For wealthy, a different notion of ‘cutting back’
Even the well-heeled are willing to cut back in a rocky economy, though there are some sacrifices they just won’t make.
Laurel Chirico, who owns three Tony & Guy Hairdressing salons in Orange County and charges $250 for a cut, can testify to that.
“I’m booked out a couple months. I don’t see any slowdown at all,” Chirico said recently. “We’re definitely a business that’s pretty safe” in the midst of what might be a recession.
For some merchants and manufacturers, the stumbling economy of 2008 isn’t as painful as it is for others. Americans of certain economic classes have broadened the definition of household staples to include items -- organic fruit, cellphones for the kids, greens fees, personal trainers, bottled water -- that their parents wouldn’t in their dreams have considered essential.
These people do respond to an iffy economy, though not in the same way as earlier generations, said Patricia Pao, owner of Pao Principle, a retail consulting firm in New York. Instead of reining in across the board, she said, they engage in “selective spending.”
So Janet Lowder is trimming her grocery bill, cooking most anything stashed in the freezer, but won’t abandon her manicure and pedicure every two weeks or her weekly massage.
“It’s a real stress reliever,” said Lowder, president of Restaurant Management Services in Rancho Palos Verdes. “Those things you have to have.”
Although consumers with above-average disposable incomes have been notching back since the third quarter of last year, they aren’t curtailing purchases of “experiences,” such as theater tickets and meals out, said Pam Danziger, owner of Unity Marketing, a research firm that focuses on luxury markets.
Danziger herself draws the line at stopping Botox and Restylane treatments, which set her back $800 or so every four months.
“I’m not about to give that up,” she said. “That’s my affordable luxury.”
How else do the comfortably situated cope? They might split an entree at dinner, Danziger said, or, given the shriveled U.S. dollar, adjust their travel itineraries.
“A very simple way to save on travel is to not go to Europe,” she said. “All you’ll do is end up feeling poor over there anyway.”
Apparently, that is a chance that many are willing to take. International travel bookings for June through August are running ahead of last year, and trips to some European cities (Pisa, Italy; Geneva, Lisbon) show double-digit gains, according to American Express Co. More people also are traveling to China, Hong Kong, the United Arab Emirates and other far-flung places, the company said in an e-mail.
For some, skipping Dubai is easier than bypassing organic arugula.
“People are very concerned about everything they ingest, eat, put on their skin because of what it’s doing biochemically to their body,” said Pao, whose business helps companies develop turnaround strategies. “So the organic food market is kind of blowing out the door even though it’s like four times as much as regular food.”
At Erewhon Natural Foods Market in Los Angeles, where “body ecologists” dispense tips from the tonic bar and customers pay $15 for a Mint Chip Energizer drink or $25 for Blood of the Dragon, business is great. If the drink they select doesn’t already include it, most people add “super deer antler” (believed to boost sexual strength, virility and fertility) at $2 a drop, said Mitzi Poulin, a store manager.
“Sometimes your drink can cost you $40 for just one cup,” she said. Some sales come from people who partied too hard the night before. “They come and say, ‘Oh, I have a hangover, can you fix me?’ ”
Poulin said that in April, revenue was up 11% compared with the same month last year. “I cannot say that the recession affects us,” she said.
Nor did the state of the economy stop Cott Beverages Inc., which makes RC Cola and other drinks, from introducing Fortifido, vitamin-enriched water for dogs, in February. It’s too soon to say how sales are doing, but the company’s innovation director, Charles Calise, said there had been a “tremendous response from retailers that really feel like the time is right for this product.”
“People who have dogs spare no expense,” he said.
As the parents of a newborn daughter and a 9-year-old son, the Ioanas of West Hollywood are always making financial choices. The kids come first, so the grown-ups go out on the town less often than they used to and have cut back on driving. But Saniya Ioana, a stay-at-home mother, is not about to forgo her hair extensions, which must be redone every two months at $150 a pop. “I’m not giving up my facials either,” she said.
Husband Beau, a movie producer, said he drew the line at giving up his gym membership and one more thing: chocolate.
The anecdotal evidence would seem to suggest that looking good and feeling good are priorities. Stuart Fischoff, a social psychologist and former professor of media psychology at Cal State Los Angeles, said that wasn’t surprising.
If you turn your back on your high-end haircutter, your friends will notice, he said. People don’t want to give up certain things for fear of looking poor, “unless their peer group is poor. Then they can all complain together about what’s going on.”
“If a staple for me is having a massage, that already says something about my status and where I am and what I think about myself,” he said. “If I give that up, that’s a fall from grace.”
Xavier Guerin, co-owner with his wife, Muriel Mastey, of Los Angeles hair salon Point de Vue, said that seemed to ring true.
“We suffered a lot more during the writers strike than we are now,” said Guerin, referring to the three months that Writers Guild of America members weren’t working. “Nobody wants to give up her hair, thank goodness.”
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