Byline: Rosemary Feitelberg / Arthur Friedman

NEW YORK — It’s not exactly the Eighties, but it is time to spend again.
Confident about the surge in the stock market and the generally strong economy, upscale shoppers are once again investing in their wardrobes, according to better retailers, Wall Street analysts and designers.
The luxury goods market is benefiting from the positive economic cycle and an expanded customer base. Part of this comes from women trading up for better quality, while another factor that comes into play is the maturing baby boom generation.
Affluent consumers in the U.S. — those with household income of $70,000 or more — spent $19 billion on women’s apparel last year, according to the 1996 Mendelsohn Affluent Survey conducted by Mendelsohn Media Research. This market has grown to represent 22 percent — 42 million adults in 17.5 million households — of the total U.S. population, up from 20 percent in 1995.
The report said in women’s wear, people in the $70,000-$99,999 income bracket averaged $754 a year on apparel, the $100,000-$199,999 group spent $1,555, and the top earnings segment of $200,000 and over doled out $2,465 on average for the year.
Laurence Leeds, managing director at Buckingham Research, said the luxury goods boom differs in the Nineties from the Eighties. Now, there’s more of an international flavor, with high-end labels like Gucci, Louis Vuitton and Hermes selling to the newly wealthy in countries like China, Russia and Indonesia.
“In the U.S., the Wall Street boom and strong economy have certainly helped designer apparel, because the people making the money are the extremely wealthy that buy the designer merchandise,” Leeds said. “But there remains a lot of competition for the consumer’s dollar, particularly from technology products like computers and electronics, as well as recreation and travel.”
Leeds said specialty chains like Saks Fifth Avenue and Neiman Marcus have been helped by resurgence of the luxe market, which had hit the skids in the recession of the early Nineties and the recouping of debt from the overspending of the Eighties. On the downside, Leeds said, is the bridge market, which has been hurting at retail this year.
Designers are benefiting from aggressive advertising, the popularity of pricy jeans lines, in-store shops, men’s businesses and exposure generated by their expansion into nonapparel products, according to Jay Meltzer, managing director of LJR Redbook Services, which specializes in retail, textile and apparel firms.
“People are buying more apparel than usual, but they’re not buying it indiscriminately,” he said. “They buy designer goods because they feel better having them. It makes them feel good to wear them.”
Sales of luxurious goods are increasing thanks to a wide range of shoppers, including those whose incomes are not “shooting up,” Meltzer noted. Consumers’ debt is increasing faster than their incomes.
Despite that, credit-card charges are slowing down. From January through August, credit-card charges have decreased each month, he said. In addition, some consumer confidence can be attributed to growth in mutual funds. Unlike 20 years ago, when mutual funds were “next to nothing,” 75 percent of American families now invest in mutual funds, he noted.
Claudia Thomas, chief executive officer and president of Carolina Herrera, said the high-end apparel market has benefited from the strength of the stock market and national economy because “people have the confidence to spend.”
“The last time luxury goods were in fashion it was very evident and external,” Thomas said. “Now, it has a lot more to do with quality. The consumer is more educated about quality and the look and fabric of a style, as opposed to a label.”
Thomas said there is a new consumer for designer merchandise, one who is choosier about what she buys and more confident in her purchasing decisions.
“The Eighties was about indiscriminate spending, whereas now, it’s about discriminate spending,” Thomas said. “There’s also a redistribution of wealth going on, with the maturing baby boomers. We’re finding these women care about special details, like a silk charmeuse lining we put inside our jackets. Only the woman wearing it knows it, but she responds to it because it’s special and represents quality.”
Thomas also thinks designer-price lines have taken business from bridge labels, because in many cases bridge became too expensive and too basic. She said the consumer recognized she can get the basics less expensively and needed to trade up for unique merchandise.
Todd Oldham feels the end of minimalism has given women the urge to spend again.
“With minimalism, once you buy the first season, you don’t really need to buy the second season.” he said. “Now there are prints, fabrics and textures that make a person want to shop.”
At Oldham’s boutiques in Los Angeles, Miami and Manhattan’s SoHo, fall sales are 30 percent ahead of last fall. Meanwhile, wholesale volume is 40 percent ahead of last fall, with such stylish looks as a wool crepe tank with stretch fake mink straps at $360, tiny miniskirts in fake seal skin at $320 with coordinating jackets at $800 among key fall items.
Halston is among the firms prospering from the healthy economy.
First-year wholesale volume for Halston’s designer collection is projected at $8 million — $3 million ahead of plan, said Carmine Porcelli, executive vice president and managing director for Halston International.
“It’s not a question of money. Today, people have money to spend. When buyers are cautious, it’s because the item is not something they need — because no one really needs anything,” he said. “If they’re going to buy something, they have to really want it.”
High-end goods are also performing well for Michael Kors, where collection sales are 12 percent ahead of last year and bridge sportswear sales are up 35 percent. Fall bestsellers include 10-ply cashmere sweaters retailing at $1,495, leather sportswear ranging from $1,500 to $3,000 and double-faced cashmere coats between $2,400 and $3,200. The designer sold out of 250 units of double-stretch matte jersey leggings at $495.
“These are luxurious items, but a bit casual. They’re going to customers who are doing very well on the stock market,” Kors said. “It’s almost as though the more affluent the customer becomes, the more casual she gets.”
With double-digit percentage gains for its designer business, Saks Fifth Avenue expects that pattern to continue through the end of the year, said Stephen Bock, executive vice president of merchandising.
“Clearly, the economy is much better. Store managers and salespeople have to create a relationship with customers — that’s what leads to success,” he said. “We have in-depth programs to establish relationships, a reward program for employees and Fifth Avenue, our exclusive private shopping services.”
That kind of service encourages women to shop on a seasonal basis, Bock noted. Giorgio Armani, Chanel, Valentino, Ungaro, Yves Saint Laurent, Gucci, Dolce & Gabbana and Helmut Lang are among key labels at Saks.
“There clearly is a link between the strength of the luxury goods market and the Wall Street boom, in that people are feeling good about themselves and their level of wealth and are inclined to purchase luxury goods,” said Steven Elkin, chairman and ceo of Bergdorf Goodman.
Elkin said the designer market has benefited from an expanded customer base that now includes people trading up from bridge and a mature baby boom generation.
“We’re also in the middle of a four-to-six-year cycle of baby boomers reaching a point in their lives where they have more disposable income,” Elkin said.
Business is also on the upswing at a few designer boutiques.
In July, shoppers at Mary Jane Denzer in White Plains, N.Y., shifted their style from austere to festive, said Holly Denzer, an owner. No longer looking for simple looks like slipdresses, women want beaded, lacy and ornamented apparel. This fall, ballgowns have been outselling cocktail dresses 3 to 1, she noted.
Fall sales are 12 percent ahead of last year, she noted. John Galliano’s designs for Christian Dior are contributing to the growth.
“There are certain pieces that turn their heads,” Denzer said. “When we call customers to tell them we have it in their size, they come running.”
Givenchy, Yves Saint Laurent, Christian Lacroix and Sonia Rykiel are also doing well, she added.
Fall sales are also ahead at Toby Lerner, with two stores in Philadelphia.
The popularity of Etro, Richard Tyler Collection, Donna Karan Signatures, Missoni and Fendi has helped business to climb 5 percent over last year, said Toby Lerner, owner. The retailer introduced these labels to the fall mix since customers were looking for more exclusive items.
Missoni’s sweater coat at $2,300, Rebecca Moses suits at $1,500, Richard Tyler suits at $1,700 and Etro suits at $1,400 are among the bestsellers.
“A lot of it is due to the feeling of prosperity. Salaries have increased, and there’s more job security,” Lerner said. “There’s low inflation, low interest rates and increased employment. This good news from the media is making people want to spend.”

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