High-end spenders again indulge urge to splurge
Claudia March has a taste for the finer things. She drives a 2010 BMW. For Gucci shoes and Prada handbags, she shops at Saks Fifth Avenue and Neiman Marcus. And the 38-year-old treated herself and her mother to a weekend at the Boston Park Plaza hotel for a spring getaway.
Her spring spending spree follows a year of trimming her $3,000-a-month spending budget by half by reducing her trips to high-end stores, restaurants, and bars.
“I’ve been cutting back in the past year, but I feel that I can start indulging again,’’ said March, a marketing manager for an information technology staffing firm, as she shopped at the new Nordstrom store at South Shore Plaza in Braintree, where she bought $300 worth of makeup. “The economy is doing better.’’
During the recession, consumers in every income bracket scaled back on discretionary spending. But analysts say the slow and steady economic recovery is causing higher-end shoppers to loosen their purse strings again — splurging on everything from $200 pearl necklaces to $500,000 cars to million-dollar homes.
Some analysts note, though, that the average consumer may not be riding this luxury wave.
Nationally, sales of luxury goods rose 22.7 percent in March, compared to a year earlier, according to SpendingPulse, an information service of MasterCard Advisors that tracks US retail sales across all forms of payment.
“Affluent and wealthy consumers went into hibernation for the first three quarters of 2009,’’ said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research-and-consulting firm that focuses on the spending habits of the affluent. “Consumers are more discerning now, but they still covet the best.’’
Analysts and business owners say upper-income consumers’ increasing optimism about the economy is reinforced by the recent surge in the stock market.
A study released last month by the Boston consulting firm Bain & Co. estimates global luxury-goods industry revenues this year will increase 4 percent from last year. The report said the increase will be a reversal from the 8 percent decline in revenue the global luxury-goods sector suffered from 2008 to 2009.
High-end retailers, home sellers, and car dealers are all experiencing an uptick in business.
Nordstrom reported a 16.8 percent increase in same-store sales (sales at stores open at least a year) for March, while Saks Inc. had a 12.7 percent increase for the same period. The big percentage increases are in comparison to a bleak first quarter in 2009.
Herb Chambers, who owns several car dealerships that sell BMW, Lexus, Audi, Porsche, and Rolls-Royce, said his luxury car division’s business has increased 30 percent in sales from the first quarter of last year to this year.
So far, Chambers has sold one Rolls-Royce and three Bentleys this quarter. During the same time last year, he did not sell any Rolls-Royces, and just one Bentley. The cars are priced between $190,000 and $500,000. Overall, he sold just over 1,000 luxury cars in March, compared with 700 in March 2009.
“Bottom line, luxury is really, really good,’’ he said. “I think people are feeling better about the economy. The stock market is up and people have got confidence. They are tired of not spending money.’’
Beth Dickerson, senior vice president of sales at Gibson Sotheby’s International Realty in Boston, said high-end home buyers also are beginning to come back. Last year, she sold $57 million worth of real estate. This year, she has sold $42 million worth and believes she is on track to surpass that.
“I feel in the first of the year, there were more lookers, more buyers, more activity,’’ said Dickerson, who sold five single-family homes and condos between $1 million and $8 million last month.
At DePrisco Diamond Jewelers, where diamonds are 70 percent of business, it’s the sales of other types of jewelry, including pearls, earrings, necklaces, and bracelets, that have gone up as much as 15 percent in April from a year ago. Those items range anywhere from $200 to $1,000.
Because of the recent sales boost, owner Donna DePrisco, who has four stores in Massachusetts, said she is looking to add three sales jobs.
“Overall, things are looking up,’’ she said, noting that diamond sales have remained steady since last year.
Also looking to hire: David Walker, chief executive of Shreve, Crump & Low in the Back Bay, who last week opened his first jewelry store in Nantucket, where he is adding 10 employees. Walker said his business grew 35 percent between the fourth quarter of 2008 and the same period in 2009, and that is allowing him to expand.
“We just sold a diamond for $155,000,’’ said Walker of the 6-carat ring. “People feel better about their position and what is around them.’’
Michael Myers, president and owner of Boston Yacht Sales Inc., in Weymouth, said buyers of high-end boats have started to surface in the last few months. He said business is up by at least 75 percent since last year.
Myers recalls how last year’s New England Boat Show did not yield any sales for his company. But at this year’s show in February, his sales staff walked away with four orders for yachts that ranged from $350,000 to $700,000 each.
Myers also recently sold a 42-foot Sabre yacht valued at $900,000.
“As consumer confidence has increased, people are realizing that it’s a buyer’s market and are feeling comfortable enough to make an investment in a boat,’’ said Myers.
He describes his most recent buyers as local entrepreneurs and business executives.
One of Myers’s customers is Thomas Niles, who is looking to upgrade from a 38-foot yacht called Independence to a 46-foot Sabre Salon Express, which he is planning to call Final Rinse.
Niles recently put a deposit on the new yacht, which is being custom-made with teak flooring, an icemaker, and a sunroof.
Niles declined to say how much he’s spending for his yacht.
Similar models, however, can be priced from $500,000 to $1 million or more.
“I wouldn’t have felt comfortable doing it a year ago,’’ said Niles, 70, as he looked at other vessels on a recent weekday at Boston Yacht Sales.
The Lexington resident said he lives a modest lifestyle, but refrained from making big purchases until now because of the economy.
Niles develops multifamily homes in Boston but enjoys boating off Buzzards Bay, Nantucket, and Newport in his down time.
“I sense we’re bottoming out and the economy has stabilized . . . Boating is relaxing for me. That’s why I don’t have high blood pressure.’’
Johnny Diaz can be reached at firstname.lastname@example.org.
Correction: Because of an editing error, a caption for an earlier version of this story misstated when Rachel Simmons was at Shreve, Crump & Low. Simmons visited the store April 22.