February 11, 2016

Expensive Stuff

This image from my customer acquisition presentation comes to us courtesy of Rag & Bone (click here).

You visit their home page, and you are served a dollop of white space. You look at the merchandise, and you quickly realize that you will have to take out a second mortgage to afford the assortment!

Expensive merchandise means that rich people are eligible to buy the merchandise. Head to Facebook (click here), and you'll see that famous people like Jennifer Lawrence own a handbag. That attracts traffic, folks.

I recall being in a meeting at Nordstrom, way back in 2002. The accessories merchant was in an argument with another merchant ... and the accessories merchant was winning the argument. Her comps were pushing +10% ... and for good reason ... she was pushing prices higher and higher and higher. Her claim? She said that when you pushed prices as high as possible, you self-select an aspirational audience. In other words, she was choosing the audience she wanted to acquire via the price points offered in her category.

I know, I know. You sell widgets. Widgets are a commodity item. You are under severe price pressure from Amazon and your competition. If anything, you have to lower prices! Fine. Good luck with all of that.

Do you think that Rag & Bone has stiff competition? One of the fast fashion brands can knock this stuff off in less than two weeks and sell something similar for $30 instead of $300, right?

Expensive merchandise is a customer acquisition strategy. Regardless of your business model, you have expensive merchandise that your existing customer base craves, and the expensive merchandise anchors a perception among prospects. You get to pick your customer acquisition audience. Why pick and audience that always demands the lowest price?