Among the massive, drab and noisy manufacturing plants at Appliance Park on Buechel Bank Road, a small structure provides for some moments of zen: Light brown wood covers the walls. Water sprinkles nearby. Paintings battle for attention with a Dale Chihuly-like sculpture.
The setup evokes excellence, class and sophistication. And that’s the point: The Monogram Experience Center aims to increase sales for GE Appliances’ luxury line, Monogram.
About 42 weeks out of the year, Appliance Park hosts groups of no more than 24 guests for several days for tours of the center and the factories and to visit local events, hotels and restaurants.
The tours provide a way for “influencers” — builders, designers, architects — to get their hands on the products and to allow luxury appliance sellers to gain an understanding of the pricey machines’ capabilities. Convincing a buyer to acquire a $10,000 pizza oven requires a little more expertise than selling a $500 oven.
Valinda Wagner, who runs the center, said some of the brand’s customers spend more on their kitchens than other people spend on their entire home. But even in more middle-class homes, people want their kitchens to envelop them in the same elegance as their luxury automobiles, she said.
The center’s staff includes two chefs who run live kitchens and prompt guests to chop, cook and taste. The final day includes an Iron Chef-like competition including a secret ingredient.
“It’s a fun day. They have an absolute blast,” said Michael Mahan, Monogram’s general manager.
As Mahan stepped into the kitchen/classroom earlier this year, a steak was being prepared sous-vide style, inside a plastic bag floating in hot water. A temperature probe connected to the cooktop via bluetooth kept the temperature at a constant 130 degrees. Once taken out of its water bath, the steak is seared for 30 seconds on each side.
As guests savored thin strips of beef, Mahan told class participants about the ease with which he recently prepared steaks sous-vide style. He set them up in the water and left them for several hours, which allowed him to entertain guests before coming back to the perfectly tender steaks, which he could finish preparing in a matter of minutes.
Other Monogram items, such as a dishwasher, focus on noise reduction. Mahan said one of the new items is so quiet that customers won’t notice whether it’s running unless they place their hand on it.
In the center’s theater room, high-end appliances line the walls. A French door wall oven, launched last year, can be opened with one hand, allowing the cook to carry a tray in the other hand. It also allows the customer to stand closer to the product and to not have to bend over to access the interior. And it can be controlled with a smartphone. Other products include subtle details such as LED lights that light up slowly after you open the doors.
Marketing and feedback
GE Appliances built the Monogram Experience Center in 2007. And though Mahan won’t reveal how much it cost — except to say that it was “quite a bit” — he said the initial investment and significant costs to run the operation have generated a great return based on how many Monogram items the tour participants sell.
And, Mahan said, in a small market — about 150,000 high-end kitchens are built every year — every customer counts.
“These are significant investments,” he said. “You want to fall in love with the product.”
The company has similar setups in New York and Chicago.
Beyond the revenue boost, GE Appliances staff also gain insights from visitors because they deal with appliance customers every day. During their visit to Louisville, guests meet with engineers and designers who develop products. That’s a critical part of the center’s role, Mahan said, because appliances that work well in a sprawling mansion overlooking the Pacific Coast may not work very well in a penthouse in Manhattan — even if you can get the machine up the stairs.
The typical Monogram buyer is 52 years old and has a median household income of $300,000. The buyer’s average home covers about 4,500 square feet, though that varies greatly depending on the region.
Mahan said the buyers tend to look for the best quality, best features and best look. They’re buying for their second or third home, their “dream home.”
“We take that responsibility very seriously,” he said.
Appliance Park manufactures Monogram’s freestanding refrigerator and dishwasher. Other items are made in Tennessee and Georgia — though all are designed and engineered in Louisville. The company tests every single unit before shipping it. Corners are hand-polished and buffed.
“We go the extra mile with Monogram,” Mahan said.
The appliance industry as a whole has grown about 6 percent in last few years, Mahan said, and the high-end market has seen growth rates about twice as high. Monogram expects that to continue for at least the next couple of years.
The new affluent are putting a greater emphasis on quality over quantity, he said.
“That’s good for us,” Mahan said.
According to statistics portal Statista, the total retail value of the U.S. consumer appliances market is projected to grow to about $70 billion this year, nearly 17 percent in the last five years.
Monogram competes with brands such as Viking, Sub Zero and Thermador.
Mahan said the Monogram line also boosts the prominence of its less expensive and less glamorous sibling, GE Appliances, much like Audi and Acura boosts the reputation of Volkswagen and Honda.
“Monogram is really the pinnacle of what we make,” Mahan said. “Reputationally, it’s hugely important.”
Mahan declined to talk about profit margins, but said the ultra-high market provides for great features and great quality — “and it’s good business for us as well.”
The company told IL this week that while some business lines at Appliance Park are profitable, the park as a whole is not — though a union leader told IL that the company was merely trying to intimidate workers ahead of contract talks.
Cooking shows and open floor plans
Louisville real estate agent Tre Pryor, who is an IL contributor, said that home-focused TV shows and changing preferences in home layouts have made kitchens more of a focal point.
The Food Network and shows such as “Iron Chef,” “Kitchen Nightmares” and “House Hunters” have given people insights into and raised their interest in professional and upscale kitchens, Pryor said.
The use of kitchens, too, has changed. Kitchens formerly served a utilitarian purpose: to produce food that would be presented to family or guests in a dining room. Today, however, kitchens often serve as a gathering point, especially in homes with open layouts that connect kitchens directly with family rooms.
Pryor noted that in a recent showcase of local homes, all had an open layout.
“It’s definitely a trend people like,” he said.
And when kitchens and their appliances are more visible, especially to guests, their look matters, and homeowners dig deeper into their pockets to pay for custom cabinetry, granite countertops and upscale appliances.
Low interest rates and a pent-up demand for home improvement projects, lingering from the recession, also are boosting sales. Market research firm NPD Group said that home-related purchases also are being driven by millennials who are buying their first homes and baby boomers who are nearing retirement and becoming empty-nesters.
And that’s good news for Appliance Park — but also for appliance retailers. Both Home Depot and Lowe’s reported higher-than-expected sales in May, and Lowe’s said it expects to earn more this year than previously forecast.
Economic conditions and changing consumer interests also have benefitted stores such as Bonnycastle Appliance and TV, in part because upscale appliances generate better margins.
Bonnie Kinzer, a manager at Bonnycastle, confirmed Mahan’s analysis that sales of higher-end appliances have grown about twice as fast as the industry in general.
Customers like the upscale brands’ energy efficiency, industrial style and touches such as racks that glide out smoothly, but can remain in the oven while it is self-cleaning, she said.
Kinzer has worked in the industry for 48 years, starting in wholesale. She has sold appliances at Bonnycastle for 15 years.
People who consider luxury appliances tend to look for features more often than particular brands, she said, but once they like a piece, they stick with the brand for the entire kitchen.
“They usually like everything to be the same,” she said.
For Monogram, an item that draws a lot of interest is the Advantium, a combination microwave and convection oven that also functions as a warming drawer and comes with “Speedcook Technology.” For example, cooks can press buttons to choose “speed cook,” baked potato, enter the weight and quantity, and seven minutes later, the oven-quality baked potato is ready.
The item was launched last year, and Monogram officials said customers build entire kitchens just around the Advantium.
Kinzer said that while interest in upscale appliances has increased in general, some Bonnycastle customers buy Monogram because it is made locally.
Pryor, who has lived in Louisville all his life, said Louisvillians have an above-average affinity for locally made products, from food prepared at locally owned restaurants to Ford trucks manufactured at local plants to GE and Monogram appliances designed and manufactured at Appliance Park.
Market research firm ReportBuyer projects that global demand for appliances will increase at an annual rate of 3 percent through 2019. Monogram will launch a new cooling and cooking platform next year.