'Mass affluent' save on the basics and then splurge on the luxuries
By JOLAYNE HOUTZ
Seattle Times
You know you are trading up when:
You start the day with a $3 latte from Starbucks instead of a 99-cent cup of coffee from 7-Eleven.
You splurge on a Coach watch for $205 rather than a $22.99 Timex at Target.
You opt for the "near-luxury" 3-series BMW ($29,300) over a Pontiac for $21,300.
You spring for an American Girl for your daughter's birthday ($84) and forgo the $11 Barbie at Wal-Mart.
A Kent, Wash., school-district manager spends almost $2,500 on a luxury vacation to Tahiti, complete with a skipper for her chartered catamaran ? but buys discount clothes and eats "whatever vegetable is on sale that week."
Trading up, trading down
Luxury is not just the exclusive territory of the super-rich.
American middle-class consumers are "trading up," paying a premium for luxury items they value with high-end features or cachet, compensating by "trading down" in other areas.
"New luxury" products and services appeal to the 47 million households making $50,000 or more a year, according to marketers and researchers who have coined a word for this trend: "masstige" ? prestige for the masses.
The "mass affluent" pay $3 for coffee at Starbucks, buy $27 Isaac Mizrahi pumps at Target and stock their kitchens with imported Italian dinnerware from Williams-Sonoma and $5,700 Sub-Zero refrigerators.
"This phenomenon is best observed by going into Costco. It's piled high to the ceiling with stuff that ... were luxuries the day before yesterday," said James Twitchell, author of Living It Up: America's Love Affair with Luxury.
See and touch
Two Seattle-area companies are among the new luxury leaders: Issaquah, Wash.-based Costco and Seattle-based Starbucks. Others include the Cheesecake Factory; Samuel Adams beer; American Girl dolls; BMW; Whirlpool; and Victoria's Secret.
New luxury products are distinguished by better design, ingredients or packaging ? technical advantages that "translate into functional benefits that consumers can see, touch, describe," said Michael Silverstein, a marketing expert who co-wrote the 2003 book Trading Up: The New American Luxury, which popularized the concept.
Among the demographic drivers of this trend, according to Silverstein: higher levels of education, an increase in disposable income and greater numbers of working women with more influence on spending decisions.
People have always saved a little here to spend a little there, said Carl Obermiller, professor of marketing at Seattle University.
Standard of living
What is different now: a steadily rising standard of living and brand-name goods that are more available and more affordable than ever. For better or worse, almost anyone can have a taste of luxury.
"It used to be middle-class Americans didn't know what the super-rich bought or did," Obermiller said. "Now we can emulate them. ... . It's not just what yacht they're buying. It's what shoes they wear."
To afford luxury, middle-class consumers have to make tradeoffs. Where one indulges, another economizes.
Becky Hanks has 68,000 miles on her 6-year-old Toyota Camry and plans to drive it "until it dies."
But the school-district communications manager does not scrimp on travel. Last year, it was a trip to the British Virgin Islands. In 2002, she and some friends chartered a 37-foot catamaran in Tahiti. The price tag: nearly $2,500 per person.
"Living the high life is not a part of my day-to-day experience. It's a major treat," said Hanks, of Des Moines, Wash. "I save up for it and ... just eat up every moment."
Champagne, diamonds
At Costco, customers can simultaneously trade up and trade down at the same checkout stand.
Jim Sinegal, co-founder and CEO of Costco, calls his 441-warehouse chain "the epitome" of new luxury. Costco is the largest seller of Dom Perignon champagne in the country and one of the largest retailers of diamonds, he said.
Peek in the shopping carts being rolled out of any Costco Warehouse, and you will see evidence of masstige spending: a $205 Coach watch nestled next to a bag of boneless, skinless chicken breasts; a 12-pack of Duracell batteries sandwiched next to a $40 bottle of imported French wine.
With the mainstreaming of luxury, the purveyors of new luxury are confronted with a paradox: How to offer affordable luxury while maintaining exclusivity.
"If everybody can buy an indulgence, then the indulgence has lost its value," said James Twitchell, a University of Florida professor of English and advertising and the author of Living It Up: America's Love Affair With Luxury.
Thus, the emergence of a tandem trend: "massclusivity," or exclusivity for the masses.
Starbucks recently began selling limited quantities of rare coffees from around the world ? coffees so precious, they say, "that to miss them once could mean you'll never experience them again." The story behind the coffee, and its limited availability, "is part of the romance of it," Saunders said.
Twitchell says consumers are drawn to products that tell a story.
"Starbucks ? don't get me wrong, it's good coffee. But it's just coffee. The difference is it's coffee with a story," he said. "The taste of modern luxury is not inside the product. It's inside our imagination."
Is it troubling that we are buying all this stuff we do not need to lift our spirits?
Obermiller said there may be a cost across society when people go upscale without also cutting costs.
Personal bankruptcies in the United States have nearly doubled in the past dozen years.
Silverstein dismisses worries about excessive materialism as a "media concern."
Conflicted feelings
Yet even some consumers have conflicted feelings about their access to affluence.
Laura Clenna of Seattle likes the quality and clean, simple style of Coach handbags, and she has amassed 10. The last one she bought cost more than $200.
The King County elections worker drives a 2000 Toyota Land Cruiser, which her husband drove before she "fell in love with it" and took it over.
She shops sales and discount retailers for basics such as underwear, but says buying luxury items is still "a difficult thing in my head."
"My mom was a secondhand-store shopper. I didn't have these things growing up," she said. "It makes me feel good ? and it's just nice to get into heated leather seats."
Pause.
"It's totally disgusting," she laughs.
