Matthew Yglesias » Retail Sales Down

Dec 27th, 2008 at 10:12 am

Retail Sales Down

When I was in Switzerland, where luxury goods production is a big deal, a number of people speculated that such items were somehow recession-proof. That didn’t really make sense to me, but apparently I’m not the only one who was told that since Felix Salmon writes that “it wasn’t all that long ago that the luxury segment was supposed to be immune from the plebeian woes of the economy as a whole.” Guess not.

Comments
27

27 Responses to “Retail Sales Down”

The CAP Cleaning Staff Says:
December 27th, 2008 at 10:20 am
A strange collection of data points. If this is to be believed, online sales didn’t do “that” bad, so presumably most of these losses are concentrated in the big brick and mortar establishments. Would have been nice to see that spelled out, though.
mim Says:
December 27th, 2008 at 10:56 am
Probably because you have to think twice before you head to the mall or the stores, and be prepared to burn gas. Online shopping is so easy it’s an impulse act–take it from someone who’s been ordering from Amazon the past few days.
mccainMedia Says:
December 27th, 2008 at 11:09 am
I don’t know if I trust these #’s… they are from Mastercard, and if people are using more cash these days then the data Mastercard generates would not be fully capturing the real sales.
howard Says:
December 27th, 2008 at 11:44 am
why should you be surprised that luxury goods are normally considered immune? if i used to be worth $1B and now, 40% stock market tanking later, i’m worth $600M, can i really not afford a $25,000 watch?
mim Says:
December 27th, 2008 at 11:50 am
Aha! If they’re from MasterCard, that might explain the finding about online sales. When you buy online, plastic is the way to go, unless you use PayPal.
Parhelion Says:
December 27th, 2008 at 12:03 pm
I’m kind of astonished that anyone would think luxury goods are recession-proof, given how hard the manufactures and retailers have been working to push their products farther and farther down the income ladder, away from their traditional markets, over these past few decades. If you’ve managed to convince some small percentage of my more numerous peers that they need a Hermes scarf, a “starter” Porsche, or even a Tiffany key chain as a top-end display item, you’re going to be hurting when that segment of your business suddenly goes soft.
rmwarnick Says:
December 27th, 2008 at 12:31 pm
I read somewhere that luxury goods may be suffering from an image problem. The top one percent can still afford them, but in a downturn they hold back a bit because it’s unseemly to flaunt. One possible explanation.
Ed Marshall Says:
December 27th, 2008 at 12:37 pm
The top one percent can still afford them, but in a downturn they hold back a bit because it’s unseemly to flaunt.

I’ve heard the same thing. It’s like the rich have decided they have to find a way to participate in the economic carnage.

I also remember listening to a bunch of interviews conducted by Studs Turkel about the Great Depression where the rich suddenly quit having their ostentatious parties and got really quiet and the feeling from the non-rich was that they were scared out of their minds about reminding the hordes of unemployed that they existed.
nate Says:
December 27th, 2008 at 1:08 pm
Like Parhelion says. Luxury goods might have been recession-proof when the bulk of their sales came from a small number of super-rich. Might have.
Now they aren’t… but then again, they also aren’t “luxury” in the same sense that they used to be either.

Also worthy of note is that this recession has certainly not spared the fattest wallets in the land.
Mo Says:
December 27th, 2008 at 1:22 pm
Then how come the snow boots I want are currently sold out everywhere?!?
Taylor Says:
December 27th, 2008 at 1:32 pm
Most films of the 30s focused on the well-to-do. The rationale offered was that the masses didn’t want to be reminded of their desperate straits (you have to wait until the 40s to see Barbara Stanwyck being fired in Meet John Doe), though it has always been my suspicion that the hidden studio agenda was to humanize the well-to-do and defuse popular resentment. Eg. William Powell in the Thin Man films has a spouse who owns factories and pays for his playboy lifestyle. In the Palm Beach Story, Rudy Vallee plays a sympathetic Rockefeller character who is both personally frugal and lavishes charity on Claudette Colbert. In It Happened One Night, Gable and Colbert actually take a bus and stay in a motel. But again Colbert is the sympathetic child of luxury whom Gable falls in love with.
cavjam Says:
December 27th, 2008 at 2:54 pm
I wonder what goods are considered luxury items. Cashmere socks may be, but they wear like iron and actually make some sense from a value standpoint. Brooks Brothers’ $120.00 sea island undershirt, OTOH, probably isn’t considered a luxury good.

One aspect to falling luxury purchases, like yachts, is not so much that the super-rich are ailing but that their number is not increasing.
Rix Says:
December 27th, 2008 at 3:07 pm
I’m not convinced by the figures on clothing. They were the only real bargains this year. The electronics manufacturers never give retailers permission to have price wars, there’s always something bogus about “sales” on digital cameras, laptops, HD TVs etc. The Chinese will point to their American warehouses of unsold merchandise & ask for bailouts.
BillB Says:
December 27th, 2008 at 3:56 pm
Are luxury goods recession proof? It depends on the type of recession. If the main problem is only high unemployment, which affects mainly the middle class, the wealthy keep spending. If the stock market tanks 40%, which directly depletes wealth, then the wealthy reduce spending.
Klug Says:
December 27th, 2008 at 10:45 pm
I also agree with Parhelion — when the thirteen-yr-old girl behind you at Starbucks can afford a Louis Vuitton purse, either the clientele or the brand has changed. I vote for both.
kenw Says:
December 28th, 2008 at 12:02 am
Do the math, Matt.
kenw Says:
December 28th, 2008 at 12:05 am
Or what Howard said.
Schanie Says:
December 28th, 2008 at 3:33 am
Buying habits are governed by the sense of financial security and financial growth. If you feel less secure or see poor growth, you tend to spend less. This spreads to everyone with varying degree of impact on your expenditure or your investments.
JonF Says:
December 28th, 2008 at 6:26 pm
Re: Most films of the 30s focused on the well-to-do.

The two most iconic films of the 30s were Gone With The Wind and The Wizard Of Oz. In the latter Dorothy and family were obviously of very limited means. In the former Scarlett O’Hara started out wealthy, became desperately poor, almost starving during the latter part of the war; then clawed (and slept) her way back to money. Wizard’s theme is simple: “There’s no place like home”– i.e., be happy with what you have. GWTW is more complex: “Tomorrow Is Another Day”– i.e., keep fighting no matter what, but with a caution that in getting what you want you may lose what you need.
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Matt Yglesias

Retail Sales Down

27 Responses to “Retail Sales Down”

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