MANAGING FOR
MONEY The Neiman Marcus Effect
Will $100-per-yard fabric become ordinary?
by Steven C. Bursten
You read it first
in this column months ago: Custom draperies are steadily growing
in market share (see D&WC, December 2004, page 58). Result:
Savvy window fashions leaders who jump on the bandwagon can benefit
by bigger ticket sales, higher margins and lifetime repeat customers.
Today I’ll tell you about the newest opportunity trend boosting
our industry: I call it The Neiman Marcus Effect. You may remember
reading news reports about the year-end holiday shopping season
when Neiman Marcus, Saks Fifth Avenue and high-end department stores
had disproportionate sales increases, while Sears, Target and even
giant Wal-Mart were softer than expected. I wondered at the time
if this was an aberration or the first stirrings of an enduring
trend. I now can report that this trend has legs. It is impacting
window fashions sales today and will for years to come. This trend
is a genuine opportunity for leaders. Here is what’s happening
and how to make money from it.
THE SKY’S THE LIMIT
There seems no upper limit to the amount some couples will spend
for a new home, and the amount they spend inside their home to make
it distinctive. High-end window products are breaking sales records.
Established dealers report growth in quality shutters, wide wood
blinds, motorization and stylish custom draperies. If you ask homeowners
to buy premium products, many will do it. Some are selling top-end,
high-quality specialty wood shutters for twice the price of standard
quality. Custom draperies with distinctive top dressing designs
approach $4,000 for a single picture window. No one knows where
the top is.
FAD OR TREND?
All indicators point to this phenomenon as a long-term trend. Today,
one percent of homes—100 of every 10,000—are over $1 million
in value. There are some $750,000 homes in this range today—double
the number only five years ago. Households with $1 million in net
worth are now seven percent of households in America.
In retailing, upper end Rodeo Drive and Neiman Marcus continue record
sales. This is new. It is a trend sneaking up on us and now is clearly
evident to any crystal gazer in home furnishings. The high end is
a good place to be today, and will be for years to come. (We will
disregard the old quote, “He who lives by the crystal ball
soon learns to eat ground glass.”)
Add to these trends the indicators in our own industry: metal blinds
have virtually disappeared in better homes; wide wood blinds and
shutters are in vogue. One of the most telling trends is the price
per yard of fabric sold for custom draperies. The norm has been
$30 to $50 a yard for many years, with upper-end rarely topping
$80. Today there are increasing sales of $100 a yard fabric and
occasionally $150. We just developed a custom drapery pricing chart
with the top end of $90, but the furniture store requesting it asked
for a grid up to $150 per yard.
NEW SEGMENT OF HIGH-END BUYERS
There is a new segment of high-end buyers for window coverings.
People in this segment buy homes valued at $800,000 to $1.5 million
and higher. Many of these homeowners prefer to deal directly with
a window fashions specialist, rather than a full-service interior
designer. They want someone to bring samples to their home, and
they want more: an experienced consultant with good ideas. They
want ideas and expertise on the product quality and how to use it.
Even more, they want ideas how to make their million-dollar home
special, a place of pride when they entertain friends.
You will find this segment in growing markets and upscale communities.
Especially look where home values are over $250,000 median. “Median”
means half the homes sold are above that level and half are below.
Then, look for homes that are triple the median, about $700,000
and higher.
TURN A TREND INTO CASH
The way to make money from this trend is to first spot it in your
area. Index for your own home values; check Google for “median
home value, (your county).” If your county median home value
is $200,000, look around. Look for homes that are double and triple
that value. Talk to Realtors. Ask where the really upscale homes
are sold. That is the area to get out your flyers.
Next, work on your own confidence. Never fear selling homeowners
who want the best. But, remember, you must not sell them like you
do the ordinary price-conscience person. Instead, talk about quality,
performance, beauty and how her friends will admire her choice.
Talk about values beyond low price. This customer may ask about
pricing, but that is not their primary interest. When you handle
these customers correctly, you will get referrals from their friends
with similar income ranges and from neighbors on the same street.
You can sell more of these customers if you sell ideas instead of
products. If you haven’t ordered it yet, request my report,
“How to Sell Concepts instead of Commodities,” it is right
on target for this segment. Just e-mail your request to steveb@custEmers.com.
PLAN FOR THE DRAPERY BOOM
Customers who take pride in their homes want draperies and fabrics
on their best windows. Only top treatments and draperies can give
a room a unique, designer look. With more homes sold at over $500,000
in value, more customers want the best for their best rooms.
In May, The Home Depot closed more than one-third of its Expo Design
Centers. It reminds us for the umpteenth time that big money, displays
and floor space will never replace skill and ideas at the high end
of the market. If you want to beat competitors, go for the gold:
the growing number of upscale home owners who want beautiful, unique
window fashions.
Attend all the training you can. Training in sales is what sets
you apart from others. It will give you confidence and help you
feel at home with million-dollar homeowners. You can give great
customers great ideas to make their homes beautiful. Then, as a
professional, you will build a better business and benefit from
The Neiman Marcus Effect in your area.
This article is based on Steven C. Bursten’s actual experience
with sales and financial information working with hundreds of window
coverings businesses. Whether you are a sole manager who aspires
to higher sales, or you manage 50 window fashion decorators in a
multi-million dollar business, this series will help you manage
sales better and increase your profitability. Bursten is the retired
founder of Decorating Den Interiors and author of a how-to book
on new business start up, “Bootstrap Entrepreneur,”
and is a leading expert in window coverings marketing, sales systems
and sales management through his company, custEmers.com. Questions
and comments welcome: steveb@custemers.com or call (888) 333-8981.
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