When Affluents Shop Discount

 

Ruthanne Terrero
I’m shown here atop the Hotel Arts in Barcelona, one of my favorite hotels in the universe. We dined at Arola, where high-end tapas are served in a stunning setting, where sliding doors open to a terrace with a garden and views of Barcelona and beyond. While at the hotel, we got a glimpse of the new nightlife venue, Frank’s, which has more than 40 champagnes and sparkling wines on its menu and where bottle service is also available. It’s all quite posh and worth a visit.

 

 

The vacuum left from the sudden settlement of Tom Cruise and Katie Holmes’ divorce last month left news stations scrambling, in these slow summer months, to find something else to talk about. We saw some in-depth reporting from one local TV station on why New Yorkers shouldn’t walk around the city in flip flops because of the danger it brings to their tendons and insteps. Really? With all those puddles of greasy water it’s not safe to walk around nearly barefooted? A reporter actually traipsed around the city and interviewed people who said they would wear flip flops no matter what because they loved them so much. So much for a top news story.

And then came the quiet little item that Target and Neiman Marcus have partnered for the first time to offer a limited collection of products, more than 50 from 24 designers. Why combine forces? Research has shown that a certain segment of consumers shop at both higher- and lower-price stores, says an Associated Press story. The two retailers, Target—a discount, mass-market chain—and Neiman Marcus—a luxury department store whose pricing has virtually no ceiling for affluent goods—have already realized some of their customers overlap. It’s not unheard of for someone who shops at Neiman’s to go to Target to buy low-priced trendy clothing as well, picking up some groceries and household staples while they’re at it.

You may have already noticed that the shopping biases of your high-net-worth clients have blurred. But don’t be mistaken. They may want value and be willing to enter shops where they can get it, but they don’t want to get stuck on line behind that someone who came in to return a pile of dresses but who doesn’t have any receipts and who starts reconsidering midway that they might want to keep some of the stuff, but just can’t decide.

Why would a wealthy individual shop in Target when he probably doesn’t have to? I would argue that Target benefits because its stores are set up in a more attractive manner than other mass-market retailers. It’s a brand that was launched with style in mind and that goes far with consumers, especially if good customer service backs it all up.

For the luxury travel advisor, this means that you may be able to offer more travel opportunities to your client. I’m not suggesting you mess with that $50,000 booking where only the best customized experiences will do. But no harm in getting your clients to travel more frequently to hotels for quick getaways that provide a little pizzazz without breaking the bank. Perhaps a hidden gem has a rooftop bar that will give your client a sense of being in the know or maybe a lobby scene is just so enticing, day and night, with stylish locals that your A-listers feel they’re part of an in crowd in a new destination. Just be certain that the rooms are clean and comfortable and that the hotels in question have at their core a dedication to good customer service.

In other consumer-behavior news that impacts the mass market more than the affluent, it appears as if people are starting to charge more on their credit cards again. That’s a trend that slowed as people went bankrupt during the recession and lost all of their credit; in other cases they just got smarter and stopped spending what they didn’t have. This study, the First Data SpendTrend analysis, showed that in May 2012 compared to May 2011, consumers were spending less on discretionary products, including travel, and instead charging living necessities on their credit cards. That’s a note of caution for travel advisors to consider steering away from the true mass-market crowd, which may be headed for a halt in spending again, and to focus on the ultra-affluent, a sector that’s not really impacted by the woes of daily economics. We all know that after a day in Target they’re going to head back to Neiman Marcus—and after a weekend jaunt at a low-cost, design-oriented hotel, they’re going to return to the Four Seasons on their next trip, which is always a good thing.

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