Affordable luxury

What a lot of people may already know – but are afraid to say is that friendships now have price tags, and dinner guests are gauged, thanks to our current economical state.

Some of us will go all out for a good friends’ birthday: there are friends who get the 300 euro CAYMUS and there are friends who get the 10 euro bottle. They’re saying, ‘I like them, but I don’t like them that much.’

It’s a matter of redefining luxury – and redefining nonessential – in an economy whose most consistent product may seem to be dismal daily headlines.

Ultimately, though, “essential” and “luxury” are personal definitions, choices driven not only by how much money remains when the bills are paid but also by our position on the social ladder, our sense of how to stay there, and the feelings we get from the things we buy.

We are already choosing: Starbucks is closing 100 underperforming stores. Sales of trucks, SUVs, and roomy sedans are plunging. Retailers are slashing prices to lure shoppers back to the malls. Though 94 percent of us still pay our mortgages  or rents on time, some are giving up extras or tapping into savings to do so.

Notions of what’s necessary are always changing, says JULIET SCHOR ,a sociologist at Boston College, Dishwashers, air conditioners, washing machines, and color TVs were once indulgences. Today, they’re basics. Consumers now may be considering things like clothing labels and coffee brands or cooking at home versus dining out, says Schor, author of THE OVERSPENT AMERICAN: UPSCALING, DOWNSHIFTING AND NEW CONSUMER.”

Now – when times are trying, the “status premium” that people are willing to pay shrinks, whether the product is high-end lipstick or a gas-guzzling vehicle. And with awareness that neighbors are suffering, conspicuous consumption becomes less comfortable.

So people postpone purchases. People take on less debt and pay off more debt. They just get more conservative. Most people shop to meet desires, not needs. Great chunks of the middle class have the needs down pat, so it’s all shopping for emotion. So now, instead of trading up, we’re trading down. But we’re still trading. Enter the era of the AFFORDABLE LUXURY

AFFORDABLE LUXURY

We’ve all been there: A window display or a recommendation lures us into a store – and we face unexpectedly astronomical price tags. It seems to happen more often these days as many luxury brands – selling everything from 14.000 euro Ralph Lauren handbags to 899 euro Bugaboo baby strollers – push their top price points higher than they’ve ever gone before. What’s priced below falls into that ever-expanding category: “affordable luxury.”

Some people cut and run when confronted with prices that seem crazy. But many of us experience a sudden emotional-mathematical transformation. We set a new ceiling for a “reasonable” price. Disinclined to go all the way to buy the trophy, we instead settle for a consolation prize. Comparing to a Brioni 3.000 euro suit – a private label suit of 800 euro seems a bargain.

The thing is, if you’re in that world long enough, 800 euro for a suit stops even feeling like a lot of money!

This concept is one of the reasons for the proliferation of 300 euro designer sunglasses these days. The fact that Ralph Lauren is charging 14,000 euro’s or so for an alligator RICKY HANDBAG makes it easier for a consumer to justify in her mind paying 300 euro for a rather simple sweater. Many Chanel sunglass owners are actually would-be owners of Chanel suits. Something similar has happened to many owners of Tiffany keychains, Prada legwarmers, Coach wallets, and Frette tea towels.

When shoppers are confronted with prices they can’t afford, a smart retailer will “move you right along to where you can salvage your pride. It is a mixture of anger and happiness.That pretty much describes the whole shopping experience at those moments when we’re outpriced (anger), then soothe ourselves with a smaller splurge (happiness).

This played itself out in the purchase of a sweater when what he actually wanted was a certain pair of  BLUEBLOOD JEANS. Given that accessories like sunglasses, fragrances, and logoed belts drive the sales of companies like Gucci and Louis Vuitton, such consolation prizes account for a very sizable chunk of the luxury business these days.

That is just about everything in luxury goods and fashion. In fact, that’s one reason why some in the luxury fashion industry are irritated with retailers like Target and Zara: They’re seen as setting the ceilings too low.

This has been a strategy that goes back to the 17th century. You sold one thing to the king, but everyone in court had to have a lesser one. Today, we have Hermès, Fendi, Louis Vuitton, and Gucci. There’s the 500 euro bag in the window, and what you walk away with is the T-shirt. It’s the same strategy as putting the sports car in the window to sell the sedan in the back.

Still, luxury brands today have fine-tuned the strategy. The folks at PORSCHE are masters of this. Look for a notably expensive car in one of the brand’s dealerships. Only a few of them are available for sale. But scores of similar, smaller, less-elaborate items (helmets, jackets) are nearby, primed to walk out the door. And if you can’t even go that far, try the wallet, the keychain or pen.

As convenient as it might be to accuse these manufacturers of gouging when they set prices so high on their top goods, there’s nothing nefarious going on here. Clothing is one of the most democratic marketplaces around. There’s always another store, another pair of pants to turn to.

Question is: can you afford it?

Alfredo Silva is Co-Founder of Klatergoud.com and a freelance marketing strategist.
Image courtesy of the guys of  STRAATJUTTEN.NL