They have the sepulchral feel of rediscovered tombs. Lavish. Silent. Undisturbed. Visiting luxury boutiques these days can seem like stepping into a time capsule, and in a sense, you are, as retail and marketing plans and products conceived during the bully days of early 2008 are still on display and feel, in this post-luxury age, as anachronistic and appealing as Zeppelin travel after the Hindenburg disaster. A recent afternoon visit to several luxury boutiques in New York's SoHo confirms this brand and consumer disconnect. Luxury firms seem adrift and lost amid the deepest and most brutal falloff in sales since the Great Depression. Suddenly, the acres of rare hardwoods, the vast yardage of animal skins, the bling, the gaudy logos everywhere, the suggestion by one Prada salesman that he would recommend a particular crocodile skin suitcase "only if you fly privately"—it all seems so 2007.
"How many of these are you selling?" I asked that Prada salesman, my hand on the crocodile skin. ("From the belly of a Nile Crocodile," I was assured. "Caught in the wild but with no battle scars.")
"In 2009?" He paused. "None."
Firms like Prada relied on the halo of that $36,000 piece of luggage to diffuse through the brand and inspire those who could never afford such ostentation to purchase, perhaps, a bottle of fragrance, a pair of sunglasses, a T-shirt, some small piece of the brand so that they, too, could bask in the reflected glory of such splendor. But with the American consumer facing unprecedented wealth destruction—home values plummeting, 401(k)s halved, credit card debt interest surging, unemployment booming—that emulation of the haves by the have-slightly-lesses seems to have gone the way of liar-loan-backed CDOs. Part of the problem is that we have seen a generation of the ultrawealthy exposed for unbecoming behavior; the rich just don't seem as cool as they used to, so why should we all aspire to look and act like them? "It's like the French monarchy is falling," says David Wolfe of the Donneger Group. "Who wants to look like the old regime? The core of the problem is that luxury needs luxury wannabes, and those folks are all jumping ship."
The numbers are frightening: Retail sales at luxury retailers are down 30 percent. Luxury brands now confront a consumer who is earning less and saving more in a marketplace where, for the first time in several generations, there is actually some populist revulsion with conspicuous consumption. If we are really living through, as Time magazine proclaimed, "The End of Excess," then how do companies—indeed, an entire economy—geared toward excess and aspiration retool and convince weary, debt-burdened consumers disgusted by their own previous spending that their brands are really not about excess at all?
How do you sell luxury in a post-luxury age?
The last time luxury faced such a reckoning was the 1930s, when the American consumer, facing an even worse cataclysm than today's, revolted and rejected the gaudy glamour of the previous decade. Luxury brands built during that earlier profligate era of debt creation and financial chicanery entered the '30s trapped in a similar time warp to today's luxury brands. It is striking to go back and look through magazine advertising of the period to see how the message of those luxury brands that did survive changed from the heady days of 1929 to the dark, Depression depths of 1932. The first 10 pages of the 112-page, July 1, 1929, Vogue, for example, features ads from Raleigh Cigarettes, Tiffany & Co. (TIF), Barbara Lee Costumes, Dunlap Hats, Vici Kid Shoes, the Shelton Looms, Ocean Bathing Suits, Bon Ton, Frigidaire, and International Exposition Barcelona. Typical is the aspirational tone of the Vici Kid Shoes ad: "In Europe—where feet aren't built on the American plan—the lucky traveler who never gets museum legs or a Riviera limp is the one who brings over plenty of shoes of Vici kid." Vanity Fair's first 10 pages of a 110-page, January 1929 issue included Crane Fixtures, Tiffany & Co., Caron Fragrance, B. Altman, Guerlan, Best & Co., Walk-Over Shoes for Gentlemen, Marcus & Co. Jewelers, and Lord & Taylor. The tone was similar, all aspiration and the idea that somehow, by purchasing these brands, one could join the leisure class.
At the beginning of the Depression, wrote Jackson Lears in Fables of Abundance, "The business strategy of dealing with hard times was systematic denial." Unable to adapt to the new reality, luxury fashion brands as eminent as Callot Seours, Vionnet and Poiret, and premium carmakers like Hispano-Suiza and Pierce-Arrow were among the high-enders who didn't make it through the depression. By July 1932, Vogue was down to 81 pages and the only surviving front-of-the-book advertiser was Tiffany & Co. Vanity Fair, by 1934, was at 72 pages and had become a venue for consumer goods like Listerine (which was then, curiously, an anti-dandruff treatment) and Heinz (HNZ) tomato juice. The luxury advertiser had nearly vanished, as would Vanity Fair itself a few years later, a victim of the very same trend. (Vanity Fair, of course, was relaunched in 1983.) The eventual response, derived in part from consumer focus groups and widespread surveying—both innovations of the 1930s and part of the advertising industry's response to the Depression—was the selling of utility over luxury, craftsmanship over status, quality over excess. There is a reason Tiffany & Co. survived as an advertiser and enterprise: Its message was always based on heritage and history. It was running the same ads in 1932 it ran in 1929, an austere white page featuring its logo and its address. Tiffany, which was a 90-year-old firm during the Great Depression, will certainly emphasize its heritage during this recession. "In times like this, people go home," says Caroline Naggiar, chief marketing officer for Tiffany. "Certainly we will be listing up our core values and traditional values. ... We are not moving or going anywhere, there are so few institutions left which have held up the test of time, all of that works so well in this environment."