Thursday, November 19, 2009

The not-so-luxe client

I've said for some time now that our current economic situation is actually doing us a favour; stores have been forced to step up their client experience, ramp up their product knowledge, ranges, and offerings, and competitively price their items, and stores are more easily focusing their resources on clients who actually shop, rather than tending to those who constantly are "just looking", are able to negotiate pricing, model stock, minimum purchases requirements, shipping, etc.

One aspect that this economy has really been positive is the "mid-market, newly luxe" client. This client is still very much financially secure (all things considered), and still keeps a very discerning eye - but is more responsible with their liquid assets and spending abilities. For example, a client who in 2006 was unphased at spending US$1100 on a pair of Dior boots, might instead opt for 2 pairs of US$280 Cole Haan boots in 2009. Not that Cole Haan is a cheap or unfashionable brand by any means, but the traditional luxe client wouldn't have normally shopped at Cole Haan. Similarly, that same luxe client in 2006 might only wear Maison Martin Margiela vneck tshirts, but now in 2009 is opting for the US$19,00 special at Martin + Osa.

My point is - the luxe client has been introduced to an entire new shopping experience. And when corporate America and the other owners and managers of these stores can rise to the occasion, success is translated into dollar signs instantly.

I wrote a few months ago about the value of Mixed Marketing. When these "mid-market, newly luxe" clients shop these traditionally non-luxe stores, they still expect the same service they'd receive at a conventional luxe boutique. A genuine greeting, possibly by name. Lifestyle awareness. Beverages. Added services. Extended clienteling. Impeccable attention. The luxe client doesn't want to know that Martin + Osa is a concept owned by American Eagle Outfitters. The luxe client doesn't want to know that Lexus is made by Toyota. Not that there's anything wrong with AEO or Toyota, but the luxe client likes to remain exclusive, more elevated.

Ruehl, a concept by Abercrombie & Fitch, is closing its doors January 2010. "It has been a difficult decision to close Ruehl, a brand we continue to believe could have been successful in different circumstances," said CEO Mike Jeffries. "However, given the current economic environment, we believe it is in the best interests of the company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally." The 29-store chain generated a pretax operating loss of $58 million during the last fiscal year.

Where did Ruehl go wrong? Where do we begin is the real question. The brand was marketed towards the "hip twentysomething" crowd as higher end, better quality, more grown up option to Abercrombie. Could the brand have been more profitable and longer lasting if the associates in their stores were exposed to a more dynamic training program, that included product knowledge and actual sales training? Possibly. Could the brand have been more profitable and longer lasting if its products didn't become more and more like those from their sister company's products but with higher price tags? Possibly. Could the brand have been more profitable if it didn't continue to market to the Abercrombie client, who was conditioned to loud music, lackluster service, and sold more on sex than on quality, value, and design aesthetic? Possibly. Could the brand have been more profitable and longer lasting if its marketing department focused on selling a lifestyle, rather than just focusing on sexy people? Possibly.

I'm not hating on Ruehl. I used to really love the products and the look of their apartment style stores. But quite honestly, when the products offered ended up looking just like the same things I could find on the shelves at Abercrombie but for at least half the price, I knew something was wrong. When ANF started marketing Ruehl as Abercrombie's sister, I knew something was wrong. But it's not just at Ruehl. Many stores in this "mid-luxe" tier are struggling to identify their clients and create lasting relationships with new ones.

Some of the clients I shop for refuse to buy anything full price or brand new at J. Crew, because they know the brand is quick to mark down new items shortly after roll out. Is it really worth spending US$88 for a silk ruffled tank top, when just two weeks later the shirt will probably be $49,99 and then a week later an additional 25% off? The same can be said for Martin and Osa, who recently have had more promotions in two weeks than stores have for an entire year. There have been friends and family discounts, special pricing for cashmere, denim, and outwear, new clearance items, additional discounts on clearance items.

When stores constantly are discounting items, clients begin to question why they should pay full price for anything. If a department store offers 20% saving for people who open credit cards, clients may ask "why can't I get the discount without opening the card" - and if they don't get the discount, the client takes their business somewhere else.

No matter how much money someone may be able to spend - everyone always likes a deal and to save more. So when clients are sold on value, on quality, on design - they're more inclined to buy. Associates who arm themselves with product knowledge are able to sell much more than those who do not. Sell me the product, sell me the romance, sell me the story - and you've got a buyer. Send me a thank you note, call me to make sure I like my product, invite me back to shop - and you've got a client.

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