For some people, luxury is still what it was before the recession: $2,295 python satchels from Michael Kors, $62,000 Porsche Spyder sports cars, $500 spa days in Beverly Hills.
But most Americans would beg to differ, according to a report from the IBISWorld research firm. Their concept of luxury is now a far cry from what it was before the housing bubble burst, unemployment soared, consumer confidence crashed and disposable income plummeted for the first time in years.
Even as the economy slowly rebounds, consumers are interested in “more subdued, conscientious and functional versions of luxury,” according to the report. The industries that have emerged to meet that demand will earn more than $1.5 trillion in revenue this year alone.
Luxury and discounting are more intertwined than ever as Americans continue to budget. With the popularity of sites such as Gilt.com, HauteLook.com and RueLaLa.com, which offer limited-time flash sales on high-end goods, nearly 90 sample sale websites will have emerged from 2007 through the end of 2012.
Daily deals websites such as Groupon – which made a much-ballyhooed public debut in the fall – and LivingSocial have exploded. In 2007, there were four such voucher sites; this year, there are 632.
And it’s not just women trawling the discounts – many of the sites also offer markdowns for men, children, travel and entertainment.
Consumers wanting luxury look beyond the price tag now – they increasingly find extravagance in customization, which gives buyers a sense of ownership and involvement, according to IBISWorld.
Apple has done well tailoring its products and software to customers, as have department stores that offer makeovers and personal shopping assistance. Credit-card providers such as American Express now integrate some accounts with Facebook to offer personalized rewards; markets such as Pavilions have started customizing their coupons.
And as more Americans adopt healthful, eco-friendly lifestyles, they’re splurging on fitness regimens and organic goods, according to IBISWorld. Though organic offerings can often cost five times as much as their conventional counterparts, chains such as Wal-Mart are increasingly stocking specialized brands that focus on naturally produced, Earth-friendly items.
Earlier this spring, organic food company Annie’s saw its stock soar when it began trading publicly. Last year, sales of local food reached $7 billion in the U.S. as the number of farmers markets doubled.