Williams-Sonoma Inc. just released its corporate quarterlies. The company reports that its third-quarter revenues rose 7.8% and profits were up 8.6%. But not all of the Williams-Sonoma brands could boast such great news. The luxury-leaning Williams-Sonoma flagship brand was up a measly 1.2%, while mass-market targeted Pottery Barn eked out 2% growth. West Elm, its hip, urban contemporary brand, led with 15.7% gain.
What made West Elm the growth engine for the company, while Williams-Sonoma brand languished? West Elm knows what young HENRYs (high-earners-not-rich-yet) customers want in home furnishings and shopping experiences and delivers it to them. Williams-Sonoma? Not so much.
HENRYs are the key demographic customer for the future home market.
HENRYs are the key demographic customer for the future home market. Young HENRYs, aged 24-34 years, have already reached affluent levels of income ($100k-$249.9k), but not yet hit their peak earning years. That will come about the middle of the next decade.
It is unlikely that once young HENRYs reach ultra-affluent income levels of $250k+, putting them squarely in the target market for luxury brands like Williams-Sonoma, that they will transfer loyalty. West Elm is perfectly positioned to keep their core customers coming back, even as they age and their incomes rise.
West Elm is a connected brand for a connecting generation
Now with 65 locations, West Elm’s secret sauce is its commitment to connect with customers by creating meaningful experiences in and through its stores. While it is a big national retailer, each store strives to be a vital part of its local community. West Elm stores are customized to the local market. Its ‘think small, think local, think young’ strategy is key to its success.
West Elm with its modern design sensibility is perfectly in tune with not just the home decorating preferences of young HENRYs, but their values, attitudes and lifestyles. Examples:
- Handcrafted goods: It has committed with the Clinton Global Initiative to source $35 million worth of handmade goods over the next two years. The result: More than 20% of the company’s products will be handmade.
- Made in USA: West Elm customers wear Carhartt jackets and carry Filson bags and want American heritage brands, so the company will source more made in USA product.
- Supporting craftspeople: In a unique partnership with internet-crafts site Etsy, West Elm showcases selective Etsy sellers in its catalogs and in popup shops at various stores. Early success of this venture has resulted in West Elm becoming a partner in a new Etsy Wholesale venture which connects Etsy craft sellers with brick-and-mortar shops, including independent retailers and museum shops.
- More kitchen and home goods: West Elm has spun off ‘West Elm Market’ to showcase kitchen and other home goods, 75 percent of which are made in USA. The West Elm Market stores, some of which are stand-alone and others are stores-within-a-store, also feature a coffee bar.
- Home decorating services: West Elm offers free decorator services where the decorator visits the customer’s home to help clients pick out products and create a decorating statement in their home.
- Classes and special events: Classes, like basics of fermentation and container gardening, are taught by store staffers or local entrepreneurs through partnership with Skillshare and other organizations. Classes are not focused so much on selling store product, but helping their customers enhance their lifestyles. To make West Elm a more vital part of the community and caring partner of the customers is the goal of these classes. That class attendees return to the store more often and spend more when they do is an added benefit.
For West Elm, its success is not so much the products it sells, though its products are cool and affordably priced, but how it sells them. Stores are not laid out to any corporate cookie-cutter design, but are individually crafted and made to feel and function as community hubs. The sales people are encouraged to think of themselves as ‘merchants’ and help customers not only with their home furnishings needs, but also direct them to other community resources, such as libraries, flower shops, theatres, whatever the customer might desire at the moment.
The concept is by West Elm making a personal connection with its customers above and beyond their home furnishings needs, that they will return to the store when they have new home furnishings needs to fill. It’s a strategy that is working today, but perfectly poised for tomorrow.
The Consumer Demographic of the Future: Young HENRYs
West Elm is tapping the emerging demographic of young HENRYs that have a growing need for just the type of home furnishings that West Elm sells. Not only that, but the brand knows how to connect with – really connect, not just market to — this customer. For brands that want to be successful with the young HENRYs, it is not about how they connect – internet marketing tactics are a given – but rather how to create new and compelling reasons why their brands are meaningful and important to this digitally-empowered generation.
Let Unity Marketing help you learn how to make a connection with young HENRYs:
- Get Introduced: My new mini-book, entitled What Do HENRYs Want?, provides a quick overview of the HENRYs and how to connect with this emerging demographic. It includes a look at brands that are capturing the brand loyalty, and spending power, of the HENRY customer.
- Get an Overview: Unity Marketing has a trend report focused exclusively on the home furnishings needs of affluent consumers, including HENRYs. Entitled Cocooning in New Luxury Style: How the top 20% shop for & decorate their home and ways for businesses to prosper, this report reveals research about affluents and their home furnishings purchases, brand preferences, and their decorating choices. It provides case studies of brands like West Elm and many others that have met the affluent consumer market at their point of need.
- Dig Deeper: Unity Marketing offers a comprehensive trend report, Millennials on Road to Affluence: Mapping a Path to the Next Luxury Generation, that goes into depth about this next generation customer that is the future for luxury and other high-end brands.
- Get Up-Close & Personal with young HENRY: Unity Marketing is expert at giving marketers access and understanding of the HENRY customer that is their best and brightest prospects today and tomorrow. We provide both qualitative and quantitative research with HENRYs, defined by income, age and gender. Call me at 717.336.1600 or email firstname.lastname@example.org to meet the young HENRYs, key to your brand’s future. Learn more about our custom research services in this prospectus entitled ‘What-So-What-Now What?’