Masses trade up to luxury
BY JOLAYNE HOUTZ
The Seattle Times
You know you are trading up when:
You start the day with a $3 latte from Starbucks instead of a 99-cent cup of coffee from 7-Eleven.
You splurge on a Coach watch for $205 rather than a $22.99 Timex at Target.
You opt for the "near-luxury" 3-series BMW ($29,300) over a Pontiac for $21,300.
You spring for an American Girl for your daughter's birthday ($84) and forgo the $11 Barbie at Wal--Mart.
Luxury is not just the exclusive territory of the super rich.
American middle-class consumers are "trading up," paying a premium for luxury items they value with high-end features or cachet, compensating by "trading down" in other areas.
"New luxury" products and services appeal to the 47 million households making $50,000 or more a year, according to marketers and researchers who have coined a word for this trend: "masstige" -- prestige for the masses.
The "mass affluent" pay $3 for coffee at Starbucks, buy $27 Isaac Mizrahi pumps at Target and stock their kitchens with imported Italian dinnerware from Williams-Sonoma and $5,700 Sub-Zero refrigerators.
"This phenomenon is best observed by going into Costco. It's piled high to the ceiling with stuff that ... were luxuries the day before yesterday," said James Twitchell, author of "Living It Up: America's Love Affair with Luxury."
New luxury products are distinguished by better design, ingredients or packaging -- technical advantages that "translate into functional benefits that consumers can see, touch, describe," said Michael Silverstein, a marketing expert who co--wrote the 2003 book, "Trading Up: The New American Luxury," that popularized the concept.
Among the demographic drivers of this trend, according to Silverstein: higher levels of education, an increase in disposable income and greater numbers of working women with more influence on spending decisions.
People have always saved a little here to spend a little there, said Carl Obermiller, professor of marketing at Seattle University.
What is different now: a steadily rising standard of living and brand--name goods that are more available and more affordable than ever. For better or worse, almost anyone can have a taste of luxury.
"It used to be middle-class Americans didn't know what the super rich bought or did," Obermiller said. "Now we can emulate them. ... It's not just what yacht they're buying. It's what shoes they wear."
To afford luxury, middle-class consumers have to make trade offs. Where one indulges, another economizes.
Becky Hanks has 68,000 miles on her 6-year-old Toyota Camry and plans to drive it "until it dies."
But the school district communications manager does not scrimp on travel. Last year, it was a trip to the British Virgin Islands. In 2002, she and some friends chartered a 37-foot catamaran in Tahiti. The price tag: nearly $2,500 per person.
"Living the high life is not a part of my day-to-day experience. It's a major treat," said Hanks, of Des Moines, Wash. "I save up for it and ... just eat up every moment."
At Costco, customers can simultaneously trade up and trade down at the same checkout stand.
Jim Sinegal, co-founder and chief executive officer of Costco, calls his 441-warehouse chain "the epitome" of new luxury. Costco is the largest seller of Dom Perignon champagne in the country and one of the largest retailers of diamonds, he said.
Sinegal believes consumers are feeling "a loss of rapture with low-price, low-quality merchandise. They're more enamored with high-quality items they can keep and count on."
Peek in the shopping carts being rolled out of any Costco Warehouse, and you will see evidence of masstige spending: a $205 Coach watch nestled next to a bag of boneless, skinless chicken breasts; a 12--pack of Duracell batteries sandwiched next to a $40 bottle of imported French wine.
Starbucks has more than 8,300 stores and is approaching $5 billion in coffee-drink sales. Somebody at Starbucks headquarters has done the math and found there are some 19,000 possible coffee combinations to order.
And that is a big part of Starbucks' allure -- getting a superior cup of coffee exactly the way you want it, said Anne Saunders, Starbucks' senior vice president of marketing.
"Getting something that's uniquely created -- that's really hard to get today," she said.
With the mainstreaming of luxury, the purveyors of new luxury are confronted with a paradox: How to offer affordable luxury while maintaining exclusivity.
"If everybody can buy an indulgence, then the indulgence has lost its value," said James Twitchell, a University of Florida professor of English and advertising and the author of "Living It Up: America's Love Affair with Luxury."
Thus, the emergence of a tandem trend: "massclusivity," or exclusivity for the masses.
Starbucks recently began selling limited quantities of rare coffees from around the world -- coffees so precious, they say, "that to miss them once could mean you'll never experience them again."
The story behind the coffee, and its limited availability, "is part of the romance of it," Saunders said.
Twitchell says consumers are drawn to products that tell a story.
"Starbucks -- don't get me wrong, it's good coffee. But it's just coffee. The difference is it's coffee with a story," he said. "The taste of modern luxury is not inside the product. It's inside our imagination."
New luxury items help define us, to ourselves and others, and feed our emotional needs, Silverstein said.
He dismisses worries about excessive materialism as a "media concern."
"This is about making better decisions, consuming less," he said. "It is not about reckless consumption. ... It is actually a celebration of consumer intelligence and knowledge." |
