Cutting One's Nose to Spite One's Face?

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 excess inventory. And therein lies the contradiction or question. Can Coach and others be considered luxury brands if you can buy their products at 50% off at an outlet? That's the question author and retail consultant Pam Danziger asked in a recent blog, which delved into the definition of luxury. 

Danziger noted that European and American definitions of luxury differ. Citing Dr. Martina Olbertova, founder of Meaning.Global, a brand strategy company, who claims American luxury suffers 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. 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% of wage earners. Using their branded outlets lets American luxury brands control pricing and how the brand is portrayed.

What does this debate have to do with kitchen and bath showrooms? 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 kitchen and bath showrooms more difficult. And true luxury products and the ability to tell their stories are what will differentiate 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 kitchen and bath showroom be considered a luxury destination if the sales team focuses on discounting price versus achieving one's dreams?

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