The Look of Luxe

We all enjoy the finer things in life. But what, exactly, is a luxury item? Certainly a price tag tells you something, but the idea of luxury is more complicated than cost. It means different things to different people. For some, luxury is a steak dinner; for others, nothing less than caviar will do.

“Luxury is not necessarily expensive; it can be a great value,” says Mary Carol Garrity, owner of Nell Hill’s, Atchison, KS.

Yet even as the nation faces an economic downtown, big ticket items seem to be thriving. Despite reports of fading wealth, the October New York Tabletop Market was flush with luxury product. From Christofle’s diamond encrusted flatware and serveware to a crystal coat peg by Lalique, there was enough extravagance on hand to counter those reports. What’s going on?

According to MarketWatch.com, “Confidence among luxury consumers has fallen for a second straight quarter to its lowest level since 2004.”

Pam Danziger of Unity Marketing agrees. “If consumer confidence continues to weaken among the ranks of the affluent, it will be a testing time for luxury marketers and brands,” she says. “Many luxury brands are going to discover just how dependent they’ve become upon consumers’ penchant to 'trade up’ to more luxurious offerings. On the other hand, luxury brands that have built their business on the super-affluent market will likely be immune to this trend.”

From here on out, expect luxury manufacturers to target those super-affluent consumers and leave the mid-level shopper behind. In fact, the trend was evident at Tabletop, where Royal Crown Derby, best known for dinnerware collections that have graced the tables of royalty, set its sights directly on the younger consumer. The company is looking to attract these new buyers — but not by lowering prices. Royal Crown Derby is attracting younger customers of the same “caliber” by showing them how a traditional table can blend with a modern aesthetic.

“We need to continue to reach our existing customer. But more importantly, we must continue to bring our brand strength to the attention of new consumers with a design direction that draws upon the past while linking to the future,” says Monica Watts, vice president of Royal Crown Derby USA.

Lalique has taken a similar approach with a streamlined stemware collection and reduced prices to attract up-and-coming younger consumers.

“We found that the super-affluent (incomes of $150,000 and above) continue to be willing to spend, but it is the lesser affluent consumer ($75,000–$149,000) who cut their spending back in the third quarter of 2007 on a vote of no-confidence in the economy/direction of the economy,” says Danziger.

Yet with all this talk of a poor economy, stores are still selling. “Oddly enough, when all the news reports say the economy is down, we’re doing well,” says Jennifer Viola Laddy, owner of Filenni Gift Boutique, Woodcliff Lake, NJ.

“People who spent money before are still spending money,” explains Garrity, who in addition to owning three stores also has a collection of dinnerware, serveware and accessories called the Mary Carol Home Collection. She notes that consumers are shopping smarter nowadays. They’re looking for a good buy — and when they find it, they’re willing to spend a little more.

“I see [consumers] trading up, but it has to be a great value,” says Garrity. “They’re buying fewer pieces, but higher quality pieces. I have a $6,500 bookcase, and I sell one a month. Four years ago, I would have sold three in a year. People will spend if it’s a great value.”

Not even the decline in new home purchases has slowed the luxury market, for while consumers may not be decorating new homes, re-decorating has become the next best thing. Shoppers will often invest in one high quality piece, and purchase a number of lesser-priced items to coordinate their luxury product.

“I’m seeing big ticket items move a little earlier this year. I think a part of it is the holiday, but another part is that people are out shopping,” says Jennifer Viola Laddy, who hasn’t noticed a drop in sales, and doesn’t feel she’s losing any customers. “I just sold a $600 piece of Lladro and a $2,000 Faberge,” she says. Laddy’s store is 2,000 square feet of low to high end gifts. She carries everything from Webkinz to Faberge — and notes that customers are buying it all.

Bridging the gap between luxury and mid-priced merchandise is easier than retailers may think. Consider fashion: You can pair jeans with an expensive top, or throw on some jewels to dress up an otherwise casual outfit. The same goes for the home. Mix it up; match high end with lower end merchandise and customers may just embrace both types of product.

“People are mixing high end with low end. They’re not ashamed to say I got it at Target and mix it with something else. The snob appeal is gone,” says Mary Carol Garrity.

In fact, consumers are proud of the way they can mix an expensive item with a lower-priced piece and make it look luxurious. Most of the time, it’s about achieving a luxurious look. This is an area where specialty retailers can help, and displays play an important role. For example, set a table display with some fine china, accessorized with lower-priced pieces such as candelabras, vases and napkin rings. Show customers that they can pair such products successfully.

Jennifer Viola Laddy, on the other hand, keeps luxury items separate from lower priced, giftable lines. She draws her customers in with baby accessories and giftable items in the front of the store, and keeps luxury goods in the middle and gift baskets in the back. “When we first opened, we had all the high end items in the front of the store. We noticed that people were intimidated. A friend of mine commented that we were losing a lot of business because of the way the store was merchandised. So we changed it around,” she says. Laddy quickly noticed the difference.

And you will, too. Though money is tight right now, shoppers are still willing to spoil themselves a little. Not every customer is going to spend thousands on a crystal figurine, but they’ll invest a few extra dollars on a quality item. The luxury market isn’t going away.

As retailers head to the winter markets, keep in mind that slightly higher-priced items will move — if they’re sold the right way. Define what luxury is for your client base and create a buying strategy. Choose a well-mixed selection of high and low end items and explain to customers why it’s worth spending a little more on a product that will last a lifetime.