Right about now, if you sell luxury goods and services, you’re hosed.
That is, unless you get the shift in consumer psychology and respond quickly. Over the last two weeks, I’ve spoken with a people very high up in the luxury furniture, hotel, goods and services businesses. And, they all tell me the same thing.
Enough people still have money to buy what they’re selling, but they don’t want to be viewed as spending frivolously right now.
There’s been a shift in the psychology of luxury buyers. For some, it’s that they feel genuinely awkward spending conspicuously, while so many others are in pain. For others, it’s more about perception, it’s just not “cool” to be spending lavishly on luxury right now.
Regardless of the reason, there’s been a noticeable shift away from spending money on things that are positioned as “public displays of luxury.”
Does that mean you’re hosed if you sell luxury stuff?
No. Well, yes, if you don’t do anything to at least temporarily reposition what you’re selling. But, no, if you get this change in psychology and what’s motivating it and then quickly change the marketing message around what you’re selling.
So, rather than luxury, you’re now selling exceptional quality. Rather than pampering, you’re selling high-level stress management and rejuvenation. Rather than glitz, glamor and showiness, you’re now in the business of premium, yet discrete, subtle and noticeable to the right people.
See, react, reposition … survive.
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About the Author: Jonathan Fields is a former hedge-fund lawyer turned serial lifestyle entrepreneur, copywriter, Internet and direct marketer, speaker and writer. You can find him blogging on entrepreneurship and lifestyles at Awake At The Wheel, crafting high-impact copy for clients at Vibe Creative or training people to become entrepreneurs and career renegades at Career Renegade (also a book published through Random House/Broadway Books).
Jonathan great and necessary point – although I sure wouldn’t want to own a Hummer dealership at the moment.
There’s another side to this too – there’s an opportunity to paint your products and services as little, replacement luxuries. I was talking to the owner of a cup cake shop – they sell $5 really cute cupcakes and market them as ways to have that little indulgence of luxury without the obvious display you mention.
David Hakala, Denver, CO
“Every experiment, by multitudes or by individuals, that has a sensual and selfish aim, will fail.” –
Ralph Waldo Emerson
Management of only your OWN stress will fail. Rejuvenation of only your SELF will fail. Confining one’s luxury only to “the right people” will fail.
I wear seven opals appraised at $9,400 wherever I go, and I daily go among the homeless. It is no luxury to share their beauty with others. It is Kindness.
“Thousands of candles can be lighted from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared.” – The Buddha.
BTW, “discrete” means a thing is separate, apart from all others. None of us is discrete. “Discreet” means “having or showing discernment or good judgment in conduct and especially in speech”.
John: Hummer is now belonging to a Chinese company. GM sold it.
Jonathan: What’s the meaning of the word “hosed”? Btw: I sent you email earlier. I enjoy your career renegade profile interviews very much! 🙂
I have no problem with consuming luxury products as such and savour these special moments. I could spend >100 USD$ for a kilo of fine tea (harvested only during a two week period per year, Formosa Oolong) and someone else are using tea bags. I eat healthy dark chocolate that has a price of circa $ 1.50 per piece, when Mr. Smith is eating a candy bar for a “nickel & dime”, etc.
Three things in a product: Quality, price and delivery time. That’s the “mantra” for a purchaser. As the selling part you could try to package it in a way so you are including added value and you give a solution to a special problem or create a precious moment for the buyer.
It is great to see your musings on Small Business Trends. Nice job, and very true. Interestingly enough, a friend of mine works for a Mercedes Benz dealership, and he told me that they are doing better than most other dealers that sell middle of the road type vehicles.
The Franchise King
Jonathan, you’re right on target by saying that people are avoiding conspicuous consumption. There are still people out there with money and these people still appreciate nice things. Even people on limited budgets want to splurge every now and then just because it makes them feel better for a brief moment.
Yes very true. With the economy in downturn, peoples buying psychology changed noticeably. I myself is hesitant to buy luxury items these days. I also noticed that on our sales report. These days, is a great demand on cheap and second hand items and luxury ones suffer.
Same here. Even I as a consumer has changed my buying preferences. Entrepreneurs should foresee this too. We must be really practical.
Yes people’s psychology have changed during the economic downturn, but it is not the end of the age of consumerism.
Consumers will still look for value, differentiation and utility, there will always be a need in every industry.
Hi Martin, “hosed” means broken, in trouble, trashed. Take your pick.
It’s not a good thing to be hosed. 🙂
It’s important to change the marketing strategy. If the luxury items appear to be lavish not many will be interested but if they are presented differently there may be buyers. Consumer preferences in the present business climate have definately changed.
Thanks for the explanation! 🙂 I had to go to Answers.com and check out the word (water) “hose”…
And for the record, I am not a big spender or consumer of things that have been categorized as luxury items. I don’t own a Hummer, big sailing boat, expensive clothing, jewellery, etc. But I have no problem in defending individuals who want to purchase above items or other things that are viewed as luxury stuff. The thing is that as an example, an avid stamp collector having a rare stamp worth several thousands of dollars could be viewed as not a “normal” investing of time and money by another person. This other person is maybe spending plenty of time and money on golf.
I am going on “ranting” a bit, please forgive me! 😉 But I am passionate defender of individuals who are finding their true passion in their life and want to achieve their values. Please keep polishing that copper pot if that is your favorite thing to do. That said, I have a bit of a problem with people who are “showing off” all the time and want to brag about their material belongings. You will find a lot of this kind of successful people on the net. The thing is that they often are trying to substitute their lack of spiritual worth and self-esteem with material stuff. And then they can’t enjoy their stuff anyway, because they don’t see the link between ideas, action and values (reason – purpose – self-esteem).
I like Jonathan’s punch line: “See, react, reposition survive.” It is a very sound philosophically statement according to my views.
Observe and adjust. It’s prudent advice for all businesses regardless of the audience or segment you target
If you’ve properly positioned your company, brand, product to target the audience you seek with the features/value point that is appropriate, then seeing, reacting and adjusting is a good thing just don’t radically reposition (IMHO).
In boom time, marketers can get away with pricing “junk” as luxury items or getting “irrationally exuberant” in pricing too high. Now, all segments of consumers are evaluating their spending to ensure they receive “value” at the price point.
For luxury goods, I like the suggestions of Jonathan. Luxury has taken a somewhat tarnished tone to it. Finding other descriptors like premium, exceptional quality, uncompromising service are likely better ways to promote your offering.
Luxury will always have a place in the market. Adjusting to the times is just smart marketing.
This is so true. If I had tons of disposable income right now, I’d feel very guilty purchasing high priced items. I’ve been shopping for new cars lately and even though I’m in a good economic position, I still feel guilty. However, I’m finding it too hard to resist the great car deals available right now. So I’m looking at it as making a smart move by getting the best deal possible.
I think Jonathan is right about repositioning to a more value-oriented approach, and away from conspicuous oppulence. And the shift needs to take place not just in assortments, but in the totality of the customer experiece. Store layout and design must be a little more restrained, fixtures and displays must be more muted, and most importantly, store associates must dress and come across in a more understated way.
Beyond that, and to a point Jonathan didn’t make, assortments must be recalibrated, not by a reduction in quality, but by an adjustment in the percentage of higher priced goods, the introduction of more value-priced goods, and a general reduction in average price point. The adjustments to the customer experience must be matched by adjustments in assortments and price points.
Great article Jonathan. You are correct in repositioning what you are selling. As small businesses, we must create a buzz of what seperates you from the others. Every aspect becomes crucial. Thanks for sharing.
IMHO smaller quantities of higher quality products is certainly the key to self improvement. For too long now markets have been driven by price and the time has come for a quality revolution.