Catering to the ultra wealthy is nothing new.
But during a recession, retailers and manufacturers will find new ways to market more of their products to the super rich, said David Winter, president of the Luxury Marketing Council Southern California in San Clemente.
The super rich,those who don’t have to think twice about buying a Rolls-Royce,still are shopping. But they’re trying not to be as showy, Winter said. It’s a way of being sensitive to the economic times, he said.
One of the ways that retailers are marketing to the rich these days is by selling expensive brand name goods without the markings of the brand name logo,think a Louis Vuitton handbag minus the LV logo.
It’s less conspicuous, Winter said.
“They’ll know, but everybody else won’t know,” he said.
Luxury brands are marketing their priciest products in magazines such as Black Ink, which is sent to New York-based American Express Co. Centurion cardholders.
The Centurion, known as the “black card,” has no spending limit and charges an annual fee of about $2,500 in addition to a one-time “initiation fee.”
The card, which just was introduced in Canada, is for a select few.
“It’s by invitation only,” said Marina Hoffmann, spokeswoman for American Express.
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Penthouse at South Coast Plaza: offers air of exclusivity to wealthy shoppers |
Visa Inc. recently launched its own black card, with a $250 annual fee. But it’s not quite as exclusive as American Express’. Visa’s card has spending limits.
Luxury retailers that want to improve sales this year will need to focus on people who hold black cards.
Many luxury retailers saw 2008 sales fall because “aspirational” buyers,the moderately rich with luxurious tastes,were knocked out of the market.
New York-based Tiffany & Co., which has a store at South Coast Plaza, has seen sales fall. But sales of Tiffany’s $10,000 and up items still are relatively strong, Winter said.
Retailers such as Los Angeles-based Michael Beaudry Inc., which has a jewelry line with pieces starting at $30,000, are expected to fare better than most, he said.
Retailers will also be hosting more Tupperware-like parties for the rich, so that they are able to shop discreetly, Winter said.
South Coast Plaza’s newly designated Penthouse, on the third level next to Nordstrom, is catering to shoppers who want a more private shopping experience. Some of the Penthouse boutiques: Christian Louboutin, Canali, SoCa St. John and Oscar de la Renta.
“South Coast Plaza will fare better than most other shopping venues locally,and nationwide, for that matter,” Winter said. “The concentration of high-end boutiques will work in its favor, because the downturn in the economy is having a less severe effect on those who can afford true luxury.”
The Costa Mesa shopping center “may not set any records this year, but if its goals are realistic, it should meet them,” he said.
Secondhand Luxury
Phillips Auto, a used luxury and exotic auto dealer on Pacific Coast Highway in Newport Beach, has seen its sales stay steady,30 to 35 vehicles a month. But profits have fallen.
When banks were looser with financing, Phillips sold more profitable, higher-end brands, such as Bentley and Ferrari. That business has dropped off, said Malcolm Phillips, owner of Phillips Auto.
“I’ve changed my whole marketing program,” he said.
Instead of selling pricey Ferraris, Phillips is selling more of the older model Mercedes-Benzes, BMWs and Porsches,higher mileage cars that look good.
People who can’t afford the 2009 Mercedes E-Class 350 that sells for about $53,000 are buying a Mercedes that is a few years old, according to Phillips. That way, they get the brand and the look without the price, he said.
“The Ferrari market has dropped off considerably,” he said.
They’re selling for as much as $30,000 off, he said. He’s been cutting his losses by selling cars that have been on the lot for more than 60 days at lower prices.
Phillips also has been doing more consignments.
“I don’t buy the cars,” he said.
Phillips sells other people’s cars and takes a cut.
On the upside, it’s a good time for Phillips to buy autos. Many leases are up and some people are downsizing, Phillips said.
“They don’t need four cars anymore,” he said.
