Bully runs amok:
Dec. 13, 2004, 12:54AM
'Haves' have even more, so luxury sales booming
Upscale retailers are weeding out lower-priced items
By GRETA GUEST
Detroit Free Press
DETROIT - All Margaret Rahaim of Grosse Pointe, Mich., wants to see under the Christmas tree this year is a little luxury — a silver and turquoise choker necklace that sells for $995.
"I think I'll have my husband buy it for me for Christmas," said Rahaim, who found the necklace at the Ralph Lauren store at Somerset Collection in Troy, Mich.
"There's nothing I really want but this choker and peace," she said.
Rahaim is among a growing segment of the population bolstering the bottom lines of luxury retailers. The luxury segment has done so well in the past 18 months that many upscale retailers are opening new stores and weeding out lower-priced items to retain an exclusive aura that lures the wealthiest consumers.
From a Roadster watch at Cartier for $3,450 to a mink scarf with crystal beads for $1,900 at Baccarat, luxury items are being lapped up for the holidays.
Ed Nakfoor, a Birmingham, Mich.-based retail consultant whose clients include the Somerset Collection, said it is hard to miss the Mercedeses, BMWs and Jaguars jamming the parking lots at the mall. It is just one indication of the metro Detroit consumer appetite for the very best.
Michael Niemira, chief economist for the International Council of Shopping Centers, said the luxury sector is expected to be the big winner during the holidays for several reasons.
"People in the middle have moved to higher price points, better-quality goods. In a sense, there is a lopsided demand toward the top end," he said. "The highest income strata spends four times what the lowest strata does. So if you want to err on a side, you want to err on the side that has the money."
Total retail sales for November rose by 1.7 percent, on a year-over-year basis, according to figures released Dec. 2 by the ICSC.
But in the luxury segment, sales increased by 5.2 percent compared with 1 percent for discount retailers and 2 percent for department stores.
Top-end retailers are moving away from the entry-point merchandise and more toward the one-of-a-kind items with price tags that rebuff all but the well-heeled.
"This is a business that needs to focus on delivering a long-term value proposition to the luxury customer," Brad Martin, chairman and chief executive officer of Saks, said in a Nov. 16 conference call with analysts. "We wanted to focus the inventory into more exclusive goods. We continue to edit the assortment away from opening price points."
For example, Coach recently introduced a line of evening handbags and accessories called Madison at prices 20 percent to 30 percent higher than its other lines.
Niemira said higher gasoline and heating oil costs this year have not penetrated the wallets of the upper-income tiers.
Nonwage income up
Those consumers also have been helped by a rise in nonwage income from interest and dividends in the past year. In October, dividend income rose 9.2 percent, he said, and interest income was up 2.4 percent.
Along with improvements in the stock market and high consumer confidence in the high-income households, this holiday season promises to ring the bell for luxury retailers, Niemira said.
Polo Ralph Lauren Corp. spent months renovating its 16,000-square-foot store that opened in November near the Neiman Marcus store at Somerset.
While Ralph Lauren departments are staples at area department stores, the Somerset store features exclusive luxury items such as the men's Cooper duffel bag for $3,000, cashmere sweaters for dogs at $95, mink and coyote throws for up to $4,000 and women's silver, leather and turquoise conch belts for $6,500.
'An investment luxury'
"This level of luxury is kind of an investment luxury. There is a value to the timelessness. It isn't a seasonal thing," Charles Fagan, executive vice president for global retail brand development at Polo Ralph Lauren, said during a recent tour of the store.
Fagan said the wealth of luxury-minded customers in metro Detroit encouraged the company to open a full store at Somerset that is on par with stores the company operates in Milan, Beverly Hills and New York.
Another luxury retailer new to the area is Arhaus furniture, which opened in Birmingham in November.
The store features custom furniture such as the Garcia sectional for under $6,000, and a copper top dining table for $3,600.
The store also offers 500 fabric choices in material such as silk, leather and chenille for its upholstered furniture. The bedding sets also are plush. One silk and velvet duvet was going for $658.
"When you think of luxury, it's our fabrics ... the look, the feel," said Julie Gagnon, store manager.
Luxury is not defined only in terms of high-ticket items, said Karen Mac Donald, spokeswoman for Taubman Centers, which manages or owns 22 malls.
"Luxury can mean so many different things," Mac Donald said. "Luxury can be a cup of coffee if you go and spend $4 on a Starbucks coffee versus $1 for a regular cup. We are seeing people trading up, absolutely." |
