`Luxury Is Not Dead' as Greenwich Store Sells Greubel Watch for $490,000
Samantha von Sperling realized luxury shoppers had regained some of their confidence last month when her clients began booking $16,000 weekend excursions to Manhattan that included Jean Georges dinners and shopping sprees at Barneys and Giorgio Armani.
Von Sperling's company, Polished Social Image Consultants, charges $3,000 a day for services from personal shopping to advice on dining etiquette. While the uptick is welcome, she said, it can't compare with pre-recession days, when clients dropped as much as $100,000 in 48 hours.
"It's still not bling-bling," said Von Sperling, 38. "It's a little more subdued. The budgets aren't as big, yet."
With the Standard & Poor's 500 Index up 73 percent from last year's low and Wall Street bonuses rising in tandem, the big spenders who vanished during the recession have returned to Rolls-Royce dealerships, high-end antique dealers and Madison Avenue boutiques. They are ready to spend, if a little chastened, shop owners and analysts say.
"The conspicuous consumption of the past has been replaced by a more quality-conscious purchasing attitude," said Karl- Friedrich Scheufele, co-president of Swiss watchmaker Chopard & Cie SA. "Luxury products today have to be authentic and offer real value for money."
Tiffany, Nordstrom, Bergdorf
"As we get into the spring, things seem to be loosening up a lot," said Benjamin Macklowe, vice president of Macklowe Gallery, a Madison Avenue outfit that sells French art nouveau furniture and Tiffany lamps that can cost up to $3.5 million. "There's just a lot of pent-up demand amongst the well-to-do to have beautiful things."
The return of well-heeled shoppers is lifting the fortunes of luxury retailers and manufacturers. In February, sales at stores open at least a year rose 10 percent at Seattle-based Nordstrom Inc., which offers a Be & D leather purse for $1,190. Revenue at New York-based jewelry chain Tiffany & Co., whose Lucida three-carat diamond ring sells for $169,500, surged 17 percent in the quarter ended Jan. 31. Bergdorf Goodman's two New York stores, owned by Dallas-based Neiman Marcus Group Inc., posted a 9 percent sales gain for the same three months and sell Manolo Blahnik calfskin sandals for $765.
"For the most part, people feel we have turned the corner," said John Long, partner at Kurt Salmon Associates, a New York retail consulting firm. "People have been wearing the same thing for a year or more. They want something new."
Global Luxury Anemic
The recovery in high-end retail is uneven. Jewelry sales may be slow to rebound after a 12 percent drop last year as consumers buy less flashy pieces and switch to silver from gold, said consulting firm Bain & Co. Wine lovers are trading down too. Sales of fine wine from the U.S. West Coast were flat in 2009 as shoppers opted for cheaper vintages. Rob McMillan, founder of Silicon Valley Bank's wine division, a unit of Santa Clara, California's SVB Financial Group, said bottles priced $20 to $750 will enjoy modest growth this year.
Overall, luxury sales may be anemic in 2010. In 2007, before the recession began, sales of luxury goods worldwide reached a record $228.5 billion, according to Bain. Last year, sales were $205.1 billion and may rise 1.3 percent in 2010, even with consumers' increasing willingness to spend, according to Bain.
In Greenwich, Connecticut, home of many Wall Street executives, luxury retailers say shoppers began tiptoeing back in November. Roberto Chiappelloni, 59, is one beneficiary. His Manfredi Jewels, in the premier shopping district on Greenwich Avenue, recently sold a Greubel Forsey watch for $490,000. Sales since December have doubled from the same period last year and rising compensation on Wall Street is driving traffic, he says.
Not including stock options and other types of deferred pay, Wall Street dished out $20.3 billion in bonuses in 2009, up 17 percent from a year earlier, according to the New York State Comptroller.
Greenwich, Wall Street
"Luxury is not dead," said Chiappelloni, who has been selling jewelry for 22 years. "Bonuses were in the conversation again and let's not forget that Greenwich is very, very tied to Wall Street."
Some retailers are displaying pricey items again after pulling them last year. At the Windswept fashion boutique in Mendham, New Jersey, about 40 miles from New York, co-owner Amy Durling in November offered a $1,500 fur jacket from Ming Yang Design Group Inc., the New York fashion house. She says the jacket, made from female Danish mink, sold out twice.
"Back are the days of the ladies who lunch," said Durling, 29. "Now they're back to going to lunch and then shopping. It's becoming part of the social scene again. It was almost un-cool for the past year."
After toning down the ostentation during the recession, several luxury makers are rediscovering their inner bling. Hermes International SCA said it recently sold a handmade crystal desk clock for about 500,000 Swiss francs ($473,126).
De Grisogono, a jeweler and watchmaker, showcased a 1.2 million Swiss-franc necklace covered with diamonds and sapphires at the Baselworld watch and jewelry fair this month.
Bayerische Motoren Werke AG released the Rolls-Royce Ghost, a new luxury sedan with a price tag of $245,000, in the U.S. this month. Pre-sales of the four-door with a top speed of 155 miles per hour have been substantial at the Beverly Hills, California-based O'Gara Coach Co. dealership, said general manager Matthew Vazana.
Those who can afford it are again treating themselves to luxury vacations. It is harder to book such trips than last year, said travel agent Yaye Karasawa, who works at Travel International in Beverly Hills. She couldn't find lodging for a family of 15 who were willing to spend more than $100,000 for a safari to South Africa.
Swimming with Sharks
Three months into 2010, Largay Travel in Waterbury, Connecticut, has booked almost as many trips as it did during all of last year and nearly equaled sales from the first quarter of 2008. Owner Paul Largay said clients are again buying vacations, like the mergers and acquisitions executive in his 60s who spent more than $100,000 on a two-week trip to Africa to swim with great white sharks off the coast of Cape Town and raft down the Zambezi River.
"Over the last year, the concept of nesting was the key," said Largay, 52. "But people at this level of the economic scale have enough stuff and know that one thing that is invaluable is time and opportunity. Now they want to get back to traveling."
During the recession, wealthy customers began asking how much a particular item cost, said Arthur Aronov, who runs the Madison Avenue location of the Domenico Vacca luxury apparel chain. Now, his best customers have stopped asking. An executive from a private investment firm last week spent $20,000 in 20 minutes, including two pairs of alligator shoes that cost $7,500 a pop. Before him, a lawyer spent two minutes picking out a red alligator skin shoulder bag for $11,000.
"You don't have people coming in and saying 'What's your lowest priced X?'" said Aronov. "Now people are saying "This is what I want,' and they buy it."
To contact the reporter on this story: Matt Townsend in New York at firstname.lastname@example.org