This AP article notes the problem of “luxury marketing” in the current environment:
Months before a financial implosion shook shoppers straight to their checkbooks, Saks Inc. executives realized a problem might be brewing with their holiday lineup.
The luxury department store thought its extravagant gift packages featuring foreign travel and celebrity chefs might seem out of touch at a time when the nation’s economy was beginning to falter and even the wealthy were wary of what was ahead.
That’s why this summer, more than halfway through planning the retailer’s most important quarter of the year, the New York-based company switched gears and swapped elaborate trips for gift packages where half the proceeds will be donated to charity.
“We really reconsidered and thought we need to be careful with that over-the-top message, because it doesn’t feel relevant,” said Kimberly Grabel, the senior vice president of marketing for Saks Fifth Avenue.
As banks collapse and investment accounts sink alongside consumer confidence, some of the nation’s most venerable brands are struggling to strike the right tone for marketing and advertising campaigns amid one of the worst economic downturns in decades.
By all indications, we are in a pretty nasty recession that will go at least through next year. The days of a guy on Wall Street making a fortune on the stock market and then buying a $5,000 bracelet for his girlfriend are, for the time being, over.
Fortunately, diamonds also have the fall-back of being an item bought out of love and emotion. And if you look at the market now, without the bridal segment, this industry would be in a lot more trouble.
Now, you could argue that buying a diamond out for one would call “emotional” reasons, and buying it because it’s a luxury item, are not necessarily contradictory impulses. Zale CEO Neal Goldberg told me last month, “When I buy a nice watch, I feel emotional.” I agreed with most of what Goldberg had to say, but I am not sure about that. Granted, people can get excited (and therefore emotional) about a nicely designed piece, but most jewelry has pretty basic designs. I do think we have to re-emphasize the emotional aspect of jewelry — whether it’s emphasizing the “diamonds equal love” aspect, or linking the product to a higher cause, as Saks did with its gift baskets for charity.
Now, no one is saying luxury is dead. But it’s clearly taking a hit – and it’s not just because people are poorer. It may be because flaunting your wealth (the “over the top message,” as Saks called it) may not “feel right” at a time when so many are struggling. Take this piece from the Wall Street Journal:
It’s not necessarily a good thing to show up at the tennis club with a new $30,000 crocodile handbag when your friends’ net worth has been halved and the Federal Reserve is spending billions to keep the banking system afloat.
On Monday, when U.S. Rep. Henry Waxman grilled Lehman chief Richard S. Fuld Jr. over his multimillion-dollar bonuses, he suggested that public feeling is running against the vast wealth some executives have gained in recent years. Two AIG executives got a similar congressional grilling on Tuesday for the bonuses the insurance giant showered on some employees, as well as its lavish spending on a luxury retreat for insurance agents after the announcement of a government-backed bailout. The rising tide of anti-wealth sentiment could well affect how conspicuous the rich want to be.
So …I’m interested in hearing: Are people a little shy-er about conspicous consumption these days? And, if so, how can the industry deal with it?