Even the Wealthy Are Shopping for Discounted Goods

By Jeralyn, Section Off Topic
Posted on Sat Dec 27, 2008 at 10:42:41 AM EST
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Aspen's peak ten days of the year are Christmas to New Year's. Shopping is a a key past-time and stores selling luxury goods abound. "Sale" is not a word you frequently see in store windows this time of year.

But, this year, shopping has been all about sales. Even the wealthy are looking for bargains and if they don't see them, taking a pass.

Wealthy Americans are re-evaluating their priorities and are 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.

The article describes three "classes" of luxury shoppers, all of whom are cutting back: [More....]

The aspirational luxury shoppers, those whose average annual salary is about $150,000, began cutting back a year ago.... 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 told the Associated Press.

Overall, wealthy Americans are seeing their fortunes shrink:

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, senior director of consumer economics at Moody’s Economy.com.

Meanwhile, investment bankers who once could depend on $3 million annual compensation to finance their spending are facing shrinking bonuses, long-term unemployment or worthless company stock, where they may have had most of their net worth.

In Palm Beach, consignment shops are seeing an upswing in business.

Many of the most exclusive labels are holding "private sales" so as not to damage their image in the eye of the public.

Instead of advertising discounts in shop windows - which can damage the brand by undermining the notion that quality comes at a pric