Gary Evans — Furniture Today,
NAPLES, Fla. — Luxury is a niche market, with a savvy

customer with lots of money who wants choices in products, fabrics and finishes.

These were just a few of the points covered by panelists speaking about The Magic of Luxe at the Furniture/Today Leadership Conference.

Bob Maricich, president and CEO of Century Furniture, cautioned the audience not to confuse good design with luxury because of the “democratization” of design in the mass market — where, for instance, consumers can buy a waste basket designed by Philippe Starck at Target. 

“If you’re going to participate in the luxury market, you’ve got to have a niche mentality,” Maricich added. He figures the category represents only 4% to 6% of the overall market, but says it is a globally growing business.

“Why it’s growing is because affluent customers are growing,” he said, noting that 10% of the population controls half of all disposable income. “Between 2004 and 2015, the number of households having more than $50,000 annual income is going to increase 25%.”

Of particular interest are baby boomers turning empty nesters because they “become incredible luxury customers at that point,” Maricich said. “They get a gigantic pay increase and believe they deserve luxury.”
He said there are 15 million people in that category now, and in the next 10 years the number will grow to 23 million.

In the luxury market, choices are often aspirational — emotionally triggered by a desire for power and prestige, or a passion for gardening, cooking or decorating. “People are prepared to spend extraordinary amounts of money on things they’re interested in, and a home is just right for that,” Maricich said.

Joe Bograd, president of retailer Bograd’s Fine Furniture in Riverdale, N.J., said the high end business centers on custom orders.

“You make the sale first and buy the product. At the low end you buy a product first and then make the sale. They’re completely different operations,” he said.

He said the 76-year-old business switched to a high-end approach in 1983 and immediately saw a sales gain “because our sales people were no longer talking about price. They were talking about what they were trying to sell to the customer.”

Bograd said the retailer, on the fringe of the New York metro market and along New Jersey’s Route 287 “wealth belt,” is in a perfect place to sell high-end goods.

Bograd said the company offers no credit. Except for clearance sales, its advertising is all image — showing products like a $4,850 massage chair from Spain.

Another high-end retailer, Jim Gabbert of Gabberts Furniture and Design Studio in Edina, Minn., said there was a time when you could line up chairs or dressers at 50 paces and separate them by price points. Now it’s harder to differentiate product on looks alone, he said, and customers are likely to buy on style as well as price.

“They think nothing of combining an Armani suit with a pair of jeans from Target,” he said. “How do we capture that imagination?”

One way, he said, is to give consumers a wide choice of furniture online. He is an investor in Minneapolis-based Reshare, whose Distribution Relationship Management software allows a consumer to buy furniture on a manufacturer’s Web site and then choose a retailer to complete the sale.

Jacques Wayser, president of high-end manufacturer French Heritage, said a luxury products not only has to be good “but it has to be fabulous and make customers feel extraordinary.”

He stressed the importance of store displays, because high-end customers want to see constantly changing products and not the same old thing. In addition, Wayser said that ending price quotes in the number nine is unnecessary in the luxury market. It’s okay to price an item at $1,250, he said: “A customer is not going to walk away if it’s over $1,000.”