Sunday, October 18, 2009
Luxury: at what cost?
Some high-end retailers are catering to their shoppers' smaller budgets.
Kyle Green | The Roanoke Times
Charlene Hudson (left), director of sales training for Fink's Jewelers, talks with sales associate Mallory Johnson about the 2009 jewelry line by John Hardy. Fink's is one of several local high-end retailers affected by the economic downturn.
Kyle Green | The Roanoke Times
Fink's merchandise includes Breitling watches and this sterling silver woven cable bracelet by David Yurman (above).
Jeanna Duerscherl | The Roanoke Times
Haberdasher Doug Kidd (right) shows attorney Michael Hastings a pair of five-pocket pants. Kidd is a local Tom James salesman who visits professionals in their offices to sell business and casual attire.
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Boats, Rolex watches, designer dresses and high-end wine. Sales of these items are indicators of what people are willing to spend on luxury.
Some Americans' lavish tastes are taking a back seat to frugal spending and the risk of appearing overtly conspicuous in light of economic woes. This trend is apparent at Roanoke Valley wine shops, jewelers and upscale boutiques, where $7,000 Rolex watches sit on shelves and $1,700 Michael Kors dresses aren't moving off racks quite as fast as they once did.
On the other hand, some local high-end retailers say sales are better than last year, a signal that this holiday season could be brighter than 2008.
Still, nearly 40 percent of affluent consumers (with household incomes in the top 20 percent) will spend less on holiday gift-buying this year, according to a survey by Unity Marketing.
These kinds of consumers are more price conscience than ever, said Pam Danziger, president of Unity Marketing.
Also, sales at luxury stores open a year or longer dropped 16.3 percent as of September, which is down from a decline of 8.3 percent last year, according to the International Council of Shopping Centers.
It's evident that luxury may be taking on a new meaning for some people.
For Susan Ivey, it means purchasing $20 bottles of wine this year, instead of ordering $400 shipments of nine bottles at a time from a California winery.
"You can find some good wine" for $20 said Ivey, who shopped at Wine Gourmet in Roanoke on a recent Friday afternoon. The Roanoke consumer said she's satisfying her taste buds with wines from Spain and Chile, which sell for less than $20 at Wine Gourmet.
New tastes
Consumers' appetites for wine have come down by about $4 per bottle in the past year, a change that is evident for Kimberly Eakin, owner of Wine Gourmet.
Her shop's year-to-date sales are down slightly from last year, and Eakin has worked to keep her retail operation's overall costs down. That includes asking for discounts from wine distributors, canceling an annual party for employees and not giving raises.
In February, Eakin attached a value tag to certain customer wine favorites that she and her staff determined were "fat values for thin wallets." These promotions have helped to increase the number of bottles sold, she said.
Sales rose 8.5 percent in September alone, a factor that Eakin only can attribute to an improving economy.
Jewelry is another luxury that faces repercussions from the economic downturn. Sales are down across Fink's Jewelers stores, said Lindsey Kirby, Fink's marketing director. That includes sales of some of the Roanoke-based retailer's most expensive merchandise, such as Rolex watches priced at $7,000 on average.
Also, sales of certain jewelry priced at $1,000 to $1,500 have slowed down, said Kirby.
In response, the jeweler has added some merchandise that it believes will fit shoppers' newfound budgets, such as a sterling silver woven cable bracelet by designer David Yurman for $825.
Yurman dropped the bracelet's 18-karat gold features in order to bring down the retail price of the bracelet, Kirby said.
"They're responding to the economy, just like we are," she said.
Slashing prices
Scott Reynolds knows the secret to selling high-performance boats: Put them on sale.
Reynolds marked down the prices of much of his inventory at Smith Mountain Boat & Tackle in Penhook, where sales for his most expensive boats are down 20 percent to 25 percent this year.
"It's a pleasure item," Reynolds said, explaining that people use these kinds of boats for water-skiing and other related sports.
For example, he's selling a 25-foot TriToon boat for $35,900, discounted from $39,900.
Similarly, Tom James, a Tennessee-based manufacturer and retailer of custom suits and other clothing with an office in downtown Roanoke, is running a stimulus sale. The deal packages include a suit, shirt and tie for $599 and other suit specials for at least $1,349.
Doug Kidd is a local Tom James salesman who visits executives, attorneys and other professionals in their offices to sell business and casual attire. Kidd said his sales are picking up compared with last year, though some regular customers continue to put off purchases and the average price of an order is down. When the economy hit rock bottom last year, some financial professionals told Kidd not to call them for nine months.
Kidd works harder now to keep a full schedule of sales appointments, with a goal of at least five a day. His earnings are commission-based, though he would not disclose what percentage of total sales he receives.
Casey Morgan, a State Farm Insurance agent in Vinton who regularly orders clothing from Kidd, said Kidd's personal service keeps him spending. Morgan likes his left shirt sleeve to be short, so he can see his watch. Kidd takes care of that for him.
"I consider it a luxury-type item, but the way I do business, that's the way you dress," said Morgan, who recently spent about $800 with Kidd for two pairs of pants and dress shoes.
After quickly checking the Internet during a recent morning appointment with Kidd, Morgan determined that he'd have to pay more for a pair of walnut-colored $369 shoes, with shipping, if he ordered them online. But Kidd will hand-deliver the shoes to him. It was a no-brainer for Morgan.
A swing from showy
But Morgan and other consumers are not necessarily wearing their luxury purchases on their sleeves. In light of tough economic times for many consumers, people lately have been less showy about their purchases, possibly opting not to buy them at all, said Ellen Davis, a spokeswoman for the National Retail Federation. They fear that their spending will look exorbitant to a friend who may have been laid off from a job.
Unity Marketing's Danziger called it a cultural shift and a movement away from certain status symbols, such as brand names.
Morgan said he decides when it is appropriate to wear a nice suit and when it's best to dress casually, depending on what client he is meeting that day. Sometimes, people are intimidated by a business person dressed in a suit, he said.
"I'm dealing with middle America-type of people who are hit the hardest by this recession," Morgan said.
Still, despite a national drop in luxury expenditures, some people buck the trend. Perhaps that's why Carl Rosen, owner of Henri Kessler Furs in Roanoke County, claims that fur coat sales are strong right now.
And Eakin of Wine Gourmet cannot fully understand why a black case holding $50 to $400 bottles of wine at her shop is more than half empty. Several weeks ago, she sold two bottles of wine, at $200 each.
Affluent medical professionals, whose jobs are driving much of the employment growth in the Roanoke Valley, likely are responsible for much of this buying action, Eakin said.
It also doesn't hurt that Wine Gourmet's green building sits less than a mile from Carilion Roanoke Memorial Hospital and the health care company's other office buildings.
