Kel Kelly

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“Value” Is The New “Black”

March 15, 2009 7:34 PM

I saw a print ad this week that made my jaw drop. The advertisement was for Frontgate. For those of you not familiar with Frontgate, their tagline says it all — Outfitting America’s Finest Homes. Frontgate sells products for the home that are so high-end that the prices are almost laughable. From a $7,778 stainless steel outdoor grill to a $7,999 eSommelier Wine Inventory System to the $1,650 Hammerhead Resort Pool Cleaner, Frontgate has been supplying the best of the best to the peeps who never had to think about price…until now.

The reason the ad has such a shock and awe effect is because its key message is all about “value” — an attribute that has never been within earshot of Frontgate’s brand and up until now would have made its customers’ noses turn up. The Frontgate brand has always stood for “unprecedented quality.” This particular ad is for World Class Resort Cotton Towels, something you can hear Thurston Howell, III asking Gilligan to get him in a tone dripping in elitism. In its execution, Frontgate highlights the $19.99 price as a representation of the value. The funny thing about Frontgate calling attention to the price is that in previous communications, price has only been used to show a products high-end quality. Also interesting is that these resort towels are the only thing on the site that I could find whose price ended in 99 cents, a tactic places like Walmart choose to employ.

Deliberately or not, Frontgate has just taken its brand to a place were Sonic , America’s drive-in restaurant, sells jr. deluxe burger, chicken strip sandwich, and jr. breakfast burrito for $1 on its Everyday Value Menu. For shizz dudes. For most of us, value used to be what we got when we bought a big-ass bottle of shampoo that gave us 25% more for free. And now, value is something Frontage want to bring us too.

The economy has changed everything and value is the new black. Value is white hot and consumers across all income demographics are looking for it in everything they buy. I recently read an article on how the Palm Beach crowd torched by Bernie Madoff’s Ponzi scheme are all now shopping the sale racks at retailers like Neiman Marcus and Saks. It’s a world gone mad! Thank God for private sale sites like Gilt. They have been a lifeline for those who summer in the Hamptons or on Nantucket by giving them their hoity toity brands at value pricing. Value says, “low cost, cheap & inexpensive” in a vernacular that is still palatable to the Lily Pulitzer crowd.

I totally respect and understand why Frontgate is beginning to reposition their brand around value. They are doing it for pure survival. There isn’t a single item on its site or in its catalog that isn’t considered “discretionary spending”…although given the economy, the $349 Premium Margaritaville Frozen Drink Machine might get put on the must-have list with electricity and prescription drugs.

Have you seen any interesting value plays in the brands you come across?

Posted by Kel | in Uncategorized | 10 Comments »

10 Comments on ““Value” Is The New “Black””

  1. julie Says:

    How about start with Starbucks Value pairing – latte and oatmeal for $3.95, every ski resort across North America combining free nite stays with lift tickets, Home Depot & Lowes combining products with free installation and 1 year financing… everyone wants to b like Ronnie Mac…

  2. Kel Says:

    julie, these are all great examples, particularly starbucks. as a brand, starbucks took its category (coffee) to astronomical levels when it came to pricing. the brand had no place to go aside from hitting a wall when the economy went south. btw, i’m a dunkin’ donuts girl. they keep it real.

  3. Jenn Says:

    Whole Foods has definitely been trying to show consumers that they offer a wide variety of cost-conscious items. To be fair, Whole Foods started this trend at some stores well before the current economic situation. They would periodically print out cash register receipts showing the cost of a specific item at Whole Foods compared to another supermarket. Also, the market would publish monthly recipes for a meal to make for $15. This has been ratcheted up tremendously in the current economic climate. Now Whole Foods has printed circulars that not only contain coupons, but also provide cost-effective recipes. They are really trying to make consumers understand that they aren’t just “Entire Paycheck,” but really Whole Foods.

  4. Kel Says:

    jenn, whole foods is another great example. i like your insight that they started this trend ahead of the economic fallout. i’m sure they were seeing the trend in their own business long before wall street collapsed. i believe coupons are once again going to be a big part of many brands’ marketing strategies. given all the social media elements today, i expect coupons will see a traction like nothing before.

  5. limeduck Says:

    Kel, you’re my fashion inspiration so if you say something’s the new black, I’m all over it. But I have to say, I’ve always believed that many rich people get that way and stay that way because they are [proportionally] even tighter with money than the less wealthy. I think they’ve always loved a bargain, but might not have been so open about it, and merchants catering to them were more discreet about discounting. If the luxury marketers are waking up and smelling the catfood that can only be a good sign for keeping the economy’s few remaining wheels turning.

  6. Kel Says:

    limeduck, well you know we share the same fashion perspective — nothing beats jeans and a black shirt! i totally agree with you. did you ever read “the millionaire next door?” the essence of the book is that the millionaires are not the people you think. they are not the peeps driving the fancy cars, living in the big houses and going to the country club. they are the frugal peeps who drive their car into the ground and live modestly. i heard an interesting conversation recently about whether anyone will pay full price again. it’s an interesting point to ponder. i used to make fun of my dad because he thought i was “rich” because i used bottled water and he believed it was wasteful. he grew up during the depression. i must admit i now have more appreciation for his perspective. i smell catfood.

  7. Ben Carcio Says:

    Kel, so true. I love watching the premium brands scramble. You’d think Whole Foods was Market Basket, or Cole Hahn, Payless. The tough thing for them is they are eroding their brand. History is strewn with brands that were “the” name; Gap, Levis, Budweiser, Ford, who now find themselves hopefully stuck in between value and premium. It would be interesting to see if the moves they made during previous downturns lead them to this position.

  8. Kel Says:

    ben, great insight! not sure what happened in all of those example. i know gap strayed too far from its roots of “basics” when it came to their merchandise. they lost footing that they have yet to regain. i think levis, bud and ford were leapfrogged by new “premium” brands that eroded their leadership perception and forced them down the perception ladder. anyone else have any thoughts on this? it’s a great point. thanks ben!

  9. Christopher Says:

    [This may not be exactly what you were asking about, Kel, but] One of the major value plays of the past 10 months has been equities and corporate securities.

    As an IR practitioner, it’s intersting to see the sharp decline in stock prices across both the NYSE and NASDAQ, not to mention markets around the world. Comedians and political cartoonists regularly take a jab at the price of Citigroup, once one of the darlings of Wall Street. While the venerable consulting firm Bearing Point is now trading under a dollar.

    To some degree, even ‘value’ stocks, which are perceived to be priced less than their actual value, are in vogue among investors.

  10. Kel Says:

    christopher, that is great insight and so true! the only difference is that with companies like frontgate and sonic, they purposely changed their message to include a value theme. unfortunately, most of the equities and corp. securities found themselves there without any deliberate strategic moves on their part. regardless, i love your insight. thanks so much for taking the time to post a comment, christopher.

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