This article on Wall Street Journal Digita Network features AARC research about aspirational consumers (http://www.smartmoney.com/spend/deal-of-the-day/how-to-buy-luxury-goods-at-a-discount-1313705085759/?link=SM_hp_middle_optStory).

by Kelli Grant

August 2011

While the market upheaval and economic uncertainty has encouraged many people to tighten their budgets, shoppers lusting after that “it” bag, a first-class airline seat or a pricey car may now find those luxuries are more affordable than before.

Companies that make or sell high-end goods are increasingly aiming for what they call aspiration buyers — middle-class shoppers who can afford to occasionally splurge. The tactics are vast, including pitching less-expensive product lines, selling overstock online and allowing consumers to buy luxury perks in lieu of earning them. Audi, for example, is rewarding brand loyalty by offering $1,000 to $3,000 cash-back to households that already own an Audi and want another one. In September, eBay (EBAY: 30.49, 1.03, 3.50%) will team up with Nieman Marcus and other luxury e-tailers to sell goods at discounts of up to 65%. And new credit cards from American Airlines (AMR: 3.54, 0.28, 8.59%) and United (UAL: 18.59, 0.67, 3.74%) offer a cheaper buy-in for perks previously available only to elite road warriors and big spenders. “Luxury has become more democratized these days, and everyone wants access,” says Milton Pedraza, the president of Luxury Institute LLC, a marketing firm.

The luxury-for-everyone pitch may seem at odds with brands that owe some of their success to their elite images. But going down-market has become a survival tactic during tough economic times. Luxury goods sales fell 5% during 2008 and 2009, the biggest drop since 1995, according to Bain & Co., and experts say most of those lost sales were from these so-called aspiration buyers. (Shoppers with a net worth of $800,000 or more scaled back somewhat during the recession, but have largely kept spending, according to the American Affluence Research Center.) Recent market volatility could make middle-class shoppers even more important. Less than the very wealthy, aspiration buyers tend to have less of their net worth tied up in the stock market, and so the occasional downdraft may not stop them from spending, says AARC president Ron Kurtz.

The best deals on luxury goods may not come via coupon — or Groupon. Instead, luxury brands often use subtler tactics, like private sale events and invitation-only deals, Pedraza says: “You don’t want to scream ‘discount’ when you’re a luxury brand.” Getting in on these offers isn’t so hard, though. Consumers can give their contact information to the high-end stores and brands they like, says Fred Thompson, a partner at LoyaltyOne Consulting. Invited guests often gossip on sites like SheFinds.com or Mizhattan.com, where, in June, notices about Chanel’s two-day private sale with deals of 40% off made the rounds a week beforehand. Auto pricing site Edmunds.com tracks unadvertised auto incentives, including loyalty rebates.

Shoppers on the hunt for luxury goods are also finding success with so-called flash-sale sites such as Gilt Groupe, which offer discounts of 50% or better for a short time on clothing, home goods and other products. eBay launched its version, Fashion Vault, last fall and Amazon (AMZN: 206.53, 7.26, 3.64%) debuted MyHabit in May. But shoppers may find the same problem that outlet-mall shoppers often do: Some items on sale aren’t a part of the brands’ usual collections, they’ve been produced specifically for the sites. Which ones? The sites don’t usually say. Amazon and Gilt spokeswomen said there’s no need, because the items are legitimately from that brand or designer and have quality consistent with their price. “We make sure not to give the [buyer] lesser quality,” says a spokeswoman for Gilt.

Even non-luxury brands — think American Airlines, for example — are offering new opportunities to pay for a higher-end experience, says Thomas Jacobson, a senior executive in consulting firm Accenture’s pricing division. For example, airline credit cards have grown in popularity over the past year with the introduction of bigger benefits and waived fees for the first year, while the airlines have also started offering more a la carte purchase options to cut the line for boarding or pick a cushier seat. Cable companies, amusement parks and other companies are also offering pay-in options for a shorter wait. Here, consumers need to evaluate what they’re getting for the extra cash, Jacobson says. Your luxury experience might be little more than a convenience fee.

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This article posted on Daily Finance features quotes from Ron Kurtz about affluent spending in the luxury market (http://www.dailyfinance.com/2011/08/25/why-oscar-de-la-renta-is-americas-most-expensive-store/).

by Alice Hines

Date: August 25, 2011

Of the 25 stores that made consumer finance website Bundle’s “most expensive stores” list, Oscar de la Renta was the only one to break the $3,000 mark: That’s $3,217 on average that customers spend at his Madison Avenue location in New York City.

The top 25 list reads like the credits of a Vogue editorial: big names, big numbers, big cities. Bundle, a data-analysis startup, took price data from millions of credit card transactions provided by Citibank over the course of one year to generate average receipt numbers for each store.

While Oscar De La Renta is not out of place on the list, it does seem a little strange that the brand would trump the likes of Chanel, Chloe, Lanvin and Prada. Giorgio Armani, down the street, comes in second at $2,821.

One reason for its list-topping status does stand out: De la Renta sells dresses. While many of the brand’s original competitors such as Gucci or Louis Vuitton have been absorbed into luxury conglomerates, and now focus more on the high-margin sales of shoes and bags, Oscar de la Renta has stayed private and family-run, and held true to its pricey roots. (CEO Alex Bolen is de la Renta’s son-in-law). Today, Oscar de la Renta is known for the same sort of timeless, womanly gowns that it made for the socialites of the 1960s.

And as Oscar de la Renta fans like Oprah and Sarah Jessica Parker know too well, looking timeless is a pricey habit. As Ron Kurtz, president of the American Affluence Research Center put it, “Unlike even Armani, [Oscar de la Renta] doesn’t carry a diverse range of merchandise to serve different segments of the market. Everything starts at a very high price point.”

Madison Avenue — home to three of the top four locations on the list — is also an international tourist destination, where people come to buy brands that may not be available in their home countries. “Some of these stores have a very limited distribution and become more appealing,” Kurtz says.

Kurtz also notes that Bundle’s study takes into account only part of the luxury market, since until recently, Citibank dealt only with Mastercard and Visa — not American Express cards or private store accounts. So while the numbers give an idea of how people are spending, they aren’t representative of the entire market.

The only top-four boutique not on Madison Avenue is Boston’s Loro Piana, a family-owned Italian brand known for its fine cashmere that came in at No. 3 at $2.818. It would seem that top spenders are also willing to pay for established glamor and exceptionally well-made products, even when they aren’t flashy or avant-garde.

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This article posted on the Luxury Daily website discusses whether or not the luxury market is on a rebound, and it includes AARC research on the topic (http://www.luxurydaily.com/25886/).

by Rachel Lamb

Date:  August 5, 2011

Is luxury back?

Mixed reports on consumer satisfaction and the economy are confusing experts as to whether or not luxury marketers should expect a rebound — and how they should prepare for the future.

Recent reports have been indicating that luxury sales are on the rise and that consumers are spending close to pre-recession levels, but whether or not the industry is rebounding is still up in the air. Experts are still trying to decide whether or not this is a lucky streak or if the economy is still in danger of double-dipping.

“I think luxury retailers appear to be back only in comparison to the rest of the retail sector,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“Yes, there are people who can and will pay $1,500 for a pair of shoes, but their numbers are small relative to the population as a whole,” she said.

Confidence confusion

Indeed, analyses and articles have been reporting confusing statistics about whether or not the affluent are truly back to spending.

This uncertainty is making experts uneasy about which way to sway.

For instance, the New York Times released an article reporting that the affluent are back to spending again.

The article mentions that luxury department stores such as Neiman Marcus and Saks Fifth Avenue have been running out of luxury goods because of high demand and luxury car companies have been reporting their best months in years.

While this is true, there has been much tension in the past few weeks as Washington officials have been butting heads in the debt-ceiling debate.

Luxury brands have had an impressive second quarter, but the dip in consumer confidence is putting a damper on spending.

“Most of the aspirational or mass affluent in the U.S. are still out of the market,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“The true luxury consumers are still holding back because they lack confidence in the strength of the economy and the outlook for the stock market, which is an important determinant of their mood,” he said.

Indeed, a report from Women’s Wear Daily claimed that the S&P Retail Index fell 3.8 percent Aug. 2 as the Dow Jones Industrial Average lost 2.2 percent.

Additionally, gold prices shot up to a new high of $1,664.20 an ounce.

Luxury retailers such as Nordstrom and Tiffany & Co. were also down that day, according to WWD.

Looking ahead

These mixed reports pose a problem for some luxury brands that may not know how to prepare for the future.

A recent study by Epsilon claimed that luxury marketers looking to make the most of their holiday campaigns are advised to start early and keep pushing post-holiday season.

However, this could waste a lot of energy and money if consumers are not spending as early and as quickly as in previous years.

“Ninety-eight percent of the households in the country are on hold, sitting tight and watching all their spending,” Unity’s Ms. Danziger said.

Other occasions on the horizon, such as summer spending and back-to-school campaigns, have already begun.

“It is very challenging as environmental factors, such as economic conditions and job compensation and factors affecting wealth — such as the stock market and home values — have the most influence on luxury consumption,” American Affluence’s Mr. Kurtz said.

“The best any luxury marketer can do is to keep offering new products at an attractive value and with excellent service and communicate this effectively to the target market,” he said.

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