Uptown Money, Downtown Style

You’ve heard the media refer to the “downtown crowd” vs. the “uptown crowd.” Singer Billy Joel’s “Uptown Girl” is an anthem to a classy (i.e., rich) lady. But what, exactly, is the “downtown crowd”? And why should you, a luxury jeweler, care?

It used to be simple: The uptown crowd had money, the downtown crowd didn’t. It isn’t so simple anymore. Today, downtown consumers have as much money as their uptown neighbors, if not more. What they don’t have is an “establishment” attitude toward style. They can afford to wear head-to-toe Chanel, but they choose not to.

The terms “uptown” and “downtown” originally alluded to Manhattan, but they’ve become generic in American culture, and the demographic segment they describe is global. Many of the “downtown crowd” are within the age boundaries of Generation X, but don’t say that to their faces. They’re not into grunge, they’re into high fashion—but not their mothers’ versions of it. But make no mistake: This crowd is anti-establishment, not anti-trend. They do follow trends—just quirkier, more bohemian ones. They want designer looks, but not brand names. They view their homes and personal style as works-in-progress, but they don’t frequent traditional decor and apparel shops. They’re buying couture clothes and pricey jewelry, but not in department stores. They like old furniture, but you won’t find them bidding at Christie’s. They like fine jewelry, but they don’t stick to one designer or one look. They may mix tiny with huge, new with antique, real with faux. They’re willing to spend hefty sums to get what they want, but they expect the stores they patronize to understand and cater to their desires.

Unlike their more conservative peers, the downtown crowd hasn’t settled in suburbia, and they’re not spending their disposable dollars at toddler-friendly restaurants and soccer camps. They exist at the fringes of every major city, but in the United States they’re concentrated in Manhattan and Los Angeles, where, to live in downtown style, one needs serious money. Residential lofts in the SoHo and Tribeca sections of Manhattan, for example, go for up to $3 million. “You’re seeing people get outbid because someone behind them offers to pay all cash,” says one broker. “And many of these buyers are under 30 years old!” These customers frequently work in creative fields like advertising and the arts (many of which are increasingly Internet-related), and many run the funky boutiques and restaurants where their peers hang out.

On both coasts, this crowd mostly avoids the cookie-cutter, branded goods hawked at uptown chains and de-partment stores. Though Prada, Armani, and Dolce & Gabbana now have stores in SoHo as well as uptown on Madison Avenue, the new downtowners approach popular luxury brands gingerly. They don’t want what everybody else has—or worse, something the Ladies Who Lunch would wear. Many hipsters are opting for vintage Gucci instead of new (less likely to be duplicated at a party)—or better yet, vintage Pucci, whose psychedelic designs inspired Gucci in the ’60s. They do favor the quintessential classics from famous makers; they just buy them in odd sizes and weird colors. Rather than the status quo brown croc bag, these people look for something funkier. They want to have a recognizable design, but they want it in a version that nobody else at a party has.

But before you go redefining your store, be careful. Individuality is key with these shoppers, but it falls within some fairly rigid parameters. In its quest to look different, this crowd often does end up looking somewhat the same. The uniform of choice is funky, and there is room for improvisation, but there are prevailing silhouettes and a definite “in” and “out” list of labels. If you want to see what this crowd looks like, pick up a copy of InStyle, read the party pages of any magazine that follows the young affluent crowd, or attend a couture auction at William Doyle. New York’s “fashionistas” turn out en masse in May and November to snatch up the vintage Valentinos, Halstons, Courregeses, and Galanoses, the Fendi baguettes and Hermès Kelly bags.

Doyle has been holding couture auctions for 16 years. Over the last five, they’ve attracted such large crowds and created so much buzz that Sotheby’s decided to start its own in 1996. It opened a fashion department and tapped Tiffany Dubin, stepdaughter of Sotheby’s chairman Alfred Taubman, to head it. Dubin explains her strategy for luring youthful hipsters. “All of our sales are held in the evening. Half the room is like a cocktail party. It’s quite revolutionary for Sotheby’s. We get a young, hip crowd that have never set foot in here before.”

Jewelry and other accessories lend these sales a “crossover” element that Dubin tries to exploit. “Every range of customer is interested in jewelry. It’s so easy to buy or come to look at.” In November, she held a “cocktail sale,” which she says was “very jewelry-oriented—lots of cocktail rings, dresses, shakers.”

Couture sales aren’t Sotheby’s biggest-grossing auctions, but they do attract new buyers. “There’s an enormous group of people who buy [art and other objects] in downtown galleries for $10,000 and under. They’re a big market down there,” Dubin says. “Those people are normally intimidated by the idea of coming to an uptown auction house. This is a safe bridge.

“Frankly, many people who are young and making money—though they’ve grown up with photography and fashion—might not relate to something like a piece of 18th-century furniture. Even if they can afford it, it’s not part of their lifestyle, whereas vintage couture and accessories fit a younger lifestyle,” Dubin explains. And, of course, young buyers may develop a taste for Chippen-dale eventually. “We’ve had so many buyers who have started in fashion, moved to photography, then gone on to contemporary art.”

Taking sales to the Web—as Sotheby’s, Christie’s, and many retailers have done—is another way to tap this market, especially on a global level. (See related story, p. 111.) As the younger generation becomes more visible, established retailers will have to devise creative strategies.

Rafinity in Santa Monica, Calif., is a store that explodes every myth about how to sell fine jewelry. Diamonds and platinum account for 80% of the merchandise, and the average sale is $2,500, but when you walk in the door, you don’t hear Chopin, you hear alternative rock. The staff isn’t dressed in tasteful pantsuits, they’re dressed in jeans. And though they might have on diamond pavé rings and necklaces, they’re just as likely to be wearing diamond-studded leather dog collars and platinum belly rings—both big sellers here.

Rafinity customers fall into two groups, says co-owner and designer Ann Whatu. “One is the young, computer-savvy woman who can afford a Mercedes but drives a Jeep instead. It’s not about flash for them. Their idea of status isn’t a 4-ct. stone. They want a 2-ct. D VS1, bezel-set in a chunky platinum band. They could afford a 3-ct. or a 5-ct. even, but they aren’t going there. It’s a look, a feel, that they’re after.

“The second group—and we also get a lot of tourists, being on the Promenade—is the woman who lives in the [San Fernando] Valley, who has everything—the big rings, the overkill—and she wants something hipper, cooler. They’re tired of the same old stuff. These women love the little details, like stones flush-set inside a shank or a hoop.”

Members of the entertainment industry make up about 40% of Rafinity’s customers. (The store frequently appears in magazine jewelry credits for shoots featuring Hollywood’s hottest young stars.) But Whatu doesn’t see a big difference between hip West Coast and hip East Coast style. “I don’t think the New York hip crowd is too terribly different from the one here. In this age range, everybody is doing the same bag, the same boots. They don’t go for the David Yurman and Cathy Waterman pieces. They’re not as hung up on the branded stuff as older customers. The reason we’ve succeeded is that you can’t walk into Neiman’s or Saks and find these things. The boutique thing is back, you know?”

In New York’s SoHo district, the young, artistic, and prosperous still frequent well-known designer shops and jewelry galleries, like Fragments, NOA, and Stuart Moore, but large upscale retail chains increasingly are commandeering this district. Commercial rents have skyrocketed, and many bohemian boutiques have decamped for adjacent Nolita (Northern Little Italy). Along with clothing designers like Tracy Feith, local jewelry design can be found in Nolita at Push and Kara Varian Baker jewelry galleries. Michael Bazzio works at his bench in Ciela Studio, and designer Christopher Roule shows his platinum Braille jewelry at the Hedra Prue gallery.

“Customers who come here tend to be in their early 20s to mid-40s, young professionals in the fashion industry, the arts, advertising,” says Megan Howard, manager of Resurrection, a Nolita vintage clothing boutique. “They’re all looking for a unique look. Stores here lend themselves to that because they all have their own individual flavors.”

Katie Rodriguez, who co-owns Resurrection, cites two reasons for the demand for vintage: retro trends in contemporary design and young customers who like to mix styles and periods. “This whole idea of appropriation and putting things in a different context is peculiar to our generation,” Rodriguez says. “We grew up with MTV and all this technology at our fingertips. We all speak that language. Most people in this age range have an amazing ability to cross categories—to take stuff from the ’20s, the ’60s, and the ’90s and mix everything up. People of our generation like the idea of recycling—taking a swing dress and doing crazy things to it, taking ’40s Americana and turning it on its edge by wearing it with tattoos and piercings and purple hair.”

Katherine Cohen, a Yale graduate who runs a college counseling service called IvyWise, recently moved from Los Angeles to Manhattan. She shops the downtown boutiques to find unusual jewelry and accessories to wear to the social functions she frequently attends. She recently bought a $1,000 art deco shawl from Resurrection to wear over her formal gowns. “A lot of times when you go to society events, everyone is wearing the same thing: the new Prada dress or the Chanel suit,” Cohen says. “It’s nice to differentiate yourself.”

“My customers are not afraid to be different,” says Rita Watnick, who has been outfitting the fashionable well-to-do for 20 years at her posh Beverly Hills vintage couture boutique, Lily et Cie. “All of our customers know they’ve arrived. They don’t look at the price tag or the label. Demi Moore recently appeared at Cannes [film festival] in a full-length vintage red-and-black coat with amazing ruby jewelry—it was real, it was hers, and it looked great. Most of my customers are pretty sophisticated about this stuff.”

Connecting with this crowd requires casual but attentive personal service. You also need an intuitive understanding of their esthetic, which is about personal style. Make sure your store has its own personal style on every level, from decor to music to the merchandise itself. Since the new “downtown” trend is all about juggling styles and eras, eclecticism is key.

“It’s about mixing,” says Ann Whatu of Rafinity. “Younger girls are wearing Victorian rings and sari pants, jeans and pavé bangles and rubber bracelets and a $10,000 cuff and some leather-and-brass piece from Thailand—and it works!”

The New 4c’s of Selling Luxury Goods: Comfort, Convenience, Childproof, and Click! The rising number of millionaires under age 40 will have a profound impact on the way retailers view affluence in the future. That was the theme of the third annual Luxury Marketing Summit, a panel discussion sponsored by House & Garden magazine. The event, titled “Luxury Brands and the Young, Wealthy, and Wired Consumer,” outlined some of the most critical differences between the new generation of affluent consumers and previous generations. Young affluent consumers often spend far more per item than their parents would have, but they want lots more information than their parents did, and they don’t want showpiece products to use only on special occasions. They want everyday luxury that works in a busy family environment.

Panelists included Michael D. Aaron, chairman of Sherry-Lehmann Inc., a prestigious wine and spirits retailer based in New York; Mario Buccellati, president of the American division of the Italian luxury jeweler Buccellati; Nancy Corzine, president of her own furniture, fabric, and accessories firm; Anthony D’Ambrosio, executive vice president of watch retailer Tourneau; and John F. Smith, vice president and general manager of the Cadillac Motor Car division of General Motors. Panel moderator was Dominique Browning, editor of House & Garden.

Each new generation throws a new class of money into the consumer spending pot, Browning said. There’s a tremendous amount of new money out there now, and though consumer spending is strong across the board, luxury goods spending is growing four times faster than spending overall. Browning noted that some new houses in the luxury class are averaging 40,000 to 60,000 sq. ft., while the Whitney Museum in New York is only 42,000 sq. ft. Art, wine, automobile, and jewelry collecting is growing at an unprecedented rate.

But retailers who rely on old formulas won’t get many of these new faces coming through old doors, Browning said. There are several critical differences between today’s young rich and the previous generation’s wealthy class. Those differences are expressed in the way they access information; the way they shop; and the casual, democratic view they have of luxury. These consumers are driven and intense, and they work “killer hours.” As a result, convenience is of utmost importance. They are far more willing to spend money than time, and they have no tolerance for waiting, for poor service, or for poor product performance. Many are ignorant about living well, explained Browning, and they rely on magazines and other media to teach them, albeit in private so nobody knows that they don’t know. And their idea of a lofty lifestyle is much more democratic than the previous generation’s. A snooty image doesn’t cut it anymore. That’s a challenge a number of the panelists are facing in their own businesses. For example, Buccellati said his family’s jewelry firm is working hard to change the perception of Buccellati as a store that caters only to the ultra-rich.

“The way my father marketed to people in the mid-1950s doesn’t work anymore. We have a huge challenge to change people’s perception that the average price in our store is $50,000. In fact, the average price spent at our stores is $9,000 for jewelry and only $1,500 for silver.”

“To the previous generation, luxury equaled formal—the home as a showpiece,” said Corzine. To new affluent consumers, luxury means comfort and convenience. They want luxury furniture, but it has to be baby-proof. And they won’t wait six months for it to arrive, either. Corzine offered an anecdote about a Silicon Valley developer who agreed to sell the furnished model homes in a new luxury neighborhood to anyone who wanted to move into a ready-made house instead of waiting for one to be custom built. Within a week, 10 of the furnished homes were sold, complete, right down to the bathroom soap dish. All were purchased by couples in their 30s and 40s pushing baby buggies.

“I’m constantly surprised by the speed at which they make up their mind on purchases of $1 million and more,” said Corzine.

This group loves information, Browning said. They want to know how a product is made, what makes it a high-quality item, and why it’s better than another similar product. They acquire much of their information through the Internet. They’re focused, rational, and orderly in their decision-making, even for an impulse purchase. This generation also grew up with a strong sense of individualism. For retailers, this means they must never underestimate the importance of selling the experience as well as the product.

Despite this market’s vast wealth, panelists warned retailers not to grow complacent thinking they’ve struck the mother lode of free-spending consumerism. These consumers are price shoppers, but—no surprise—they price shop in a new way. They might drop a million bucks without blinking, but they usually have a set price in mind, they hold to a price threshold, and they arm themselves with plenty of information before setting out for the shops.

This group is not willing to settle. If an item costs less than a similar product but they don’t want it, they won’t buy it. If a product costs more than they expected but they absolutely love it, they will buy it. If they perceive the product costs more than it is worth, they definitely won’t buy it. And if they find the exact same product online for less money, they’ll buy it there. Most of the panelists said they use the Internet to boost relationship marketing, by teaching, providing information, and displaying company histories.

Finally, many members of this market are beginning to wrestle with mortality, and many are feeling the need for spirituality and connectedness. Although the new young affluent consumers will spend far more than their parents did for certain things, such as wine, they’re also looking to make purchases that will help bring balance to their lives.

—Hedda T. Schupak