Jan 26, 2010

As recession stops splurges, luxury retailers retoolBy Jenn AbelsonBoston.com

Liz Wyman is done splurging on indulgences like a $300 leather Michael Kors bag and a pair of $575 black suede Cole Haan boots.

Instead, the 46-year-old state lawyer in Maine is scrimping however she can, tossing out catalogs from Neiman Marcus and avoiding Saks and Nordstrom at all costs. With her income eroding, she says, “I have to walk away.”

Wyman is emblematic of the “aspirational shoppers” – middle-class consumers with luxury tastes – who have disappeared during the Great Recession. Their newfound frugality has contributed to an estimated 16 percent plunge in luxury spending over the past year, according to a report by Bain & Co.

But retailers are not giving up so easily; they are trying to rekindle middle-class America’s love affair with luxury by working with designers to create lower entry prices for high-end brands like Gucci and Christian Dior.

Bloomingdale’s last week unveiled plans to launch upscale outlet shops for the first time this fall. And other merchants are spinning a new kind of luxury – quality goods without designer labels that can last for several seasons and don’t break the bank.

“There was a catastrophic dropoff in demand,” said Michael Silverstein, a senior partner at the Boston Consulting Group, which estimated that middle- and upper-middle-income households accounted for up to 70 percent of luxury spending a few years ago. “Great retailers have taken it on the nose.”

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