Luxury retailers cash in as affluent shoppers step up holiday buying

Not so long ago, people who could still afford a $15,000 Birkin bag or a $2,000 diamond bangle requested their packages be wrapped in plain paper bags so as not to broadcast their splurges in Hermès orange or Tiffany blue. But now, after a stretch of guilt-ridden stealth spending and general belt-tightening, wealthy consumers are jumping back into shopping as sport. At Chalk, an Evanston boutique that carries such high-end labels as Giambattista Valli and Alberta Ferretti, co-owner Sharon Watrous says her clients have found a happy medium between conspicuous consumption and recession-induced austerity. “We're not returning to the excess of the "80s or the 2000s, but the idea of taking pleasure in shopping has returned,” she says. “People are finding a balance and enjoying beautiful things again.” HAPPY HOLIDAYS Encouraged by a rising stock market and big bonuses for senior management, upper-income shoppers are feeling wealthy enough to spend again on luxuries this holiday season. Yes, their home values have dropped like everyone else's, but the affluent are decidedly more bullish about the future than their lower- income counterparts, says Allison Paul, Chicago-based head of the retail practice at consultants Deloitte LLP. Herewith, some photos of items sure to put a dent in a Wall Street bonus. The divide means a rich yearend for upscale boutiques and department stores and a middling season at best for mid-market retailers like Hoffman Estates-based Sears Holdings Corp. Luxury stores were off to a good start heading into the holidays, posting an overall 6.4% sales gain in October from a year earlier, according to the International Council of Shopping Centers. Neiman Marcus Group was up 9.5%, Saks Inc. saw an 8.1% boost and Nordstrom Inc.'s sales rose 3.4%. Sears doesn't release monthly sales figures, but mid-market rivals Kohl's Corp. dropped 2.5% and J. C. Penney Co. was down 1.9%. Deloitte's holiday retail survey finds that individuals earning more than $100,000 plan to spend an average of $826 on gifts this season, up from $795 last year. Overall, shoppers plan to spend $466, vs. $452 in 2009. There's also evidence that quality is replacing quantity. In 2007, shoppers bought an average of 23.1 gifts, according to Deloitte. This year, the number is forecast at 16.8. The high end was the first to bounce back from the recession, despite the humbling of so-called aspirational shoppers: middle-class folks who spent like the affluent until home prices tanked and banks cut their credit-card limits. One difference in 2010, though, is that it's becoming OK for the rich to flaunt their fortunes again. “When you're feeling secure and when you haven't spent on yourself for two years, there's a lot of pent-up demand for some serious retail therapy,” Ms. Paul says. “People are choosing quality and expense over a lot of little stuff.”