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Selling Luxury Goods in a Shabby Market

Clearly, the recession has affected everyone. Consumers who may be out of work – or afraid they’ll soon find themselves out of work – continue to cut back on spending; which directly affects retailers and their ability to remain in business. Commodity retailers aren’t feeling the pinch as much as retailers of higher-priced, considered purchases such as automobiles and luxury appliances. These retailers face an uphill climb as the battle for the almighty dollar persists, and consumers continue to settle for less expensive options versus status.

Clearly, the recession has affected everyone.  Consumers who may be out of work – or afraid they’ll soon find themselves out of work – continue to cut back on spending; which directly affects retailers and their ability to remain in business.  They may have the money to spend, but the purse strings are still tied tight.  We are climbing our way out, but the recession cloud still shades the economy.

Commodity retailers aren’t feeling the pinch as much as retailers of higher-priced, considered purchases such as automobiles and luxury appliances.  These retailers face an uphill climb as the battle for the almighty dollar persists, and consumers continue to settle for less expensive options versus status.  Some retail brands saw the writing on the wall more than a year ago and made the decision to develop what we’ll call a “2nd tier” product line (fewer bells and whistles and less expensive) that could be marketed to a wider range of consumers – AKA lower household income.  The trick here is to develop this new product line and market it to the masses without losing your brand cache and, ultimately, the consumers who’ve been willing to pay top dollar for that cache.  BMW has done this successfully with its 1-Series, launched in March of 2008.  They’ve managed to capture a younger, less affluent audience while still maintaining their core, wealthy consumer.

In the luxury appliance category, Dacor has done this successfully with the launch of its Distinctive™ Series – a new, more affordable line of appliances that offers fewer high-end features while maintaining the core style and innovation for which Dacor is so well known.  The Distinctive Series includes a Range and Rangetop, Single and Double Wall Ovens, a Dishwasher and a Cooktop.  The new line launched at the beginning of 2009 and is currently being sold through Dacor’s traditional, independent retailers as well as Sears.  The partnership with Sears is a first for Dacor.  And what better way to reach the masses with a premium appliance line than through a partnership with the leading mass merchant in the country. The bonus is that while only the Distinctive Series is on display at Sears stores, consumers have access to all Dacor appliances through the retailer.  As a result, Dacor has seen significant revenue through Sears from both its Distinctive and its non-Distinctive, higher-end appliances.

To sum it up…Dacor did it right.  The company did not choose to simply slash prices or offer deep discounts in an attempt to win the battle against its luxury appliance competitors.  We know – again by watching the car industry – that this strategy does not work.  Instead, Dacor did its due diligence and spent the R&D money to develop a line of appliances that would appeal – in performance, style and cost – to a new group of consumers.  Bravo, Dacor.  Nicely played.

Domus is an innovative marketing communications firm that incorporates state-of-the-art technologies and classic marketing principles into effective marketing campaigns. For more information visit us at Domus, Inc. and Domus Digital.

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