The New York Times lets the cat claw its way out of the burlap bag: unbridled spending, lavish parties and greed are now declassé. Jeff Koopersmith goes behind what they really mean: “We just don’t have the money.”
November 24, 2008 – Geneva (apj.us) – Recession after recession has not taught the West – and now the East – to stop shopping without reserve.
Sure, we need to buy things to underpin the foundation of rocky global economics – but by golly, we don’t have to spend $350 for a pair of basketball shoes that cost $7 to make, ship, and stock.
One reason we have been taught to pay so much for so little – Advertising. One wonders why a Rolex watch is expensive far beyond its value. Rolex is a machine made watch for God’s sake. The answer of course, is that Rolex spends more money telling you what a great watch it puts together then any other watchmaker in history and you are paying the bill for all that less-than-honest puffery. This week alone Rolex is bragging about its Golf tournaments, sailboat regattas, its art exhibits, and which star athlete finds “irresistible” its watches. (They give them away free to those guys and gals)
So. Here we are – paying a fortune so Rolex can sell more over-valued Rolexes. Nevertheless, Rolex is not alone. Far from it. The list of “luxury” manufacturers and designers could stretch around the planet.
One always has to admire the almost-honesty of the New York Times. Today Stephanie Clifford wrote a column concerned with the slump in advertising from luxe brands. A downturn in advertising means a downturn in receipts for the Times.
Aha! Yet what she truly reveals is that the classe dominante en régime – has finally put the brakes on lavish consumption. The truly rich with whom I am familiar are far less apt to spend their money on “brands” – they have their things made, or they shop at Sears or in Milan. It’s only we in the middle class who clamor for trusted labels and dearly expensive “stuff”.
I include myself in this group although I must say that age has brought with it a certain maturity about spending lots of money on things that make me feel more “acceptable”. There was a time, actually many times when I believed that a solid gold Rolex was a passport to better service, more respect, and “club” membership. In fact, it was and probably still is. That’s a sad commentary.
Today, however, the Patek Philippe wristwatch is more in vogue as some Americans have begun to appreciate true quality and not just ads in poor taste. The Patek is the only kinda well known watch – or should I say “timepiece” that is entirely hand made. I might argue that things hand made are not always very accurate, but in this instance, I won’t.
In reality, it doesn’t pay to own things coveted or expensive. I owned a Patek once. I lost a lot of money in business and had to give it to a so-called friend who had loaned me $5,000 to help pay tuition for one of my kids. The watch cost $15,000, and I threw in a Rolex and another costly watch asking this women, who I jilted some time before, to pawn them so she could get the money right away and until I had the cash to pay her back. Of course she didn’t. Instead, she held the watches “for ransom” and had some loser lawyer write me to tell me that she was keeping the watches until I paid up. Instead, I let her keep them. I have no heart for such lurid battles. Her name was Zan Vourakis watch out for her – she’s a viper.
Ms. Clifford reports: “Gold was raining from above for luxury brands in the good old days of 2007”. I’ll bet! Much of that gold flowed to the Times and its other publications. I assume that today this flood has ceased for many publishers and the editors allowed this story to go forward to embarrass some “exclusive” and way-behind-in-their-contractual obligations companies that once festooned the Times’ blank spaces. On the other hand, perhaps she just got one by the advertising department. Ms. Clifford covers herself, and the Times later in this story.
At the top of her list of, seemingly at random, is the cut-back advertiser budget of Tradema of America. Who? What? Most of you haven’t heard of it. They distribute Girard-Perregaux watches which run from a high of about $400,000.00 list (you can get one of those for $250,000 if you shop carefully) to a low of $4-5,000.00.
Next is Marc Jacobs. I realize Mr. Jacobs is a very popular designer, but his clothes are not exactly le style du jour save in the Village yet they are nice just the same, and by today’s designer standards – not expensive. You can buy a Marc Jacobs ladies dress for one or two thousand, a little blouse for under $600, and a pair of shoes for from $500-1,200.
Today, Marc is cutting back. Last year he had a little holiday party around this time. Here’s a photo of it, courtesy of the Times:
The “normal” Marc Jacobs party celebrating success in big business last year. You paid for it.
Jacobs didn’t have a party this season.
Like the Times says: “… luxury brands are suffering”.
Stephanie Clifford makes the mistake of calling the people who generally buy luxury products “rich consumers” – but she’s wrong. Nuevo-Riche people buy luxury products – yet many of them don’t know where the true luxury lies. Yes, there are some wealthy women who pay a good deal of attention to their clothes – but that’s usually because they must – not because they want to. Most wouldn’t be caught dead in a “label”, unless it read, “Made for Mrs. Patty Goldfarb Jones” and in the inside of the garment – not on view. If these women buy casual clothes, they buy them at the Gap. If they buy holiday and cruise –they buy it at Hermes. They rarely buy what the movie stars wear or what the movie mags tell you they wear. When they do – the clothes are usually given to them just so the news mags will tell you – “She wore Marc Jacobs.”
Jacobs is smart and talented. He lends his name to anything that isn’t alive. But much like Yves St. Laurent, this cheapens his brand – because Jacobs is no St. Laurent. Naturally, when things get tough for the last of the big spenders, they stop buying his stuff.
According to MasterCard research – luxury spending was down over 20% in October alone. Perhaps we are saving for November. Worse, for the Times, which can get as much as 100 thousand for one full page in just a single issue, spending for luxury advertisers is down even more. Poor Vogue is down to 220 pages from 290 this year. Food & Wine is down 25% as well. Who reads Food & Wine? You’d think that the very busy newly rich wouldn’t have time.
In case you have not noticed, newspapers and magazines depend quite heavily on luxury advertising.
Look for your subscription prices to go up. Look for Luxe TV to have trouble. Look for Conde Nast to cut more issues of pricey-purrfect magazines.
Times are tough – even for the almost rich.
It seems to me that the smartest guy in the opulence arena is one Alex Duckworth who advises many deluxe brands. He says, as I have been writing for years now, that the luxury sector is not immune to recession. He calls that idea “nonsense” and he properly sees plainly that we are at just “…the very beginning of this”. I wonder if he agrees with me that the time for “brands” is pretty much over, at least for the next twenty years. Either people will think twice about paying dearly for some company’s ad budget, or they will retreat into more obscurity than normal as they have in the past. When you are in the shadows – you can wear sweats and drive an old Austin Healy Sprite.
If you doubt that think about this.
The federal government just gave $350 billion to a scantily run bank because it was so big and so big a brand. That means that every single human body – including babies, your kids, your grandparents and the rest of everyone you know with or without a job just gifted Citibank more than $1,000.00 That’s right; $1,000 of your hard or easily earned money to a banker. If you have four kids – that’s $6,000.00. Think about it.
Your question should be – is this the end of it?
The answer is no. This is the opening act as Mr. Duckworth tells us. Right now, there are trillions upon trillions of bad loans, debts and more that no one can pay. Trillions. Throwing money at the very banks that caused this horror cannot be the answer. Make no mistake; what’s happening now is the government attempting, most likely in vain, to stop what could be a run on the banks and worse – a run on capitalism.
While it’s obvious to all but the greediest people on earth that capitalism as it stands today, is a washout – this does not mean that some workable form of it can’t be found.
The question yet to be answered – is what.
America and the rest of the debtor west and Asia would be far better off if governments simply took the place of creditors as of today. Then we could start all over again – this time with some fundamental security against this every happening again.
And that, my friend, will take some doing.
Jeff Koopersmith is an internationally renowned political consultant, opinion research authority and policy analyst. He has lobbied for causes including the alternative fuel sector and women's health, and is an expert on the international real estate market. He lives in Philadelphia, Washington and Geneva.