New Rules for Today's Luxury Products

There is a new paradigm for selling the luxury products that are featured in decorative plumbing and hardware showrooms. Michael J. Silverstein and Neil Fiske brilliantly describe the harbingers of change in Trading Up: The New American Luxury. They codify beliefs that many experienced dealers have known for some time and provide empirical evidence of a dramatic change in consumer behavior that is bringing new, more and different clientele to showrooms. It is also creating challenges that the independent showroom needs to address to maintain and expand market share.

Silverstein and Fiske contend that there are three main product categories. Grand luxury is comprised of products whose price points typically are beyond the reach of middle-market consumers. At the opposite end of the spectrum are conventional products purchased primarily for their utility and/or cost. In the middle is the explosive category of new luxury products that reflects the new paradigm in manufacturing, marketing and selling luxury.

New luxury products have the most appeal to the aspirational consumer because they offer a "ladder of genuine benefits," say Silverstein and Fiske. "They don't try to fool their customers with meaningless innovations, nor do they try to get by on brand image alone. They make technical improvements that produce functional benefits, resulting in emotional engagement for the consumer." If the ladder of genuine benefits does not exist, there is little chance to maintain credibility with the customer.

On a Grand Scale
Most decorative plumbing and hardware dealers feature all three categories of products in their showrooms, with the lion's share of sales falling into the new luxury category. Understanding the differences between grand luxury and new luxury products enables showrooms to maximize sales and respond to competitive challenges in the marketplace.
The appeal of grand luxury products is based more on exclusivity and status rather than emotional appeal. Grand luxury products set trends and provide cutting-edge design and technological advances. However, these technological and functional advantages are increasingly short-lived.

Differentiation between grand luxury and new luxury products is found in the manufacturing process and in distinctive design, claims Jerry Abel, managing director for THG USA. Abel believes that the grand luxury market for decorative plumbing and hardware is largely untapped. "There is tremendous opportunity to upsell by educating the consumer to understand and appreciate the differences in design, casting, manufacturing, finishes and material quality," he notes.

Grand luxury products appeal to a certain demographic for whom price is not an object and to those who understand and appreciate their distinctive qualities. It is difficult in many cases to make an emotional attachment between the product and the consumer because often the grand luxury products sold are specified and/or purchased by a third party, e.g. architect or designer.

Selling decorative plumbing and hardware products requires raising the consciousness of the consumer to understand the emotional appeal to the buyer. When you deal with an intermediary, you don't have that opportunity for direct appeal.

Selective distribution is another requirement for success in the grand luxury category. The products cannot be readily available from many different outlets in a regional market. They lose their cache if discounted on the Internet or sold by a big box.

Making the Distinction
The new luxury category appeals to aspirational consumers those who look to trade up. New luxury products span a broad range of quality and price points and are readily available from a variety of outlets, including big box retailers, the Internet and wholesale clubs.

The competitive advantage that decorative plumbing and hardware showrooms have over the big box retailer and wholesale warehouse is the ability to make the emotional connection with the aspirational consumer. Proper displays can have a dramatic impact on the bottom line.

Toby Pontin of Kallista notes that while brand is important, brand alone is not sufficient to reach the aspirational consumer. Products must be well displayed in quality showrooms and sold by trained and conscientious personnel. If one of the components is missing, then success is not assured.

Sales staff needs to understand and appreciate the merits of the products that they sell to make an emotional connection with customers. Trained professionals who have a genuine affection for the products in their showroom and who can confidently and sincerely communicate them to the consumer will make that emotional connection. When they do, price rarely becomes an objection.

Avoiding the tendency to prejudge customers is another essential ingredient in selling luxury and training staff. "It is easy to underestimate the amount of money that a customer will spend for a product," explains Jerry Norton of Designer Hardware, in Oklahoma City, OK.
Norton's point is reinforced by Silverstein and Fiske, who claim that new luxury leaders believe the consumer has the desire, interest, intelligence and capability to trade up.

Showroom owners need to re-learn and reinforce the need to start at the top and sell up. They need to teach their staffs how to ask the right questions to illustrate the quality differences between products in a showroom and those they might find at other venues that are lower in price and quality.

Another major challenge facing showrooms owners is the commodization of luxury products and the development of line extensions by luxury product manufacturers for the mass consumer market. When this occurs, the bar is raised for the decorative plumbing and hardware showroom to help assure that it has the merchandise, staff and service to meet the competitive challenge.

The industry has profited from the new American luxury. It will continue to do so as long as professional showrooms can differentiate themselves through their inventory, staff knowledge, service and ability to best emotionally engage customers to meet their needs, preferences and desires.