There’s more to luxury than just pricey products
By Stephen Paczkowski, Expert Warehouse
Look at any product category and you will find products with luxury brands and/or premium features that are costlier than their mid-tier counterparts.
Examples range from specialty donuts and WD-40 cans with attached “smart straws,” to designer jeans and top-shelf spirits.
This marketing approach has a name: “premiumization.” Retailers should learn it because when adopted by stores, it can help stem slowing sales by suggesting your business is the best in town. How can Expert Warehouse make this work for you? Let’s take a deeper dive into premiumization and see how it can apply to AVB members.
Post-COVID, there clearly has been greater consumer demand for travel, self-pampering and home improvements. All of us have felt the urge to cheat and order dessert, or splurge on something we normally wouldn’t, and customers are no different. Regardless of higher interest rates, there are signs that this willingness to spend will continue: The New York Times recently counted no less than 60 mentions of premiumization during recent earnings calls, and a review of new car prices reveals only 10 models selling for under $25,000, representing just 4% of total U.S. car sales.
How can you make store premiumization work for you? At its core, the idea is to convey to the customer that your business is better than the next guy’s. “Better” does not have to mean “costs more,” although that can certainly play a role, and it doesn’t always have to mean “push pricier goods.” Rather, it means being better than the competition in demonstrable ways, such as offering a greater selection of financing options.
AVB is fortunate to have in-house finance choices like BrandSource Financial that offer flexible terms and other features that benefit members. Another payment option is PayPal. (Did you know that PayPal is used by 82% of U.S. consumers?) What about Apple or Google Pay? They’re accepted at many large chains and supermarkets now. Members looking for fast approvals use Wells Fargo, Synchrony Bank and the BrandSource Credit Card; are you exploring these options? Watch the member bulletins for promotional opportunities through AVB partners like Citibank and TDBank, or consider “buy now, pay later” services like Affirm and ZIP, which many large chains have also adopted. These work like financing and put the onus of collection on the provider’s end.
Another point of premiumization is social media presence. AVB Marketing can help you in this arena. It is important to look at local and major market competition and your local demographics to target the right audience and make the most impact. Choice of platform and length of message are also key considerations. (Despite privacy concerns, TikTok seems to be the most impactful right now.) You can use the medium to highlight employees, new products, cool features or promotions, or whatever hits closest to your target market.
Something that cannot be overlooked is “green” marketing. Some 77% of consumers believe it’s important for companies to be environmentally responsible through actions like recycling. Taking a stance on climate could make you a leader in this space, and perhaps justify charging more for services.
VIP services are another way to make a premium statement. Have you tried holding loyalty sales for your best clients? How about a point system that rewards good customers with reduced-cost add-ons like a home install or TV mount, or a two-for-one offer on cabling or some other high-margin accessory? Or you can issue “black cards” that, when scanned, alert employees through the POS that this is a customer who gets the white glove treatment — say a warm cookie from the appliance section, a cup of coffee or even a simple “Thank you for your recent business.”
These are just a few ways to engage in premiumization; we hope you try them and tell us the results. Happy selling!
Now here’s what some of us at Expert Warehouse are currently streaming:
“Silo,” Apple TV: Renewed for Season 2, this show is the rare beast that earned a near even split of critics and audience scores in excess of 86%. Dystopia sells, I guess!
“Otherness,” Alexisonfire: Canadian post-hardcore comes back older and quieter after a long hiatus. Check out “Sans Solei;” it’s gorgeous and heartfelt.
“Átta,” Sigur Rós: Iceland’s favorite atmospheric sons are back with some audiophile dreampop. Check out “Gold.”
“Ted Lasso,” Apple TV: Yes, I am late to this party. But this show shows the best of what humanity is capable of if we open our hearts and follow our instincts to be good, kind people. It is hard not to feel something positive at the end of every episode, thanks in part to the best character development in a series that I can recall.
Stephen Paczkowski is a product manager at Expert Warehouse, the consumer tech distribution arm of YSN publisher AVB.
