NEW YORK — The rich are tightening their belts, too. Even if it’s still a Gucci.
Faced with the sharpest decline in net worth in nearly 50 years, wealthy Americans are re-evaluating their priorities and slashing their spending at a rate unseen in decades — a move that could have dire consequences for the economy, luxury stores and high-end brands.
In response to the increasingly subdued shopping mood that began late last year, luxury brands are cutting their inventory, changing the assortment of products they offer and tweaking their advertising message.
“Fewer, better things,” suggests diamond jewelry giant De Beers Group in an ad campaign launched last month.
Sure, many of the ultra-rich aren’t exactly scrimping. Some are still dropping $100,000 on a fur coat or $600 for a pair of shoes — but increasing numbers who were never bargain-hunters are picking through mounds of discounted designer goods to save money in an uncertain time.
And why not? Deep discounts are making it a great time to stock up on high-end clothes and accessories, whether its a Chanel suit, a Prada bag or a $1,000 pair of Christian Louboutin shoes with their bright red soles.
But if conspicuous consumption was a hallmark of the luxury days of old, those still shopping ‘til they drop are taking a more low-key approach, apparently out of deference to the new breed of have nots.
“I keep a stash of brown paper bags,” says Sara Albrecht, owner of Ultimo, a Chicago-based designer clothing boutique. “No one will ever know.”
Albrecht said she used to keep just a few bags on hand for those who wanted to keep their purchases hidden from their husbands. But now she has a bigger pile in response to requests from shoppers who want to keep their buying secret from friends and neighbors.
Still, the affluent clients who do come in are buying fewer items and choosing special pieces that are less flamboyant, she said. Albrecht said her shop has suffered a 20 percent drop in sales from a year ago.
Luxury sales overall dropped 34.5 percent in the first week of December from the same period a year ago, according to SpendingPulse, a data service provided by MasterCard Advisors, and were down 23 percent in the five weeks ending Dec. 6.
Such behavior differs dramatically from even just a year ago, when luxury stores couldn’t keep up with the wealthy’s appetite for extravagance. A-listers wanted $5,000 handbags, not the $500 versions they bought in the past.
But the financial meltdown has deflated the demand that reigned for much of this decade, resulting in plummeting sales for many luxury purveyors. That has forced high-end stores like Saks Fifth Avenue and Neiman Marcus to offer discounts of up to 70 percent before the traditional start of the holiday shopping season — akin to their downscale competitors.
The aspirational luxury shoppers, those whose average annual salary is about $150,000, began cutting back a year ago, according to Milton Pedraza, chief executive of the Luxury Institute, a research firm. That spiraled up the economic scale after the economy worsened.
Single-digit millionaires began pulling back sharply starting in March, when Bear Stearns nearly collapsed and was bought by JP Morgan in a fire sale, Pedraza said.
And the ultra-wealthy with a net worth above $10 million — who make up about 60 percent of sales and 20 percent of top luxury stores’ customer base — started cutting back in September, when the financial crisis ballooned, Pedraza said.
“This is no longer a state of mind, or what feels right,” said luxury consultant Robert Burke. “This is a reality of where people’s bank accounts and investment portfolios are.”
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