things luxe, thanks to the instant mass exposure of today's runways and red carpets.

"Many other retailers have jumped on the luxury bandwagon, wanting to get their piece of the action. It's forced us to say, 'Where do we go?' And we're kind of moving up," says Katz. "We've decided there's this category we've named 'high luxury.' It's even more luxurious, more unique, harder to get. We want to sit at the top of the luxury mountain," she says. "We're pushing higher, to find that even rarer air."

Katz, who has spent the past 22 years at Neiman Marcus, is clearly the one to do it. Having worn every hat from merchandise manager to V.P. of handbags and designer accessories to senior V.P. of stores, she took the reins of the company's e-commerce business in 2000, when flat-screen fashion was designers' biggest phobia. She turned it into a half-billion-dollar branch of the business, with every name in the industry on board. And she has presided over the now 39 Neiman Marcus stores for the past five years, a period when unequaled media attention, including television programs like Sex and the City, has produced a culture more fashion savvy than ever before. Katz and comrades Ann Stordahl, executive vice president of women's apparel, and Neva Hall, executive vice president of stores--the troika of women at the helm of Neiman Marcus--stayed ahead of the crowd with flying jewel tones.

Take a quick look around. This is not your grandmother's Neiman Marcus. In the past five years, denim (of a certain pedigree) has exploded. Younger, edgier lines like Phillip Lim and Twenty8-Twelve, Sienna and Savannah Miller's new line, are cropping up and thriving. "We've had this enormous contemporary business that grew overnight," Stordahl says.

However, top on the agenda are always luxury and its core customer. And she has changed too. "She's a 50-year-old woman who has the attitude of a 30-year-old and in many cases the body of a 35-year-old," Katz says. She is also fluent in Chanel, conversational in Marni, and Thakoon curious. "And, obviously, you have to have a certain amount of affluence to afford the kinds of things we have to offer," says the Texas-born Katz, who began her career as a buyer at Foley's in Houston and whose second favorite store, she admits, is Target. "I've been a longtime aficionado. I was an early adopter. That's part of who I am too." Sure enough, Katz comes off as the nicest whiz at business school or the smartest, chicest mom at the bake sale. She is chatty about the trials of balancing career and motherhood ("Sometimes the balls are going to fall down") and asks a couple browsing through scarves if they need assistance. "We're very proud to serve this affluent customer. With that comes the need to be very approachable to people. That's my style, anyway," she confides.

It is for this core customer that the luxury bar rises and sets at Neiman Marcus. And the bar is higher than ever. A flourishing new Chanel category dubbed "demi-couture" rests between ready-to-wear and couture, with jackets ringing in at upwards of $6,000. Handbags have skyrocketed over the past two years, with the exotic-skin bags of Nancy Gonzalez special standouts. Fur is also flying out of the stores, including a Chado Ralph Rucci chinchilla clearly worth mentioning. And forward fashion, believe it or not, has stepped way up. "Eight years ago, the customer thought of Prada as being fairly avant-garde. Today it's in the majority of our stores and very successful," says Stordahl, a Minnesota native who, overseeing women's apparel for Neiman Marcus for the past 13 years, has long been a regal fixture in fashion's front row. "It's very funny, because I grew up in a tiny little town in Minnesota. We were nowhere near a big city, and our source of fashion was catalogs, but I just knew this was what I wanted to do, so I started designing my own clothes, sewing," says Stordahl. Was she a trendsetter? "In my own mind," she says, laughing. She did something right; soon she was studying at the Fashion Institute of Technology and NYU in New York City and rising through the ranks at Bullock's Wilshire and I. Magnin.

In reaching higher to bring their customers all things unattainable, Hall points to the one commodity everyone finds out of reach. "Time," says Hall, who in the '80s built out of nearly nothing what became the store's thriving leisure department. To that end, she has overseen a technology overhaul that will provide sales associates with daily alerts about the lives of their customers, whose numbers rank in archived thousands. Anniversary coming up? The associate knows to call the husband and what gifts to suggest for his wife. Thanks to this kind of signature service, Neiman's associates become, to many diehards, not only personal shoppers but also personal assistants.

"It's not always about the most expensive of the most expensive, but about what we can offer the customer that is not readily available," says Hall, who before overseeing the selling, marketing, merchandising and planning strategies of all 39 stores, as she does now, worked in everything from sportswear, fine apparel, dresses and handbags to shoes and beauty. "I grew up at Neiman Marcus," says Hall, who was raised in New Jersey, admittedly fashion obsessed. She studied merchandising in New York City and soon became a buyer at Saks Fifth Avenue and Macy's, no doubt looking as chic as she does on this day in her Michon Schur jacket. "I love to dress for work. I love to push the envelope," says Hall, who when Marni began to pique fashion interest had an impromptu try-on clinic of the line with many of the associates. "Just to keep us all continually moving forward," she explains.

There is no problem moving jewelry forward. "We've sold more very, very expensive pieces than ever before," Katz says. One 100-year-old piece, the "Sautoir," a diamond, pearl and platinum necklace created in Belle Epoque Paris by Cartier, has been selected by jewelry collector extraordinaire Lee Siegelson to be sold as one of many special 100th anniversary items (in this case, celebrating the centennial of Neiman Marcus) this fall.

Something equally precious for this group, it turns out, is time together. So, in a rare moment of synchronicity, what do three women who run a $4 billion company discuss? The clothing bills. And the day they all wore Marni:

Hall: We just have to make sure we don't all buy the same thing.

Stordahl: Karen and I both have this skirt [Marni]. We all have these shoes [black patent Manolo Blahnik wedge sandals], so we have to coordinate.

Katz: But clearly we're always on the hunt for what's new and what's next.

Hall: Yeah, we see it, and our charges show it.

Katz: And our husbands commiserate when they're together.

Hall: My husband feels much better now that he's not looking at the bills anymore.

Katz: I would never let my husband look at mine. That would end in a divorce!

Hall: But you always push the fashion quotient, so you educate the customer, so you educate the stores ...

All in a day's work.