Rich no longer resisting the urge to splurge
BURLINGTON — Even as many Americans still struggle to pay bills and find work, some consumers feel comfortable enough to finally indulge themselves this holiday season by making luxury purchases.
The willingness of the haves to loosen their purse strings was on display at a recent Long’s Jewelers party for select customers like Phyllis Schneider, who scooped up $5,000 in sapphire rings, bracelets, and earrings as a gift to herself. Yesterday, Tracy Campion replaced her 2007 BMW with a new 5 series model to shuttle her wealthy real estate clients.
Such examples represent just a sliver of the spending spectrum. But the demand for luxury products has provided a boost to high-end merchants. Many upscale retailers saw sharp declines in revenues during the recession of the past two years, when plummeting portfolios prompted more affluent consumers to temporarily swear off gems and fancy cars.
“Everybody is tired of worrying about the future and the economy,’’ said Andrea Sheehan, who bought a silver bangle at Long’s days after receiving a diamond ring from her husband, their first big jewelry splurge in two years.
Some national chains and independent merchants expect double-digit increases in jewelry sales for 2010, a dramatic turnaround from the 40 percent drops the hardest hit jewelers have experienced since 2008, according to retail analysts. Luxury car sales, meanwhile, are up nearly 12 percent this year, compared with a 5 percent bump across all vehicle categories, according to Ward’s Automotive Group, an auto research firm.
The heady days of conspicuous consumption that marked the middle of the last decade have not returned. But people of means are feeling less guilty about displaying their good fortune. And nothing better reflects the rebound of the luxury market than jewelry, considered by many to be the ultimate symbol of discretionary spending.
“Last Christmas was a disaster for most jewelry retailers. 2010 is the year of recovery and the year of hope,’’ said Michael J. Silverstein, a senior partner at the Boston Consulting Group in Chicago. “Many households with incomes above $100,000 don’t believe the sky is falling anymore. And when they don’t believe the sky is falling anymore, they want things.’’
That desire is translating into some serious spending. Tiffany & Co. projects sales to increase 10 percent this year, and diamond seller Blue Nile estimates a jump of as much as 12 percent this quarter.
One indicator of renewed bling lust is the share of shoppers who purchased jewelry over the Black Friday weekend after Thanksgiving. The percentage rose substantially, from 11.7 percent in 2009 to 14.3 percent this year, according to the National Retail Federation, a Washington, D.C., trade group. Jewelers say business is still off from prerecession highs, but for the first time they are optimistic that they can make up some of their losses.
To satisfy the pent-up demand, merchants are pushing flashy new products and high-profile offerings, such as a 20-carat emerald cut diamond that Shreve, Crump & Low hopes to sell for $1 million by the end of the year. The Boston jeweler upgraded last week’s annual holiday party by plying customers with caviar along with the usual champagne. Several shoppers at the event bought items that cost more than $100,000, including an 8-carat canary diamond, a 5-carat emerald cut-diamond, and a rare strand of Tahitian pearls.
The fete was cohosted by Lexus of Watertown as part of a holiday partnership that offers every customer who buys or leases a new Lexus a Shreve, Crump & Low gift card worth between $200 and $1,000. People are always looking for value, even if they are luxury-goods shoppers seeking to unleash their urge to indulge.
“Consumers have battled economic forces for the last couple of years and they are really ready to let loose and open their purses,’’ said David Walker, chief executive of Shreve, Crump & Low, which is expecting revenues to jump 30 percent this year after struggling with declines of up to 15 percent over the past two years.
At Herb Chambers car dealerships, the luxury vehicle business is also up about 30 percent over 2009. The company expects to sell six or seven Bentleys in December; over the past 18 months, it averaged one a month. The British-made cars range in price from $190,000 to $300,000.
Campion, who is leasing her new BMW from Herb Chambers in Boston, said she feels comfortable acquiring a fancy set of wheels. She said revenue at her residential real estate business, which deals in homes starting at about $1 million, soared 30 percent this year to $221 million in sales.
“I am rewarding myself with a nice car,’’ Campion said. “The car I drive is a reflection of my business. It’s important.’’
Selling a subdivision this year helped bring Tom Zocco back to the jewelry market. He recently treated his girlfriend to two necklaces at Shreve’s and then bought more trinkets for his children at Kay Jewelers.
“Certainly we’ve held off for the last couple of years. But I feel a little better now about the economy and the way things are going,’’ Zocco said.
Some retailers are expanding their collection of high-priced jewelry as a way to drive sales, a move that would have been almost unthinkable in the last couple of years. At LuxCouture in Newton, which used to focus on expensive handbags, owner Sari Brown has increased her jewelry selection by 50 percent. She quickly sold a batch of diamond pendants from a Lebanese designer that cost between $1,400 and $3,000, as well as $3,500 stretch bracelets with diamonds and other assorted stones.
Craig Rottenberg, president of Long’s Jewelers, introduced two upscale designers for the holiday season to cater to the growing demand for jewels. It’s already paying off: The average spending by customers is up by about 20 percent this year.
At the recent holiday party, consumers fawned over several rare sapphire pieces from Israeli designer Yvel that cost more than $100,000.
“I’m tired of feeling like it’s not OK to enjoy yourself,’’ said Kendra Lebwohl, as she tried one on of Yvel’s pricey black Tahitian pearl creations.
Dayle Goldstein spent the evening wearing a $195,000 diamond necklace and $145,000 diamond chandelier earrings from the other new Ivanka Trump line. Staff describe the merchandise as “heirloom chic.’’
Goldstein, whose last big splurge was a Cartier Roadster watch in 2007, didn’t pull the trigger, but left with words of optimism and a hint.
“I deserve them,’’ Goldstein said. “And Christmas is right around the corner.’’
Jenn Abelson can be reached at firstname.lastname@example.org.