August 13, 2012
Consumers Consuming Conspicuously
Anecdotal reports began to surface before the "official" beginning of the Great Recession in December 2007 that wealthy Americans were dialing back on their conspicuously consuming ways for reasons including not wanting to laud their own success in front of family, friends and others who had fallen on more difficult times.
By now, terms such as the "new normal" have become part of the retail lexicon and, while reports that "frugal fatigue" has set-in on several occasions, there has always seemed to be some "on the other hand" statistic to balance news both bad and good.
With all of the above as a backdrop comes an Associated Press piece saying that wealthy American parents are now their dressing toddlers as though being fashionable is somehow a requirement for their continued success. Forget about Target’s cheap chic, these parents are throwing down big bucks in stores such as Bergdorf Goodman and Saks Fifth Avenue.
Bergdorf, according to the report, recently expanded its kidswear department by a third to make room for a growing number of upscale designers such as Gucci, with new lines intended for the toddler set.
"We’re definitely growing," Andrew Mandell, vice president and divisional merchandise manager of home and children’s wear at Bergdorf Goodman, told the AP. "This is a whole new realm. And when you have our customers so fashion forward, they eat this up."
- Yearly Job Loss Worst Since 1945 – The Wall Street Journal
- Employment, Hours, and Earnings from the Current Employment Statistics survey (National) – Bureau of Labor Statistics
- Secret Shopping Takes On a New Meaning – RetailWire
- Affluent Sick and Tired of Frugal Living – RetailWire
- Rich toddlers draw fashion designers’ eyes – The Associated Press/USA Today
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Discussion Questions
Discussion Questions: Do you see more retailers and designers looking to tap into the market for luxury goods for kids? What is the key for retailers looking to excel in this market?
Poll
Retailers and designers go where the money is. Consumers with kids who are not being strained by today’s economy are also enjoying their beneficial lives through upscaling their children too. It is, therefore, only natural that retailers and designers are getting a new whiff of the sweet smell of luxury.
To excel is this market, retailer must serve such customers better than anyone else could serve them and that suggests a “no holds barred” approached to style and pricing is today’s kids model … as well as never allowing yourself or your children to go into Walmart.
There has always been, especially in markets like NY, Chicago, LA, etc., many retailers that cater to this group, both parents and children. There are too many high-end retailers in addition to Saks and Bergdorf Goodman, for others to attempt to be successful with this group unless you consider the small shops along upper Madison Avenue. The key to success in this market comes from word of mouth and peer pressure within this group. Families that have the wherewithal to spend this much on clothes socialize together; go to the same private schools, etc. If your kid’s friends are wearing clothes from B-G, you are not going to send them to school wearing Gap. I feel sorry for the teachers who have to put up with these kids.
The term “conspicuous consumption” comes from a socialist economist Thorstein Veblen in the 1800s. It was written to put down the “showy” dress of the upper class. In actuality, the phenomenon really combines two concepts — that certain purchases are visible to others and that purchases which are visible make a statement about the person to others (included in the wikipedia definition). to me, this latter aspect is the bigger dimension and retailers/marketers must always focus on products’ role at making this visible statement of self.
This is bigger than “if you got it flaunt it,” it includes the lifestyle you value (why else would people go to the US Open wearing tennis garb like they are going to be next at center court?), teams you follow, music you love, trendy vs. timeless, religious preferences (style of wearing a big cross necklace), etc.
The Millennials are charging forward, and reproducing!
Making babies isn’t something new. What is a newer play for the youngsters being birthed over the past 5+ years is the shift of other demographics about them.
The Millennials are nearly as big a slice of the population as Baby Boomers — nearly 72 million of them. Those Millennials are better educated, if they are working, better compensated, and they are marrying later.
If they choose to have children, they are likely to have smaller family units. Now, add in the Baby Boomer grandparents. Those grandparents are retiring financially better off than previous generations. A mix is being set up whereby the offspring coming out of the womb are going to be a bit like the “golden child” of China — a 4-2-1 relationship; grandparents and parents focusing on fewer grandchildren.
That focus will lead to solid sales opportunity for more luxury spending on children over the next 1-10 years.
An unfortunate consequence of capitalism of the economic landscape over the past 3-4 years is the fact that the rich have gotten richer while the other 99% pay the consequences. The 1% have new free flowing cash that is used to purchase luxury items. Purchasing designer labels for children is not unexpected or surprising. Reaganomics tried to convince us of the ‘trickle down’ concept. It was a failure then as it is now because of human greed and gluttony. I’d like to see those people use the cash the system has blessed them with to donate more to charities but alas…they’d rather go buy a $300 pair of jeans for their 24-month old nephew.
As long as the rich keep getting richer, they’ll hunt for more ways to express their comfort with that wealth. It only makes sense for retailers to provide them an outlet.
One can visit certain areas of the country and understand immediately why this is getting attention simply by looking at the parents driving upscale cars and living in neighborhoods of affluence. To me this is a sad commentary. But, as was said earlier, the retailers are going to follow the money.
Even when mom and dad cut back on their personal consumption, they still manage to find the money to spend on the kids. From personal experience, this is true for the low-income segment as well as those more fortunate. While clothing spending for the very well-off has taken a hit, it is not surprising that this is being channeled into nicer outfits for the kids. Is this a long term trend? Doubtful.
An added comment: Luxury goods for kids is a very broad term, and it won’t be owned by Rodeo Drive, Michigan Avenue, and Fifth Avenue. This isn’t about political tripe of “1% / 99%”, and it certainly doesn’t fall into an arena of “spoiling children.”
People haven’t given up the belief that the next generation will do better than the previous. When walking a Gap Kids, Neiman Marcus children’s shop, or a Mass Merchant, take a look at the baskets.
For those who have been fortunate to have children, thoughtfully remember what your own children had at those ages. Then, think of the goods that your own parents were able to provide to you.
It is categorically NOT a sad statement that people want to create a better life for their offspring. The same holds true as they are choosing better cars, homes, and clothing for themselves.
Apple is waaaaaay ahead in this game. Parents who eschew the thought of Jr. wearing designer jeans still give them $400 toys. Apple is a fashion statement. It’s an accessory. It is as much a back-to-school item for kids in Old Navy jeans as those in Armani jeans. It needs to be upgraded as often as a pair of jeans. It is a sign that your parents are so “okay” that if you drop your iPad from the Jungle Gym they won’t even yell at you.
“Kids today,” know what’s cool before mom knows what’s cool. If retailers/brands can keep the cool coming fast and furious (i.e. before Uniqlo and H&M knock off Moncler) the money will continue to flow.
The big money is to be made in the re-selling of those $400 jeans. Little sister can’t use a hand-me-down Louis Vuitton book bag. It’ll go to a reseller. Even if indirectly. Those aspiring to wear tomorrow what the rich wore today are a lot bigger pool.
You know, no one really showed us the stats that these parents can actually afford to shop Bergdorf for their kids. That takes us right back to where the story started in 2007…
During a recent conversation with my 4 year old granddaughter, I attempted to explain that people have different likes and dislikes and we don’t always agree but we should respect their views and choices.
If retailers choose to respect the wallets of people who want to spend large amounts clothing their children, who are we to criticise either the retailers or their customers? If either of them turns out to be wrong, they will find it out for themselves without the rest of us telling them what they should or should not do.
On the other hand, if some of the 99% decide to express their disapproval and frustration in more visible/vocal ways, that is their choice and the retailers/customers will have to decide how to respond. Including whether or not to buy/sell in other ways.
This isn’t a discussion about the 1% versus the 99%. Department stores are hitting lower price points to attract new customers — that’s the story. And, if that’s effective then as retailers why aren’t we applauding their efforts or dissecting on a more granular level?
It is the aspirational market that drives the luxury segment of the apparel business. Probably more so for children’s apparel. Conspicuous consumption is likely gone for a very long time in the USA.
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Retailers and designers go where the money is. Consumers with kids who are not being strained by today’s economy are also enjoying their beneficial lives through upscaling their children too. It is, therefore, only natural that retailers and designers are getting a new whiff of the sweet smell of luxury.
To excel is this market, retailer must serve such customers better than anyone else could serve them and that suggests a “no holds barred” approached to style and pricing is today’s kids model … as well as never allowing yourself or your children to go into Walmart.
There has always been, especially in markets like NY, Chicago, LA, etc., many retailers that cater to this group, both parents and children. There are too many high-end retailers in addition to Saks and Bergdorf Goodman, for others to attempt to be successful with this group unless you consider the small shops along upper Madison Avenue. The key to success in this market comes from word of mouth and peer pressure within this group. Families that have the wherewithal to spend this much on clothes socialize together; go to the same private schools, etc. If your kid’s friends are wearing clothes from B-G, you are not going to send them to school wearing Gap. I feel sorry for the teachers who have to put up with these kids.
The term “conspicuous consumption” comes from a socialist economist Thorstein Veblen in the 1800s. It was written to put down the “showy” dress of the upper class. In actuality, the phenomenon really combines two concepts — that certain purchases are visible to others and that purchases which are visible make a statement about the person to others (included in the wikipedia definition). to me, this latter aspect is the bigger dimension and retailers/marketers must always focus on products’ role at making this visible statement of self.
This is bigger than “if you got it flaunt it,” it includes the lifestyle you value (why else would people go to the US Open wearing tennis garb like they are going to be next at center court?), teams you follow, music you love, trendy vs. timeless, religious preferences (style of wearing a big cross necklace), etc.
The Millennials are charging forward, and reproducing!
Making babies isn’t something new. What is a newer play for the youngsters being birthed over the past 5+ years is the shift of other demographics about them.
The Millennials are nearly as big a slice of the population as Baby Boomers — nearly 72 million of them. Those Millennials are better educated, if they are working, better compensated, and they are marrying later.
If they choose to have children, they are likely to have smaller family units. Now, add in the Baby Boomer grandparents. Those grandparents are retiring financially better off than previous generations. A mix is being set up whereby the offspring coming out of the womb are going to be a bit like the “golden child” of China — a 4-2-1 relationship; grandparents and parents focusing on fewer grandchildren.
That focus will lead to solid sales opportunity for more luxury spending on children over the next 1-10 years.
An unfortunate consequence of capitalism of the economic landscape over the past 3-4 years is the fact that the rich have gotten richer while the other 99% pay the consequences. The 1% have new free flowing cash that is used to purchase luxury items. Purchasing designer labels for children is not unexpected or surprising. Reaganomics tried to convince us of the ‘trickle down’ concept. It was a failure then as it is now because of human greed and gluttony. I’d like to see those people use the cash the system has blessed them with to donate more to charities but alas…they’d rather go buy a $300 pair of jeans for their 24-month old nephew.
As long as the rich keep getting richer, they’ll hunt for more ways to express their comfort with that wealth. It only makes sense for retailers to provide them an outlet.
One can visit certain areas of the country and understand immediately why this is getting attention simply by looking at the parents driving upscale cars and living in neighborhoods of affluence. To me this is a sad commentary. But, as was said earlier, the retailers are going to follow the money.
Even when mom and dad cut back on their personal consumption, they still manage to find the money to spend on the kids. From personal experience, this is true for the low-income segment as well as those more fortunate. While clothing spending for the very well-off has taken a hit, it is not surprising that this is being channeled into nicer outfits for the kids. Is this a long term trend? Doubtful.
An added comment: Luxury goods for kids is a very broad term, and it won’t be owned by Rodeo Drive, Michigan Avenue, and Fifth Avenue. This isn’t about political tripe of “1% / 99%”, and it certainly doesn’t fall into an arena of “spoiling children.”
People haven’t given up the belief that the next generation will do better than the previous. When walking a Gap Kids, Neiman Marcus children’s shop, or a Mass Merchant, take a look at the baskets.
For those who have been fortunate to have children, thoughtfully remember what your own children had at those ages. Then, think of the goods that your own parents were able to provide to you.
It is categorically NOT a sad statement that people want to create a better life for their offspring. The same holds true as they are choosing better cars, homes, and clothing for themselves.
Apple is waaaaaay ahead in this game. Parents who eschew the thought of Jr. wearing designer jeans still give them $400 toys. Apple is a fashion statement. It’s an accessory. It is as much a back-to-school item for kids in Old Navy jeans as those in Armani jeans. It needs to be upgraded as often as a pair of jeans. It is a sign that your parents are so “okay” that if you drop your iPad from the Jungle Gym they won’t even yell at you.
“Kids today,” know what’s cool before mom knows what’s cool. If retailers/brands can keep the cool coming fast and furious (i.e. before Uniqlo and H&M knock off Moncler) the money will continue to flow.
The big money is to be made in the re-selling of those $400 jeans. Little sister can’t use a hand-me-down Louis Vuitton book bag. It’ll go to a reseller. Even if indirectly. Those aspiring to wear tomorrow what the rich wore today are a lot bigger pool.
You know, no one really showed us the stats that these parents can actually afford to shop Bergdorf for their kids. That takes us right back to where the story started in 2007…
During a recent conversation with my 4 year old granddaughter, I attempted to explain that people have different likes and dislikes and we don’t always agree but we should respect their views and choices.
If retailers choose to respect the wallets of people who want to spend large amounts clothing their children, who are we to criticise either the retailers or their customers? If either of them turns out to be wrong, they will find it out for themselves without the rest of us telling them what they should or should not do.
On the other hand, if some of the 99% decide to express their disapproval and frustration in more visible/vocal ways, that is their choice and the retailers/customers will have to decide how to respond. Including whether or not to buy/sell in other ways.
This isn’t a discussion about the 1% versus the 99%. Department stores are hitting lower price points to attract new customers — that’s the story. And, if that’s effective then as retailers why aren’t we applauding their efforts or dissecting on a more granular level?
It is the aspirational market that drives the luxury segment of the apparel business. Probably more so for children’s apparel. Conspicuous consumption is likely gone for a very long time in the USA.