Retailers who deal in high-end goods and services are feeling the effects of the economic downturn as some of the country's wealthiest citizens forgo luxuries — $250 haircolor highlights, $10,000-an-hour personal jet rentals — that had become lifestyle standards.
"Even if they're not in danger of not paying their mortgage, there's still a psychological change," Chris Del Gatto, chief executive of Circa, a company that buys and resells high-end jewelry, said to The New York Times. "The economy is an issue even for people who don't need the money."
And the economy, according to people who provide services to the wealthy, is having a ripple effect on affluent Americans, forcing them to quietly sell prized possessions, return to natural hair colors to avoid salon bills and cut back on visits to personal trainers and nutritionists.
"They come into the gym with a dark storm cloud over their head," said Clay Burwell, a personal trainer to many Wall Street executives.
The shift isn't just anecdotal: In April, Mercedes-Benz announced March 2008 sales were down by 3.7 percent compared to March 2007, according to USA Today. In the same time period BMW sales dropped by 8.7 percent and Lexus by 13.6 percent, with overall luxury vehicle sales down by 13 percent this year, according to the story.
"It's a recession that has a double whammy: Your real estate is down, and your investment portfolio is down," Milton Pedraza, CEO of the Luxury Institute, said to USA Today. "Even the ultrawealthy are saying, 'Let me pause here and see what's going on.' "
Not surprisingly, "aspirational" customers — people who are "relative newcomers to upscale living" — are feeling the downturn more than their more established neighbors: Nearly 40 percent of consumers "averaging $155,700 annual income surveyed late last year by Unity Marketing said they would be spending less in 2008 on luxury goods," according to USA Today.
--Mary Westbrook
mwestbrook@safnow.org
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