Leveraging Luxury Living
Though it is deliciously tempting to embrace a French proverb as luscious as “Il est impossible de trope de luxe” (It is impossible to overdo luxury), a quick survey of real estate marketing these days might persuade you otherwise. The words luxury, luxurious and the hipper “luxe” have become as common as the words “For Sale” on signs, regardless of a condo or loft’s actual attributes. And in what’s increasingly becoming the buyer’s market of 2008, developers are being forced to come up with substantial specs to back up their exuberant claims of luxury living.
Enter “technomenities,” pre-wired A/V and smart-home applications that are helping to differentiate properties. And enter Bang & Olufsen, the consumer electronics company which has perhaps more than any other, never shied away from defining itself (or pricing itself) as a luxury brand.
On a quiet, somewhat abandoned side street in the Soho section of Manhattan, a new, 12-story condo building called The Renwick is going up, offering home shoppers who are willing to part with $800K-$2 million a variety of one-, two- and three-bedroom units, some with a sunset view of the Hudson River. The new condos—advertised, as “effortless luxury”—will have familiar high-life accoutrements, from Wolf ranges and Sub-Zero fridges to an on-site garage with valet service. But they are also the first MDU residential property in the U.S. to feature Bang & Olufsen TV and stereo products as a standard amenity in every unit.
So along with a lobby library, which will house a first edition of Oliver Twist and 8-inch-plank European wood floors, Renwick condo owners will be greeted at home by a 32-inch BeoVision 8 LCD TV (with stand, a $4,500 value) and a CD/radio/SD-Card player called the BeoSound 4 with two compact bookshelf speakers, BeoLab 4000’s, a $5,600 audio combo. That’s over $10,000 of AV equipment in over 40 units, not a skimpy starter package. But B&O America’s director of sales, Domenico Palandri, said he hopes the Renwick buyers will be enticed to shop for much more at the nearby Bang & Olufsen store at 21st and Broadway.
“Upgrades are our main focus. All of our projects are hooked to a local store,” Palandri said. “Every new owner will be handed a card offering them a free one-on-one consultation. That’s actually a huge selling point to developers; they now have an A/V liaison. Overall, we are hoping to strengthen relationships with local dealers.”
About 51 Bang & Olufsen stores are currently scattered across the U.S., and Zean Nielsen, president of B&O America, said the company intends to open 15 more over the next three to four years. The expansion is notable in the current hunkered-down economy, but equally notable is the multi-tiered strategy accompanying the growth plan. Each new store will be a licensed independent dealer, not store-within-a-store concepts that the company has tried in the past.
“We’re going for pure distribution, so to speak,” Nielsen said. “What we have is unique. It’s a luxury purchase, and a luxury experience should follow it. We want to be sure that each client is fully catered to. A multi-brand environment can make that difficult.”
Regional development manager Henrik Holm Pedersen explained it this way: “We don’t want our $20,000 TV to be next to another brand’s $3,000 model. It’s just too hard for a salesperson to represent both.”
Most salespeople would argue that pitching a $20,000 plasma would be a trick on any show floor, but B&O brass said luxury CE sales require an entirely different mindset, sort of a jet-set mentality.
“Our customers like to travel, they often own multiple homes, and they don’t mind paying for items of quality,” Pedersen said. “When you market a product like ours, you need a quality and highly trained sales staff who can focus on our small portfolio.”
The 40-product 2008 offering on display at B&O stores may be small, but each product has a significant biography, not to mention a swank Bauhaus-inspired design pedigree. Bang & Olufsen, based in Streur, Denmark, has aligned itself with superstars of European design since it began in 1925. The company’s aesthetic is one of clean, streamlined shapes in the most basic of colors, often black and gray. The look of the products, created in large part by an English designer named David Lewis, who has done work for B&O since the 1960s, is right at home with the sleek modernism you see in architectural magazines. And while many CE manufacturers have tried to create products that blend in or disappear into decor altogether, B&O products are meant to hold their own in a painstakingly decorated room.
“Our customers often want their B&O products to be seen,” said Palandri, who likens the brand loyalty to that of luxury cars. In fact, a recent survey by The Luxury Institute (luxuryinstitute.com), a research firm that evaluates the changing tastes of high net-worth consumers (people who make, on average, $341,000 a year), revealed that the very affluent consider B&O the premium CE manufacturer.
Despite this long-nurtured reputation, Nielsen reported a slight drop-off in retail traffic over the last year, although retail sales are up. “You could say we’ve weathered the last year fairly resiliently and we’re happy with that,” he said.
Targeted growth in the custom install category may be one of the best explanations for the company’s solidity. Like many other retailers, B&O is learning how to increase the average ticket price of each customers. What may begin as a cash-and-carry purchase is parlayed into a home visit and then developed into a custom job. Pedersen was delighted recently by one such job, a four-bedroom, 4,000-square-foot Manhattan apartment that ended up with a $250,000 A/V system, including distributed audio, a full B&O home theater with a Kaleidescape digital file server, and control panels.
“In some of our stores, 70 percent of the business is custom now,” Pedersen said. “The projects run from $30,000 up, typically.”
Follow-up with lush-pocketed customers is particularly intense, as Bang & Olfusen employs a “customer for life” mentality. Within 48 hours of any purchase, a customer will receive a thank-you card. About three weeks later, there will be a gift and a letter from a local store manager. After three months, invitations to events like golf tournaments or musical evenings are offered. Then, when any product is close to the end of its warranty period, the B&O staff will offer to clean and examine the product at no-charge.
“We’re finding ways to sustain momentum in this economy,” Nielsen said. “Developers are coming to us now, needing us. We’ll see more and more of these contracts. It’s a little bit arrogant to say we don’t have any competitors, but you know, it’s almost true.” CR