Make us your home page
Instagram

Wealthy tighten their belts, look for bargains

The window display at Saks Fifth Avenue in New York says “luxury,” but some signs inside the store say “90 percent off.”

Associated Press

The window display at Saks Fifth Avenue in New York says “luxury,” but some signs inside the store say “90 percent off.”

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 their assortment of products and tweaking their advertising message.

"Fewer, better things," suggests diamond jewelry giant De Beers Group in an ad campaign launched last month.

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.

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.

It may be hard to sympathize with their plight, but millionaires saying no to that third pair of high-priced heels is worrisome for us all, say economists, because it deepens the consumer spending trough.

But such over-the-top spending isn't prudent anymore. Americans' wealth fell 4.7 percent to $56.5-trillion in the third quarter from the second, the biggest decline since the second quarter of 1962, according to Scott Hoyt of Moody's Economy.com.

Luxury lull

Here's a look at some of the trends starting to emerge in the luxury world:

. DISCOUNTING: Boutiques on Madison Avenue in Manhattan are offering 70 to 80 percent off and Saks Fifth Avenue is discounting up to 90 percent.

. WHO'S CUTTING BACK: Aspirational luxury customers with salaries of about $150,000 began cutting back a year ago. Single-digit millionaires, who account for 30 percent of sales and 60 percent of the customer base, pulled back sharply starting in March. Those with net worths above $10-million started scaling back in September.

. IMPLICATIONS: The economy depends on spending by the wealthy because of their dominance in discretionary purchases, and deep discounting on luxury brands could condition shoppers to spend only a certain amount on designer handbags and clothing.

Wealthy tighten their belts, look for bargains 12/22/08 [Last modified: Thursday, November 4, 2010 2:17pm]
Photo reprints | Article reprints

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times
  2. New York town approves Legoland proposal

    News

    GOSHEN, N.Y. — New York is one step closer to a Lego dreamland. Goshen, a small town about fifty miles northwest of the Big Apple, has approved the site plan for a $500 million Legoland amusement park.

    A small New York town, Goshen approved the site plan for a $500 million Legoland amusement park. Legoland Florida is in Winter Haven. [Times file  photo]
  3. Jordan Park to get $20 million makeover and new senior housing

    Real Estate

    By WAVENEY ANN MOORE

    Times Staff Writer

    ST. PETERSBURG —The St. Petersburg Housing Authority, which bought back the troubled Jordan Park public housing complex this year, plans to spend about $20 million to improve the 237-unit property and construct a new three-story building for …

    Jordan Park, the historic public housing complex, is back in the hands of the St. Petersburg Housing Authority. The agency is working to improve the 237-unit complex. But the latest plan to build a new three-story building for seniors will mean 31 families have to find new homes. [LARA CERRI   |   Tampa Bay Times]
  4. Coming soon at two Tampa Bay area hospitals: a cancer treatment that could replace chemo

    Health

    A new cancer treatment that could eventually replace chemotherapy and bone marrow transplants — along with their debilitating side effects — soon will be offered at two of Tampa Bay's top-tier hospitals.

    Dr. Frederick Locke at Moffitt Cancer Center in Tampa is a principal investigator for an experimental therapy that retrains white blood cells in the body's immune system to fight cancer cells. The U.S. Food and Drug Administration approved these so-called "CAR-T" treatments for adults this month. In trials, 82 percent of cases responded well to the treatment, and 44 percent are still in remission at least eight months later, Locke said. [CHRIS URSO   |   Times]
  5. Regulator blasts Wells Fargo for deceptive auto insurance program

    Banking

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.
[Photo by Spencer Platt/Getty Images, 2017]