Permit me to acquaint you with the Ultra-Orthodox Jewish society. While by most measures – morally, intellectually and educationally – this might be considered elite. However, many choose to live in poverty seeking high social standards. Their budgets are tight, but properly feeding their family is important, seeking out cheap solutions. Suppliers to this sector know that money talks –selling food staples with low margins, benefiting instead from economy of scale. The average household is 8-10 heads.
Furniture needs to be durable and long lasting. IKEA is well designed but won’t survive years of active children. Carpenters serving this sector learned how to manufacture what is best for this society. Most apartments are tiny with no extra space. The measurements need to be concise, or the carpenter will need to start again.
A recent debate in Hamodia, the only one newspaper that the Ultra-Orthodox utilize, discussed complaints about dishonest furniture stores. These stores asked for payment in full when ordering, but didn’t properly deliver. The examples were many. Delivery time was not respected, the furniture didn’t fit, or the color wasn’t right. One of the recommendations people gave was to always buy at a store that has a sign above it. Many stores keep costs down in this community by not having a sign.
Next, the store owners came with their stories. Payments canceled and custom-made furniture refused and could no longer be sold. This at the cost to the store owner. Two sides of the story, the customers and the suppliers.
The newspaper brought one best-practice example. The story is about a woman with a shop without a sign or a name. She has run a successful business for over thirty years. She insists her relationship with the customer is purely business, friendship is not part of the deal. She asks for a down payment upon ordering and for a moderate payment plan allowing for prefixed instalments. Over the years she has had a bad experience or two, but nothing dramatic. Mistakes happen and she offers customer service to make it right. Above all, she delivers on time. Her secret is paying her suppliers in full and in advance, motivating them to deliver as quickly as possible. The last principle that she shared was that trust is paramount. She believes in what she offers and trusts the customer.
Many lessons can be learned from this story. Instead of competing on price she competes on insecurity, a common theme. The customer delays payment and the supplier wants full payment up front both trying to reduce their risk. After all, nobody can really guarantee the furniture will arrive as ordered and on time. This woman does exactly that – she does whatever is needed to reduce the insecurity factor. Delivery is on time and if it’s not right, she makes it right. Her margins are high because she has removed the risks, keeping her customers and suppliers happy. That’s how she is successful in this competitive business for over thirty years.
The final point is interesting. She is a supplier not the customer’s friend. No birthday cards or occasions celebrated with her clients, no fancy store and not even a sign. She focuses on what she offers –her customer’s peace of mind. She knows what they need –remove the uncertainty – and that’s what she successfully delivers in this highly competitive market. This is luxury.