The residential lift industry is a small one, with few clients and few competitors. But Lift Shop founder Les Katz can tell you all about how hard this sector is to break into.
Katz established his business in late 2003, but spent most of his first year fighting competitors who he says attempted to shut him down using “strategies of obfuscation… making it impossible to compare and hard to remember the benefits”.
“This is where they would talk about us negatively, saying that Lift Shop did not have a service department, that we had financial difficulties, (when in fact their credit score was bad), Lift Shop sells illegal lifts. They defamed us quite badly, really.”
“We would end up defending ourselves rather than talking about the features, innovations and benefits of our products. We were wasting valuable time on rubbish. The clients would also get sucked into this “game” by them… and bring it to our table.”
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Katz also says one company dropped their prices to “loss making territory”, and the director said he would make up the loss when Lift Shop became broke.
“I am very glad most of those days are behind us, we did not like it… it made our industry look bad and cowboy-like. We are not cowboys at all. We are a very serious, focused and mature company.”
While the early days were a struggle, Katz says the company is finding its feet. Lift Shop recorded 53% growth from the 2008-09 year and recorded $9.9 million in revenue for the same period.
Elevating the competition
Katz started in the industry by installing lifts for other companies, but soon realised there was a gap in the residential market.
“I was on a plane, next to a guy who had recently purchased a lift. He was told he could only purchase one product, and he handed the money over and didn’t know what he was going to get. He paid $70,000 for something we can now do better for $30,000, and this was in 2003. This guy was asking for his money back, and I saw an opportunity.”
In late 2003 Katz then began offering his own range of lifts, with products imported from Italy through a local manufacturing house. He undercut the competition by lowering prices in a market that focused on mostly wealthy customers, and reduced costs to speed up deliveries.
“We doubled the delivery speed, and could offer our products at 65% of the market cost and make a profit. We were selling a better product for less money and faster.”
“The incumbents were used to a pretty basic product at very high prices, and we caught them with their lazy pants on. We’ve been received very well by customers, who have turned into sales agents for us. We don’t just cater to the cheap end of the market, although we are competitively priced.”
Targeting a different market
Traditionally the residential lift market has been aimed at the wealthy, with many wanting to add a bit of glitz to show off their properties. But Katz says the market was too narrow, and he opened up the company to new demographics and hundreds of new customers.
“As one of the late movers into the residential space, we couldn’t enjoy the fat of those who had been in there longer. The company and the product range has grown, the market is a new space. You could go into commercial, but we sit in the middle and we’ve busted that space out into new categories.”
While Katz says the wealthy still provide a lot of business for the company, there are a number of new customers including building developers who want to add more value to their properties.
But who else is buying?
Katz says the elderly, young entrepreneurs and mid-to-high income earners are all considering installing lifts, with the main motivations being convenience and increased property values. But he says not everyone has millions to spare, with many customers mum-and-dad investors.
“There are people who are getting older who need a lift for convenience, and others who have taller houses, but the point is it’s not just pompous or luxurious people buying these products now. This isn’t the province of millionaires.”
“We have customers from different suburbs buying lifts for about $30,000, when most people expect it to cost $150-200,000. The population is aging, they are putting more time into their homes and they think “this property is my last”, so they want to put some value into it as well as make life easier. It’s also a good conversation piece.”
Opening up the market to different customers has created new challenges. Katz says the nature of installing an elevator in a home makes it more difficult to convince the customer about how, and what, to buy.
“This isn’t like a normal product which you can just return tomorrow if you don’t feel like using it anymore. We are knocking a hole in somebody’s house, it’s permanent, so we have to be sure they understand what they are doing.”
“What we are doing is theoretically dangerous, and we have to jump through bells and whistles to get it approved. Our customers are certainly not stupid people, so making a sale is hard work.”
And while Katz says the competition is still focused on tearing his company down, he maintains the Lift Shop will survive not because of ruthless tactics, but robust accounting techniques.
“Most of these residential so-called experts are fiscally lazy. Many imported from Europe and when the Euro was pummeled, that gave us an opportunity to stablise our business and get market share. We properly manage our costs, so when we have a downturn in our industry we know how to handle our credit… unlike the competition.”