Kitchen & Bath Business - September 2020 - 16

HOT TOPIC

Reigniting the
Luxury Market
The pandemic has upended
every aspect of business,
but there is optimism in the
high-end sector

THE TOOLS TO REACTIVATE DISCRETIONARY

SPENDING include innovation, boosting consumers' confidence and shaping their perceptions
about premium products and services, according
to two experts on the luxury market.
Bill Darcy, NKBA CEO, hosted a thoughtprovoking discussion on NKBA Live's "Brave
New Business" webcast that explored the ways
the pandemic lockdown has impacted consumer
behavior, spending and attitudes - especially at the
top end of the market - and the steps brands need
to take to stimulate demand again.
Joining Darcy for "Consumer Confidence and
the Discretionary Dollar" were J. Walker Smith,
Ph.D., chief knowledge officer for Brand & Marketing with Kantar Consulting, and the 2020
recipient of the Charles Coolidge Parlin Award,
the oldest and most prestigious lifetime achievement award in marketing and marketing research;
and award-winning author Pam Danziger, a researcher, speaker and expert on retail, the luxury
market and the affluent consumer segment.
Among Danziger's books are Why People Buy
Things They Don't Need and Meet the HENRYs:The
Millennials That Matter Most for Luxury Brands,
about the consumer segment of "High Earners
Not Rich Yet."
The panel started by defining some terms: necessity spending, the things we need for daily living vs. discretionary spending, as Danziger said,
"all the extras in life that make it worth living -
wants and desires."
Where it gets tricky is that there isn't a clear-cut
difference between the two, she said, because a lot
of discretion goes into necessity purchases. "We
might need sneakers, but we want a pair of Nikes,"
she said, adding that discretionary spending is so
important to kitchen and bath pros, because some
of what they sell is necessity, but much more of it is
discretionary."That's where you make your money,
in getting people to trade up to more premium
items. And luxury is at the pinnacle of discretionary purchases."

16
16-19_KBB_0920_HotTopic.indd 16

ALL PHOTOS Elma Gardner,

CMKBD, was a winner in the
large contemporary kitchen
and large contemporary bath
categories of the NKBA 2020
Design Awards. The two
projects exude luxury with her
selection of finishes, appliances, details and products,
which included two column
wine refrigerators and an
elevator. Photo by Jeffrey A.
Davis Photography

By DIANNE M. POGODA

THE TARGET AUDIENCE

The consumer segment known as HENRYs are in the middle range, doing better than 75 percent of all U.S. households but still a rung below the
ultra-affluent customer, Danziger explained. With income roughly between
$100,000 and $250,000, they make up about 21 percent of the population
but account for 36 percent of all consumer spending. The top 5 percent
of consumers only accounts for 10 percent of spending. The difference is
because there are 28 million HENRY households vs. 6.5 million ultraaffluent households.
"HENRYs are so important to the K&B market because they're the best
prospects for future clients," said Danziger. "Everyone who reaches ultraaffluent income levels started out as a HENRY. It's important to make an
early connection with young HENRYs."
Smith concurred, adding that the luxury consumer, what he called the
"balance-sheet consumer," is one who thinks in terms of net worth, not
paycheck-to-unstable-paycheck, and has the financial reserves to assess
purchasing decisions from a more secure position. They have more freedom
to fall back on their reserves, and they're choosing to avoid risk.
"In terms of the COVID-19 crisis, these individuals have chosen to selfisolate.The trick to engaging with them is all about their avoidance of being
exposed to high risk," said Smith. "They're not going out to eat but not because they can't afford it - they choose to minimize their exposure."
The luxury market has shifted from categories like exotic travel, which rely
on high personal engagement, to categories that don't have that kind of focus.
Smith said there is still a desire for escapism, so luxury consumers who are
engaged in avoidance are still looking for an escapist experience, especially
spending on the home, technology, digital/video entertainment, cooking,
in-home services like a Peloton bike instead of going to a gym, etc.
"The ability of the luxury customer to self-isolate is dictating how 
they're engaged in the marketplace," he added.

/ SEPTEMBER 2020 / KBBONLINE.COM / The official publication of NKBA (NKBA.org) and KBIS (KBIS.com)

8/18/20 12:33 PM


http://www.KBBONLINE.COM http://www.NKBA.org http://www.KBIS.com

Kitchen & Bath Business - September 2020

Table of Contents for the Digital Edition of Kitchen & Bath Business - September 2020

Kitchen & Bath Business - September 2020
Contents
Editor’s Note
Show Note
NKBA Note new & noteworthy
Happenings
Hot Topic
Trends
Better Business
Tech Savvy
Research Roundup
CEDIA Expo
KBIS 2021
Color Find
Before & After
Solutions
Wellness Design
What’s Hot
Favorites
Kitchen & Bath Business - September 2020 - Intro
Kitchen & Bath Business - September 2020 - Kitchen & Bath Business - September 2020
Kitchen & Bath Business - September 2020 - Cover2
Kitchen & Bath Business - September 2020 - 1
Kitchen & Bath Business - September 2020 - Contents
Kitchen & Bath Business - September 2020 - 3
Kitchen & Bath Business - September 2020 - 4
Kitchen & Bath Business - September 2020 - 5
Kitchen & Bath Business - September 2020 - Editor’s Note
Kitchen & Bath Business - September 2020 - 7
Kitchen & Bath Business - September 2020 - Show Note
Kitchen & Bath Business - September 2020 - 9
Kitchen & Bath Business - September 2020 - NKBA Note new & noteworthy
Kitchen & Bath Business - September 2020 - 11
Kitchen & Bath Business - September 2020 - Happenings
Kitchen & Bath Business - September 2020 - 13
Kitchen & Bath Business - September 2020 - 14
Kitchen & Bath Business - September 2020 - 15
Kitchen & Bath Business - September 2020 - Hot Topic
Kitchen & Bath Business - September 2020 - 17
Kitchen & Bath Business - September 2020 - 18
Kitchen & Bath Business - September 2020 - 19
Kitchen & Bath Business - September 2020 - Trends
Kitchen & Bath Business - September 2020 - 21
Kitchen & Bath Business - September 2020 - 22
Kitchen & Bath Business - September 2020 - 23
Kitchen & Bath Business - September 2020 - Better Business
Kitchen & Bath Business - September 2020 - 25
Kitchen & Bath Business - September 2020 - Tech Savvy
Kitchen & Bath Business - September 2020 - 27
Kitchen & Bath Business - September 2020 - Research Roundup
Kitchen & Bath Business - September 2020 - 29
Kitchen & Bath Business - September 2020 - CEDIA Expo
Kitchen & Bath Business - September 2020 - 31
Kitchen & Bath Business - September 2020 - KBIS 2021
Kitchen & Bath Business - September 2020 - 33
Kitchen & Bath Business - September 2020 - Color Find
Kitchen & Bath Business - September 2020 - 35
Kitchen & Bath Business - September 2020 - Before & After
Kitchen & Bath Business - September 2020 - 37
Kitchen & Bath Business - September 2020 - Solutions
Kitchen & Bath Business - September 2020 - 39
Kitchen & Bath Business - September 2020 - Wellness Design
Kitchen & Bath Business - September 2020 - 41
Kitchen & Bath Business - September 2020 - What’s Hot
Kitchen & Bath Business - September 2020 - 43
Kitchen & Bath Business - September 2020 - 44
Kitchen & Bath Business - September 2020 - 45
Kitchen & Bath Business - September 2020 - 46
Kitchen & Bath Business - September 2020 - 47
Kitchen & Bath Business - September 2020 - 48
Kitchen & Bath Business - September 2020 - 49
Kitchen & Bath Business - September 2020 - 50
Kitchen & Bath Business - September 2020 - 51
Kitchen & Bath Business - September 2020 - 52
Kitchen & Bath Business - September 2020 - 53
Kitchen & Bath Business - September 2020 - 54
Kitchen & Bath Business - September 2020 - 55
Kitchen & Bath Business - September 2020 - Favorites
Kitchen & Bath Business - September 2020 - Cover3
Kitchen & Bath Business - September 2020 - Cover4
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