I was asked to make a 2011 economic forecast for the plumbing industry – more specifically, the decorative showroom side of the industry. But if all of the great economists with all of their economic charts and graphs can’t accurately forecast what 2011 will bring, how can I?
While I won’t predict a number, I can tell you how to prepare for 2011, no matter which direction the economic arrow ends up pointing.
Years back, times were great. Everyone was making money. We didn’t have to fish for sales – the fish simply jumped into our boats. It was effortless, simple, fast and profitable.
Soon, great times were dialed down to good, and then good quickly slipped to fair. Then the economy soured.
Why? We can all sit back and pin the tail on the faltering economy. But the economy was only part of our problem, and truthfully, more the catalyst than the main reason. At the same time, our customer, John Q. Public, retaliated by not buying our luxury products – or our pitch. John rebelled against our total lack of respect for his intelligence.
'Dumbing Down' of Products
Today, people have started a cycle of frugal living, not just watching every disposable dollar, but at the same time reprioritizing what’s important to them. While John is prioritizing his expenditures and sorting out needs versus wants, many of us have responded by reducing our costs, downsizing staff, decreasing inventories, consolidating anything remotely overlapping and slicing away at fixed costs.
Many continued this realignment by throwing support behind the waves of offshore goods flooding our market, thinking a penny saved is a dime earned. They didn’t realize they were simply buying down. Dumbed-down quality, selling phantom value and offering these products as anything but was the new game. Let’s face it: Two products that look alike with a 50 percent differential in cost are not really two “alike” products.
We then responded by cutting prices with a “let’s-make-a-deal” mentality. That only gets one to the bottom that much faster. You see, John is smart and he was soon seeing right through what we were doing, but not before he bought our products – the offshore ones – for less. Products that looked alike, and that he was told were alike, led John to believe he was a smart shopper.
But his purchases were far from alike. It was only a matter of time before John found out he was really purchasing throw-away, inferior products. So John felt foolish, and then upset, and then angry.
John figured out what we were doing. We were relabeling. We were also redefining terminology. And yes, we were misdirecting and misrepresenting “alike” products, hoping John would never know.
But he did. And soon, John lost trust in what he read, heard and saw. He dismissed our professional opinion, our background, our training and our trust. And now, because of that, the words “luxury,” “value,” “high end” and “competitive” will be redefined for 2011.
First, the word “luxury” has been overplayed for the past 10 years, to a point where the word was totally misrepresented. Some thought by labeling an item “luxury” you could sell it at a higher price point, thus giving the product the illusion of being expensive.
And John really wanted it because he thought he was buying a luxury product at a very affordable price. But soon the product didn’t hold up. It didn’t perform as was expected. In 2011, because of John, the term “luxury” will be redefined.
Luxury will not be about high price any longer. It won’t be about price at all. No, the word luxury will be about how John feels about himself for purchasing the product. If he feels majestic about himself, then the product will certainly fall under the word luxury.
So in 2011, don’t get caught labeling something luxury just to boost sales in a misleading way. Remember, luxury is not always about price.
Plus, John is now setting the rules. Don’t get him mad. Don’t mislead him. If you do, it’s no longer about John telling 10 friends what you’re up to. It’s about him telling dozens. And if he has any social media skills, it will be John telling thousands about his displeasure.
“Value” is another misunderstood word. We’ve tried to commandeer and redefine its meaning to fit our needs. By labeling things a great or good value, we would capture the unprepared and unsuspecting.
But value has nothing to do with price, saving money or wise shopping. Value does have everything to do with the “experience,” however. A great experience will be an internal, self-satisfying experience.
The 2011 clients will tell themselves: “I want to experience that shower. I want to float away in that whirlpool. I want to forget my worries for now and pamper myself. I want to feel like I am on vacation whenever I enter my bathroom.”
Notice that not one comment centered around or even mentioned anything about price, savings, dollars and cents. Value is not about money or savings.
Next, “high end” has absolutely zero to do with price. High end is about quality, period. Ask any decorative showroom if the $1,500 faucet is any better (higher end) than the one for $500, and most will say it certainly is, leaving John to think that high end has a direct relationship to price.
But in many cases, this isn’t true at all. And John is waking up and wising up.
High end should refocus on its true definition, that being quality, not price.
Finally, let’s look at the term “competitive.” Does competitive mean the cheapest selling price?
Again, it’s not about price, but about the personal affordability of the item. In other words, “Do I really want this more than a television, sofa, computer or any of the other endless items that are competing for those disposable income dollars that are harder and harder to come by?”
Competitive will also have John asking himself, “Is this a fair cost to me?”
While no one knows where the economy is going, one thing you can do to help your firm is to purchase a dictionary and place it on your desk as a reminder of the true definition of any descriptive term you will use in 2011. And when John Q. Public comes in to your showroom and sees that dictionary, he’ll know that you know what he knows.
Jeff Burton served as president of the National Kitchen & Bath Association (NKBA) and was the founding president of the Decorative Plumbing & Hardware Association (DPHA). He has also served on several industry boards. He has written many articles and has been a featured speaker for a variety of industry seminars for the kitchen and bath industry. He founded The Bath + Beyond in 1986 and successfully built it into a nationally known bath showroom.
DPH Perspectives is published regularly in KBDN under an exclusive strategic alliance with the Decorative Plumbing & Hardware Association.