The luxury appliance business in 2022 was healthy, albeit stressful. Yet, despite headwinds and other challenges the industry faced, the year turned out to be an unprecedented one.
The past 12 months started like a rocket ship — anything a retailer could get their hands on was sold. Backorders for some of the leading luxury appliance brands grew into the hundreds of millions, and consumers, builders and designers started ordering appliances for projects 12 months in advance in the hope that they would arrive in time for when their project finished. Sometimes that worked out, other times not so much.
Fast forward to the end of 2022 and consumer traffic, remodeling projects and even new home sales have slowed. Talk of a recession in the first half of 2023 is looming, leading to luxury appliance sales (sell-out) dropping as much as 20 percent compared to this time last year. Sell-out is a future predictor of what is going to be invoiced and delivered, which would indicate that tougher times are ahead.
How is this dynamic going to impact your business moving forward, and what should you do?
Let’s start here: If you are not planning on doing anything different, you run the risk of being left behind. Now is the time to be loud! Leverage the tools that you have at your disposal to find and engage with your customers.
Consider opting into what we’ll call the “4-Dimensional Strategy” for success in 2023:
Diversification: The first thing to look at how well you have diversified your luxury appliance offering. If most of your sales are tied to one manufacturer who continues to have supply chain issues, you may want to rethink your strategy.
After reviewing hundreds of millions of dollars in 2022 Luxury Appliance sales, we are experiencing an unprecedented balance of share shift away from vendor(s) with the longest lead times. The largest market share holder in the luxury appliance space has lost over 8 percent share this year alone. Luxury consumers are becoming more agnostic to their brand choices and are open to finding a brand that fits their lifestyle — no longer just a status symbol or “I need what my neighbor has.” Think Smart Appliances that include Wi-Fi, cameras, specific cooking technologies, color options — the list goes on.
Digital: Do you have a digital marketing strategy for luxury appliances? Business will continue to slow down. To maintain your market share you need to be loud! More clicks generate more footsteps, which equals more sales. Our marketing and web and digital teams (Site on Time and RWS) will be providing cost effective turnkey digital campaign strategies for our Members that are entirely data-driven. Using data to determine the effectiveness of a campaign will help ensure you are maximizing your marketing investments. If your data does not allow you to tie your marketing dollars directly to sales, you need better data.
Data: Speaking of data, there’s no better way to cut through the constant, unexpected and unpredictable nature of the industry today than with the right data. We’ve seen how our PriMetrix platform can identify trends, which helps us better prepare for what is coming. Looking ahead, we’ll continue to leverage these insights to help our Members make more informed merchandising decisions and have more informed conversations with the vendor community.
Differentiation: To stand out in your marketplace as business slows, you need to lean into your most-trusted resources, like your people, the in-store experience, financing opportunities, etc.
Let’s start with people. It is no secret that to be successful in the Luxury space you need highly trained sales professionals on your team. This is one of the barriers to entry for Big Box stores; their teams float between multiple departments and have minimal appliance knowledge. Even the most successful independent retailers only let their most experienced and highest trained sales associates sell high-end appliances. Mistakes at this level are costly, and the customer experience has to be second to none.
Luxury appliance retailers today need to meet their consumers where it counts, quite literally. You have the opportunity to use alternative consumer financing options to set yourself apart from the competition. The assumption that the most affluent consumers only use credit cards is not accurate. If you want to challenge me on this, Nationwide has millions of dollars in financing to prove you wrong (just from the last 12 months). The reality is, in times of uncertainty, an alternative source of credit with an unprecedented rate of 0 percent can be an absolute game changer. Look into the tools that are available to you as a Member of Nationwide, and see why our finance strategy in 2023 for luxury is the best in the industry.
I will end with this: As we sit here today in another year that is set up to be unprecedented and definitely unpredictable, let’s be loud. Take your luxury appliance strategy to the fourth dimension. That’s our formula for success in 2023 and beyond!