Time of luxury spending ...
High end is back in high demand
Baubles are back, furs are fine, and haute handbags are hot this holiday season.
Even as unemployment remains high and job growth is anemic, luxury spending is up, with some retailers reporting business booming at prerecession levels. Wealthy shoppers, their confidence boosted by recovering investment portfolios, are dropping thousands of dollars on designer purses at Saks Fifth Avenue, holiday decorations from Winston Flowers, and custom-made candles from Seaport Candle Co. in South Boston, among other pricey gifts.
“The high-end customer is spending again. As the markets have come back, people are feeling much better about their own situation,’’ said Stephen Sadove, chief executive of Saks Inc. “Some of our best sellers are the most expensive items - the exotic handbags, the high-end diamonds.’’
It’s a major rebound from the depths of the recession when annual revenues in the luxury sector fell by double digits. Last month, Saks reported some of the strongest gains by all retailers - sales at shops open at least a year soared 9.3 percent compared with the same period last year. Sales at upscale department store chain Nordstrom, which mostly shunned Black Friday price discounts, rose 5.6 percent. Meanwhile, some lower-end chains generated disappointing numbers last month. Kohl’s, for example, recorded a 6.2 percent drop in sales at stores open at least a year.
“It’s been the tale of two consumers,’’ said Tom McCrorey, a partner in retail and consumer products with consultancy Deloitte & Touche, and merchants favored by the well-off are reaping the benefits.
A Deloitte & Touche survey showed that US households with incomes under $100,000 anticipate spending $844, or 12 percent less this holiday season than in 2010. But households with incomes exceeding $100,000 expect to dole out $2,142, about 3.5 percent more than last year.
“There’s been increases in the luxury sales each year since the recession, and we think it will pick up even more this year to prerecession levels,’’ McCrorey said. “For this group, it’s psyche versus cash power. They have the ability to spend what they want on holiday goods. It’s really about how are they feeling. It’s ‘are they willing to spend?’ And they are.’’
In the dressing room at Neiman Marcus in Natick on a recent morning, Debbie Lurie tried on designer dresses and sweaters. Lurie said her outlook on the economy has improved this year, so she’s spending more freely. Already that day, she had purchased a pair of Cole Haan boots and an Alice + Olivia winter coat.
“Our portfolio is doing better this year, my husband tells me,’’ said Lurie, who was visiting from Baltimore.
Lurie estimates that she will spend a few thousand dollars this holiday season, partly because “the kids need ski clothes.’’
Affluent consumers are also paying more to spruce up their houses. Winston Flowers, with six shops in the region, said sales for holiday in-home design services are up about 20 percent. The company has increased its seasonal staff by 10 percent to accommodate the demand. Many orders run about $1,500, but some clients are doling out far more to deck the halls.
For example, for one client’s entryway, Winston’s team of five designers is crafting more than 100 yards of custom garland made from locally cut mixed evergreens, oversized sugar pine cones, and ilex berries accented by paisley ribbon in reds, burgundy, and gold.
“We’re seeing new customers and larger orders from existing ones,’’ said Ted Winston, owner of Winston Flowers. “We’re now above prerecession levels. People are having more confidence.’’
Revenues are up more than 30 percent at the Seaport Candle Co., which makes custom handmade candles and light fixtures for high-end hotels, restaurants, and other top-tier clients. The small factory in South Boston is running seven days a week and took on two more workers to keep up with the demand, according to Carole Lucas, the company owner. The most expensive luminaires cost $95 each and some orders can easily reach $1,000.
At Towne Stove and Spirits restaurant in Boston, holiday bookings filled up fast with some lavish lunches priced at $35,000 and select dinner affairs running upwards of $50,000 for large groups, according to Terrilynn Haak, director of sales. Planners for corporate holiday parties are also more willing to open their wallets. “Cutting corners is not so important this year,’’ Haak said. “The companies that always spent money are spending more. And other companies are coming in and choosing a little more expensive wine and inviting spouses.’’
For Pat Shulman, scrimping during the holidays has never been her style. She anticipates spending several thousand this year - a bit more than in 2010.
Shulman said she and other affluent shoppers are accustomed to buying quality merchandise. “I love to shop and I don’t really look at a prices,’’ Shulman said. “I don’t believe in giving a gift unless I think it’s worthwhile. I’m not good at wanting something second best.’’