“Generally speaking, if prices are going up, then we want to be selling products which don’t sell on price alone,” Sabbah said. “We need to focus on products which offer significant features and benefits which outweigh simple price considerations.”
However, some analysts say retailers should be cautious about plunging into the luxury goods market. Sucharita Mulpuru, a principal analyst for Forrester Research, said such a move is hard to accomplish successfully.
“It’s pretty unusual to be able to go upscale and still attract a broader market, especially in a downturn,” she said. “If they’ve managed to pull that off, there are probably some very good reasons why,”
Mulpuru said that a few advantages — like a good base of customers, a good location, and attractive visual merchandising — can make it easier to go high-end.
Goldberg has all those factors. His business is old enough that investing in the costly renovation didn’t bankrupt him. The store has always had a reputation for being pricey, so there wasn’t a wave of sticker shock when he brought in items that were more exotic — and more expensive.
But he says the transition wasn’t entirely smooth. European styles are years ahead of American ones, he said, and his sales team wasn’t familiar enough with the new, chic products to be comfortable selling them. He held an event in September to educate designers and decorators about his new products, but he said attendance was poor. (Union has since hired an external sales rep to work directly with designers.)
These days, customers don’t necessarily buy more, but Goldberg said he’s doing better than he was in the early months of the recession and he has no idea what shape he’d be in if he had done nothing. Either way, Goldberg says, the experiment with luxury bathrooms would have been worth it to him.
“I like to learn from everything that fails,” he said. “I’m a spaghetti thrower. Most things don’t work, but every once in a while something sticks.”
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