The State of American Luxury

Not so fast to ring the death bell for brick-and-mortar retail.  Yes, there are a rash of closings from Toys R Us to Sears and many others whose model, merchandising and go-to-market strategies are cemented in the 20th century.  They depended upon providing consumers with a panorama of products that could be purchased at one location.  The Internet changed the game, making it easier for consumers to purchase online than to make a trip to a brick-and-mortar retailer whose main claim to fame was their breadth of product selection.  

 

Then there is Bonobos, Warby Parker, Amazon Books and a host of other online etailers who are rapidly expanding into the brick-and-mortar arena.  Target and Walmart recently reported their best quarterly performance in a decade. Other brick-and-mortar retailers that are thriving include Nordstrom, Home Depot, TJ Maxx and Urban Outfitters.  

 

What about luxury brands? Tapestry, the parent company that owns Coach, Kate Spade and Stuart Weitzman, reported increased top line sales of 31% in the fourth quarter of its fiscal year. Michael Kors had almost equally impressive results, up 26.3% in its latest quarterly report.  However, the top line sales don't paint the entire picture.  Michael Kors' same store sales were relatively flat.  Coach's same store sales, including ecommerce, increased by a paltry 2%. 

 

The definition and perception of luxury are also changing.  When you think of luxury handbags, is Coach the first name that pops into your head?  Probably not.   The first thoughts may be Hermes or Louis Vitton.  And that distinction is at the heart of "American Luxury."  There's a strong case to say that American Luxury no longer exists. Tapestry and Michael Kors produce premium products.  They can't be considered luxury simply by definition if luxury is defined as "an inessential, desirable item which is expensive or difficult to obtain or a pleasure obtained only rarely," per the Oxford English Dictionary.  Is anything that Michael Kors or Tapestry offer difficult to obtain or do they usually deliver a "pleasure"?

 

The same parallel holds true for decorative plumbing and hardware products.  There are certaiunly brands that can be defined as luxury, however many showroom products can be found heavily discounted either on the showroom floor or on the Internet.  The continued success of DPH premium brands and products requires combining newness with value.  Evidence of the combination in the DPH showroom is exemplified by technological advances in thermostatic valves, which today are almost priced the same as pressure balanced valves.  Another key to the continued success of the decorative plumbing and hardware showroom is to understand what your customers truly want and the motivation behind their desire to equip their home with premium products that not only deliver better experiences, but also make the customers feel good about their purchases.  What doesn't work is the "spaghetti against the wall" approaches exemplified by having multiple brands and products whose design and performance are not distinguishable and then hoping that something sticks.  And as sales guru Gerry Layo told DPHA members at a previous conference, "Hope is not a good strategy."