Cutting One's Nose to Spite One's Face

Affordable luxury is an oxymoron. At least according to Bernard Arnault, CEO of LVMH, arguably the world’s most prestigious luxury brand whose empire includes Christian Dior, Louis Vuitton, Dom Perignon, Hennessy, most recently Tiffany, plus 70 others. Arnault does not believe that LVMH’s brands should ever be discounted, ascribing to the notion that luxury brands need to have total control of distribution, pricing and how the brand is portrayed.

American luxury brands take a different approach evidenced by the abundance of factory outlet stores that companies such as Coach, Michael Kors, Ralph Lauren and others use to deplete inventory. And therein lies the contradiction or question. Can Coach and others be considered luxury brands when you can buy their products at 50% off at an outlet? That’s the question Pam Danziger, author and retail business consultant, asked in a recent blog which delved into the definition of what luxury is.

Danziger noted that European and American definitions of luxury differ. Dr. Martina Olbertova, founder of Meaning.Global, a brand strategy company, says American luxury is suffering because it has forgotten its roots, evidenced by luxury brands willingness to discount and focus too much on generating short-term profits over long-term value creation.

Olbertova notes cultural differences between Europeans and Americans that serve to define different takes on luxury. Olbertova claims when a luxury brand is discounted, it trades the immediate gratification of outlet sales for the long-term legacy of the brand. “Luxury is about the transcendence of time and space. While Americans are all about form, Europeans are all about the essence…True luxury retains value in time. It goes far beyond the present moment.”

The converse argument is that when American brands rely on outlets, they bring luxury to those who are not in the top 1%. Using their branded outlets lets American luxury brands control pricing and how the brand is portrayed.

What does this debate have to do with decorative plumbing and hardware? It has everything to do with perception. As Amazon continues to drive the commoditization of everything, American consumers desire and believe they are entitled to discounted pricing, free freight and the ability to return anything purchased without cost.

The Amazon effect, and to a lesser extent luxury brand discount outlets, makes selling luxury products in decorative plumbing and hardware showrooms more difficult. And true luxury products and the ability to tell their stories are what will differentiate decorative plumbing and hardware showrooms now and in the future. Otherwise showrooms will find themselves in retail’s version of hell, racing to the bottom by having to compete almost exclusively on price. The question is: can a decorative plumbing and hardware showroom be considered a luxury destination if the first consideration is how much of a discount needs to be offered to make the sale? Please share your thoughts on the DPHA Facebook or LinkedIn pages.