"When the economy gets tough, the mood changes for the wealthy first."
So said Maryam Saghatelian, assistant VP for Cartier’s west coast operations.
We were speaking at the 2008 Luxury Summit in Beverly Hills, where experts and industry professionals gathered to gauge the state of luxury spending. Saghatelian says she’s not seeing a slowdown in spending at Cartier yet, but she’s starting to see worried looks on the faces of her long-time customers, especially the men.
With 18 years in the business, she’s been through recessions, and she knows that look. It starts there, then trickles down to lower income levels, which seems counterintuitive to me. You’d think those who have trouble paying for gas would turn sour sooner. She says her own experience has taught her that those who’ve made a lot of money worry about losing it before anyone else.
The summit was an enlightening display of conflicting trends in luxury spending. While Cartier’s parent company saw sales growth in the fourth quarter of eight percent, that was slower growth than the last two quarters and disappointed analysts.
Emmanuel Perrin, President and CEO of the Americas for Cartier’s sister company Van Cleef & Arpels, says higher gold, diamond and platinum costs "are killing us." When I asked if those costs are being passed along to customers, he’s says only partly, and expect to see lower margins.
On the other hand, slowness in the U.S. is being made up for in places like China. Van Cleef opened a store three weeks ago on the gambling mecca of Macao. By the second week, the store had reached half its sales projections FOR THE YEAR.
Judith Murphy, who helps publish Departures Magazine for American Express, probably has access to some of the most meaningful data of the super rich. She surveyed AMEX’s wealthiest card holders on whether the current downturn will impact their spending—70 percent of the women said it would not, along with 84 percent of the men.
Perrin, of Van Cleef, quipped that he was disappointed about the men. He really wishes they WOULD change their spending habits…and spend more.
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