At the upper end, the focus is on offering desirability, custom design and a memorable experience for the customer
The idea of buying and transacting our way to “experiences” is a nimble meme at retail and in travel advertising. It’s a cliché in hospitality and a trope in marketing materials for everything from baseball hats to rides in undersea submersibles (not a good idea, by the way). If we are “experiencing,” we must be living, right?
But surely, an “experience” should rise above the threshold of the mundane. Drinking a seltzer should not be described as “a hydrating experience.” But maybe — just maybe — furnishing your entire home with bespoke pieces curated by a personal design consultant who met with you in the in-store café? Does this qualify?
The high end is counting on it.
“What we’re trying to do with RH is something no one’s ever done,” RH CEO Gary Friedman said at the launch of RH England this summer, which is “to take an American brand that started probably at the base of what I call the luxury mountain and turn it into a genuine American luxury brand.”
Waiting for RH at the top of that mountain is France’s LVMH Group of France, home to 75 luxury brands and le roi de montagne. Friedman has cited LVMH on more than one occasion as the sort of global luxe brand into which he hopes to transform RH.
LVMH’s acronym comes from Louis Vuitton, Moët and Hennessy, but LVMH also owns the jeweler Chaumet, Christian Dior, Dom Pérignon, Tiffany, Bulgari and Tag Heuer, among many, many other properties. Piloting these bedazzled brands is the wealthiest man on Earth, and I mean that literally, Bernard Arnault.
As recently profiled by The New York Times, Arnault and his growing luxury empire are placing a big bet on next summer’s Paris Olympics, a showcase for the LVMH Group’s extension into sports, hospitality and bespoke “experiences.” The portfolio is bulging with a lot more than really expensive playthings.
Arnault’s eldest son and presumed heir to the throne, Antoine, distilled the LVMH allure this way: “For a dream, there is no price.”
If you have to ask how much . . .
The emphases on desirability, custom design and bespoke “experiences” are what the growing, even crowded number of big brands aiming at the very high end share in common. RH’s comprehensive, full-service hospitality strategy has been well documented in this space, as has Markor’s in collaboration with Ethan Allen. Most recently, we looked at Banana Republic’s bold move into whole home with BR Home.
This “A” list added the Dufresne Spencer Group earlier this month when DSG’s Worth & Co. launched in Houston with a 40,000-square-foot flagship store (and a logo that looks a lot like George W. Bush’s. Bush, too, calls Houston home).
Worth & Co. is a new retail venture from DSG, a Top 20 furniture retailer that already owns and operates 166 Ashley Home stores and 21 distribution centers in the U.S. and Canada, according to the group’s website. (In the launch video for Worth & Co., Jeff Edgeworth, executive vice president, states that the group owns “130 other stores.”)
Worth & Co. is self-describing as a “new luxury lifestyle brand offering clients the [ability to] refine their homes through an elite and personalized shopping experience.” The key word “experience” is repeated: The retailer seeks to position itself as a provider of “an elevated and enjoyable lifestyle-driven experience,” according to the press release.
The familiar refrain: desirability, custom design and bespoke “experiences.”
In the Markor column, I noted the emphasis on “bespoke,” a selling point for these brands’ furnishings, design and hospitality services, and basically anything a customer might ask them to do. This “bespokeness” extends all the way up the ladder into residential properties.
From furniture to the whole home
Just as the High Point market convened, news broke of a bespoke approach to New York City housing. Maison Hudson is a development being offered by The Collection that is located in the West Village. The Collection is touting Maison Hudson as ushering in a “new era of residential hospitality with luxury services and amenities.”
In fact, “luxury” isn’t enough for The Collection’s marketing. These new properties are “ultra-luxury,” and the first of them debuted earlier this month with monthly rent starting at $32,500. That’s for one bedroom. Three bedrooms will set you back about $83,000 per month.
What do you get for $1 million a year? An “unrivaled, tranquil retreat featuring impeccably designed spaces, a French-Provencal restaurant led by a Michelin-starred chef, a private panoramic rooftop, an Intuisse spa and exceptional concierge services,” according to The Collection’s marketing materials.
Maison Hudson rooms will be “appointed with bespoke Italian furniture and walk-in wardrobes custom designed by Giorgetti,” according to The Collection’s launch release. “Guests can unwind after a long day in the walk-in rain shower, dry off with modern hair care tools, douse in Italian linens and pamper with bespoke French toiletries by Officine Universelle Buly 1803.”
Oh, what I would give for some modern hair care tools.
Rock and a hard place
To return to Friedman’s odyssey, it is going to take some time, as all odysseys do, and like Odysseus, he will have to fight through the Scylla and Charybdis that all global brands face: geopolitical unpredictability, especially regarding China, on the one side, and on the other the vicissitudes of fickle consumer demand that has to survive big wave surfing the peaks and dips of home mortgage rates and the stock market.
Even LVMH has found the sledding difficult in the United States, with its stock tumbling 19% from April to mid-September. Lagging demand for luxury goods among Chinese consumers was a big reason why.
But, as the Times noted, the “ultra” high end has proven to be one of the most resilient investments on Wall Street over the past decade or so. Louis Vuitton’s profit margin last year was about 50%, and as the Times pointed out LVMH earned nearly 25% more in revenues than the entire global art market.
Bernard Arnault told the newspaper that LVMH’s strategy isn’t to chase profits but to define and deliver “desirability,” a word one former LVMH officer called the most popular word in the group’s executive suite.
Bulgari, Tag Heuer, Fendi, Officine Universelle Buly — these are the brands of desirability, and LVMH has 75 of them. And beautiful things often bring beautiful profits.
RH, BR Home, Markor and Worth & Co. each are climbing the price point ladder to rarefied air above even the whole concept of price points, seeking to avoid the whiplash of the ups and downs the industry has witnessed during the pandemic and since.
The pandemic drove robust demand, but unfortunately it also kinked the global supply chain. Since the pandemic released its deathly grip, bankruptcy courts have been busy receiving filings from furniture companies both from manufacturing and retail.
Home furnishings sales at retail jumped as much as 20% in 2021 but, if estimates prove correct, they will expand by as little as 2%-4% this year. Boom turned into bust. The high end is expected to do only a little better, but better — something on the order of about 4%-5%.
Home sales aren’t helping. The average rate on 30-year home loans topped 8% earlier this month, the highest it has been in the past 23 years, and high enough to make home buying difficult for huge swaths of the market. And we know furniture retail thrives when people are buying and moving into new homes.
But, longer term, the “luxury” high-end furniture sector is predicted to grow through 2027 by a compound annual growth rate of 5.3%, according to Business Research Insights.
It will be competitive. It will be an “experience.”