The incredible amount of wealth that evaporated in this economy is even affecting the higher echelons of wealth. Granted most ultra affluent Blacks still have plenty of money left despite losses in the market, and can easily ride the wave for the next couple of years. However, the game is changing when it comes to luxury spending.
We have to recognize that we are coming down from an unprecedented explosion in wealth levels, a new Gilded Age. Luxury brands had to reach down to capture those millions of aspirational African American dollars by offering entry-level items (such as wallets, key-chains and sunglasses) and ratchet up the exclusivity factor via one-of- a kind pieces in the tens of thousands (try a $200,000 Gucci trunk). Now that the entry-level segment is in essence priced-out, those that are left standing really are the truly affluent. Professional and affluent African American women represented a good share of the buyers of luxury/designer purses and shoes. The same went for luxury automobiles. The good news is that this recession is across the board and no single ethnic group is left out.
Regardless of one’s situation, the days of “affluenza” or conspicuous consumption are over. For the ones on shaky grounds, their money has to be allocated to more important expenses such as mortgage payments, car notes and credit card payments. They are now forced to watch their discretionary spending due to the economic uncertainty. As a community, some of us even have to provide for struggling relatives now. For those who are comfortably wealthy, the reduction in spending comes from a certain guilt associated with their status; a mild case of “survivor guilt”, if you will. They resort to discreet spending so as not to appear inappropriate in such hard times for relatives or others around them: “… there is no need to throw it in the face of someone shopping at Wal-Mart by showing off the new Louis Vuitton bag."
A suggestion for the affluent is to focus on luxury staples, items that transcend trends and can last over time. A classic Chanel suit can last a woman for years and so does a classic custom-suit by Zegna for a man. Ditto a classic Burberry trench coat or a Rolex watch. Such pieces can be accessorized with less expensive accessories over time, but their apparent quality and timeless appeal will usually overshadow the rest. This idea can be expanded to automobiles, jewelry and luxury services: practicality and quality trumps quantity.
On another note, all is not lost for the aspirational buyer. Luxury brands are beginning to feel the pinch and are “quietly” featuring-in store sales discount approaching 70-80%.That rarely happened on such a wide-spread scale before. The reality for that industry is that many brands may not be around in the next 5 years (20-30%) and competition is fierce. I would encourage all of you then to shop “wisely” this time around and stack up on those staples mentioned above. They can be blended in with clever finds from Marshalls or TJ-Maxx.
As you can see, the days of extravagant spending are now gone, but retailers and buyers have to adapt accordingly. Adopting the right outlook and a disciplined approach will guarantee that you can still maintain a healthy shopping regimen without breaking the bank or alienating your spouse.
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