Positioning Your Firm as ‘Luxury’ or ‘Premium’

We can no longer rely upon the “easy button” to generate sales or traffic in our showrooms. Housing remains mired in a slump likely to continue because of overstocked inventories and more rigorous lending standings. We can sit by and wait for the good times to return, or we can become proactive.

Chip Conley, CEO of Joie De Vivre Hospitality, understands the current economic environment. The keynote speaker at DPHA’s Seventh Annual Conference, to be held Oct. 24-26 in Phoenix, he faced similar market conditions in 2001 and was not sure if his chain of northern California boutique hotels would survive. Conley discovered that the same old tactics and business approaches were not going to pull Joie De Vivre from the brink of bankruptcy.

Conley says, “We need to restock our collective toolboxes and recall the reasons why we entered the decorative plumbing and hardware industry.”

I’ve heard from numerous industry peers that they became involved with the industry to carve out a niche, to capitalize on opportunities to perform better than what was currently available in their marketplace or to introduce new products and services to a market area that was not served or was under served. Many of us entered this industry to capitalize on opportunities and we discovered not only could we penetrate new markets, we could make a healthy living doing so.

Think back to the time when you opened your showroom or expanded new lines and market segments. Recall the excitement, the fear and the insatiability that you felt going to work each day. You likely invested a substantial portion of your energy, time and resources to enter the luxury/premium niche.

The processes used to establish your line, your showroom or your agency are similar to actions that you need to take to respond to our current economic environment.

We are all looking to exploit the market. Unlike the past, however, there has been an explosion of new and different products. The independent showroom faces much stiffer competition from multi-branch wholesalers-turned-retailers, big-box stores, the Internet and new entrepreneurs with fire in their eyes believing that the high-end market represents the promised land. You need to ask yourself, what is new, what is different, what new territories do you plan to explore?

Product differentiation rarely exists and, when it does, distinguishing characteristics and styles are short-lived.

Luxury vs. Premium

Today, the marketplace is not defined by products per se but by the story behind the products and the ability of manufacturers, representatives and dealers to create emotional bonds with consumers at all levels of the supply chain.

Our industry has become bifurcated between luxury or premium providers. Luxury is defined as very wealthy and comfortable surroundings; something desirable but expensive; very pleasant but not really needed in life; very expensive.

Premium, on the other hand, relates to something in scarce supply that is valued above its normal value.

Competitive necessities require independent showrooms, and the representatives and manufacturers that serve them, to be in the luxury business. Luxury is about being fresh. Manufacturers, representatives and dealers need to move beyond the product. It’s not the product that sells; it’s the story behind the product and the experience that the product delivers. No one really needs a $1,000 faucet or $20,000 tub. Selling in the luxury market demands creating an environment that enables consumers to connect with products so they feel they “can’t live without” them. Sustaining success in the luxury world requires creating emotional attachments.

Customers who are emotionally attached to a product or service will spend three times their preconceived budget to satisfy their emotional needs.