Hiding Recession Spending 2009-01-25Posted by clype in Articles of Interest, Money.
Tags: credit crunch, USA
Last week, Ms.Kathleen Fuld, wife of ‘Lehman Brothers’ C.E.O. Mr.Dick Fuld, stopped by the ‘Hermès’ boutique on Manhattan’s Madison Avenue to buy some holiday gifts. As she paid for her purchases, she vetoed the store’s signature orange bag and asked for a plain white one instead.
It’s become a common request, according to an ‘Hermès’ employee. Sales associates at this temple of good taste have got used to passing out plain white shopping bags to clients eager to hide their 10000 USD ‘Birkin‘ habits in the current economic environment.
Ms.Fuld has been a regular client, visiting the boutique once a week and spending 5000 or 10000 USD each time. But now she doesn’t want any one to know.
At ‘Hermès’ — and a handful of other exclusive retailers — ‘secret shopping’ has becoming the winter season’s newest trend.
Anyone who can still afford, say, the three cashmere throws at 2225 USD each that Ms.Fuld bought when she stopped by the shop that day isn’t likely to advertise it. Instead, the city’s most extravagant shoppers are ferrying their purchases home in unmarked bags; delegating delivery to assistants; or manipulating credit card bills to disguise their spending from outsiders — and their spouses.
‘We kind of respect it,’ says the sales associate, who’s worked at the shop for several years and sees a white bag twice a day now, up from once a month in August. Skipping the trademark citrus bag, with its thick paper, brown cord handles, and logo, ‘Hermès” biggest spenders are ‘trying to be discreet.’
Typically, brown paper bags conceal contraband — alcohol, pornographic magazines. Have luxury goods become the new dirty little secret among the ultra rich?
‘People are feeling guilty and they’re feeling confused and they’re feeling like they didn’t earn their money, especially within the financial community,’ says Mr.Milton Pedraza, C.E.O. of ‘The Luxury Institute’, a market research company for purveyors of luxury goods and services.
Mr.Pedraza has heard of several retailers offering plain packaging, or shipping in unmarked boxes, including ‘Net-A-Porter’, the on-line designer boutique that traffics in labels such as ‘Chloé‘, ‘Missoni‘, and ‘Jimmy Choo‘.
A quick trip to ‘Tiffany’ confirmed that the Fifth Avenue store in Manhattan has white bags available too, although a salesperson there said the store has offered them, as an alternative to the classic blue bags, for at least seven years.
In a recent conversation with a top executive at a New York luxury retailer, which Mr.Pedraza didn’t identify, the executive observed that sales were down at his stores only partly because no one wanted to splurge. The bigger factor among shoppers of means was that they ‘don’t want to be seen as consuming luxury,’ says Mr.Pedraza.
In response, the executive introduced enhanced personal shopping services, where buyers could shop and try on clothes in private rooms in the store, and extended the store’s home delivery policy.
Ms.Lucy Ann Barry, who owns an exclusive consignment shop on Manhattan’s Upper West Side and offers personal shopping and styling, says stealthy spending by the cosseted clients she shuttles between ‘Bergdorf Goodman‘ and ‘Barneys‘ is nothing new.
‘They’re always trying to hide it,’ says Ms.Barry.
‘But I’m seeing more stealth manoeuvres since the economy tanked’
A few weeks ago, a female client from the South spent 1200 USD on a ‘Gucci’ snakeskin bag from Ms.Barry.
‘She said, “Please ship it with a gift card wishing me a happy birthday, so my husband doesn’t kill me,’ says Ms.Barry.
‘So I didn’t put the invoice in the box. I just put a card that said “Happy Birthday, I hope you love the bag!”‘
- Ms.Barry has recently seen women split a purchase among several credit cards — ‘Hermès’, for example, will divide a purchase among a maximum of three cards — to avoid a single credit card bill that could give a spouse sticker-shock. She’s had clients pay half in cash, half on a card. Or they pay for part of the item up front, and return to pay the rest later.
Luxury boutiques and department stores are happy to enable such secret shoppers, keeping them afloat in a grim environment for high-end retail.
‘Underground shopping has gotten to the point where retailers recognize a need to cut the labels out of the clothing,‘ says Mr.Marshal Cohen, chief industry analyst with ‘The NPD Group’, a market research firm for the retail industry. Of course, that’s only at the top end of the market.
‘The lower end wants to keep the label in.’
Back at ‘Hermès’, not everyone is orange-bag shy.
‘I understand the concept that people don’t want to be seen spending a lot of money,’ says Mr.Bruce Culmer, a 62-year-old resident of Washington, D.C., in town visiting a friend. Mr.Culmer is leaving ‘Hermès’ with his purchase — three silk ties — proudly swinging in an orange bag.
‘People shouldn’t be flaunting what they have. But it’s kind of silly to hide it.’
- CLIPPED FROM: ‘What Rich People Don’t Want You to Know About Their Spending‘, The Daily Beast, 2009-01-24