RAPAPORT... Say goodbye to yesterday’s shopper. Amid the doom-and-gloom predictions of the past year, a new luxury consumer has emerged with a very specific agenda when it comes to shopping. And retailers, large and small, need to take careful note.
A New Language The word luxury has become ubiquitous, covering too many price points, too many people, too many brands, explains Richard Baker, founder and chief executive officer (CEO) of Premium Knowledge Group (PKG), in Dallas, Texas, a market research and marketing services company focused on the affluent market. Instead, he says, “specific brand attributes — authenticity or quality or heritage or whatever — are now getting put up in the headlines and the word luxury itself is sort of receding into the background. There’s a resetting going on right now, which is to the advantage of those really high-quality, exclusive brands we historically thought of as luxury. But I think it will be a while before the language becomes clarified.”
Experience Counts“Customers want to be convinced of the inherent value of the product,” says Ellen Fruchtman, founder and president of Fruchtman Marketing, in Toledo, Ohio, “its beauty, uniqueness and enduring nature. The focus is no longer on how many items they can have — it’s fewer items with quality. Anyone who is willing and able to spend significant dollars not only wants a tremendous experience, they demand it.”
According to retail strategist Kate Newlin, author of Shopportunity! and Passion Brands, “the desired emotional content of a great shopping experience is to feel lucky, that sense of ‘I’ve found it!’” which retailers often process to mean giving the consumer price incentives. But, she advises, “The more the retailer defaults to price, the more price gets mentioned, the more that becomes the criteria. It’s a very nasty spiral once it gets going and it’s very hard to struggle out of it.”
There’s also this moment of significance, of prominence, continues Newlin, “the sense that the purchase you are about to make matters as a life-stage marker.” Lastly, there is appreciation, an area, Newlin says, “where luxury goods should win.” Appreciation not just of an item’s beauty but in the sense that “a wedding ring is worth more after you’ve worn it. It appreciates in value, it becomes irreplaceable, it isn’t interchangeable with another ring. There’s the emotional content of it.” And luxury goods have the opportunity to offer more of that than others. Retailers, Newlin points out, can enhance that feeling “by telling customers the story behind the product — where it was made, the craftsmanship involved, the history —so that they, in turn, get to tell that story when someone admires what they’ve bought.”
Store Strategies“If retailers equip a salesperson with the history of what a person has bought, they’re going to give him an opportunity to really help that customer. High touch combined with high tech will enhance the way customers get a very custom, personalized experience,” says Milton Pedraza, founder and CEO of The Luxury Institute in New York City.
Kelley Lovelace, president and founder, Luxury Retail Consultants, in Chicago, Illinois, points out that “A luxury purchase is not a matter of need. Customers want to feel special and remembered, i.e., a birthday or anniversary remembered by a store with a reason to come in. They want an invitation to shop. They want a great salesperson who gives personal service. They need a bigger reason to part with money.”
According to luxury retailing consultant Kate Peterson, president of Performance Concepts in the Washington, D.C. area, what has changed with these customers is their interest in spending on things that have personal significance. If you start by spouting the pedigree of the products you’re showing, says Peterson, “you’ll lose their interest before you even get where you want to go. It’s got to be personal. Salespeople need to know from that person what it is that is intriguing to them so they have something on which to build value. If you can do that, they’ll spend all sorts of money.”
Reaching out to this customer does not mean just touting price. “The customer is looking for value, not cheap,” warns Peterson. “The only time that price cutting is a help is if you don’t have a staff capable of building value. If you don’t have that, then you have no choice but to cut prices because there’s no other way to get their attention. Building personal value means the customer will, in fact, spend whatever it takes to get what’s important. The trick is to make it important enough.”
But, Peterson cautions, salespeople need to be “quiet long enough to listen. If they could just ask a few of the right questions and then listen to what the customer is saying, it gets a whole lot easier. We have an entire generation of salespeople out there who are trained to stand up and talk, make presentations. And this customer is bored senseless with that. Don’t make it about price and try not to make it about product.”
Orit, founder and CEO of the O Group, a New York City–based strategy and design firm focused on luxury brands, points out that people during this economic downturn “have been beaten up a lot; there is something to be said for going that extra mile this season. The beginnings of building new relationships and even working off the old relationships and making them better and stronger is really important for this season.”
Marketing to a sense of fear and trembling perpetuates it, cautions Newlin. “If retailers are so freaked that they’re afraid to hope, that kind of panic breeds a shopper who maintains the panic, who thinks, ‘oh my gosh, if I don’t get it on sale, I’m being an idiot.’ We could have a much better Christmas season if the retailers would relax and celebrate it.”
Article from the Rapaport Magazine - December 2009. To subscribe click here.