Chaim yesterday posed a question we have all been wondering: Will the drop-off in consumer spending – and in particular consumer spending on jewelry – outlast the recession?
Certainly if you believe the New York Times this week there is a change in mind-set, with one luxury expert noting “half carat has become the new three carat.” (Though the Times really should have noted that some of those businesses were in trouble well before the recession hit.)
A recent article in Slate’s Big Money on how luxury makers are coping with the recession (which I recommend everyone read) suggests the biggest shift may be in that area of the market known as “mass luxury”:
…the view of some in the luxury business [is] that a large swath of the luxury consumer is not merely skittish but gone—financially unable to purchase or, having traded down to a more moderately priced good, found the drop-off in quality to be negligible.
That’s certainly possible, but I remind you that the desire to shop is part of the American DNA. Here one writer describes her reaction to getting a “new consulting gig” about six months after she was laid off:
… mostly what I felt was an urge to spend, spend, spend.
What I’d thought was my new frugality turned out to be bottled-up desire to buy stuff. In fact, I wanted to buy more than I had before the recession. Financial virtue went out the window. I started pricing a new laptop. A cute beach tote. I thought about putting money away and investing in my 401(k), but after I had brunch with a friend who is lucky enough to help run her family’s company and buys herself the most beautiful jewelry, I also pondered buying a really nice ring. I started hailing taxis instead of automatically heading for the subway. “Let’s go out for dinner!” I said when friends rang. And this was before I’d even received one check.
The Slate article notes things luxury businesses are doing to attract recession-era consumers, such as de-emphasizing “bling” and touting craftsmanship. Which certainly represents a possible way forward for our industry. Do most consumers realize that most diamonds are individually cut by skilled craftsman? Maybe yes, maybe no, but it can’t hurt to remind them.
If there is a change in the consumer mind-set, particularly towards the luxury sector, I would argue that it is taking hold more among younger consumers, who, even before the recession hit, seemed more interested in practical items (like IPODs and computers) and products which have a “greater meaning.” Turning those consumers into jewelry buyers will be the industry’s great challenge in the years ahead.