Affluent shoppers like their luxe goods cheap

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On the day after Thanksgiving, the parking lot at Woodbury Common Premium Outlets begins filling up even before the 7 a.m. opening time for most of its stores. Shoppers tailgate as early as 5 a.m. at the shopping mall an hour north of New York for the start of the holiday shopping. As the day goes on, thousands will stream through the mall's 220 stores, which include outlets of designer brands such as Burberry, Gucci and Yves St. Laurent.

This is the new face of luxury shopping. With holiday 2003 expected to be a good season for retailers, power shopping has become as much about how much you saved as what you acquired.

"Everybody loves to save money. It's a badge of honor today," said Michele Rothstein, VP-marketing for Chelsea Property Group, owner of Woodbury Common and 60 other premium outlet malls in the U.S. and Japan. The company recently reported its same-store sales grew 6% in the third quarter and its gross area grew to 16.1 million square feet, from 3.6 million a year earlier.

wealthy shoppers

Chelsea's outlets attract a fair share of wealthy shoppers and even celebrities, Ms. Rothstein said. She noted the company's latest mall, which opened in August in Las Vegas, is doing good business with the local hotels, which buy gift certificates as perks for their high rollers.

"The whole affluent market is bipolar," said Jeff DeJoseph, chief strategic officer, Doremus. Luxury consumers want prestigious brands at low prices, but they also will splurge on the super-premium items, he said. The Omnicom Group corporate advertising specialist does extensive research on affluent consumers.

"Strategic shopping" began during the recession of 1991-92, when affluent consumers began cutting corners on household goods and other commodities, Mr. DeJoseph said. "That mind-set has just migrated into the whole purchasing habit."

A recent poll by research firm Unity Marketing found affluent consumers, which the company defined as having average annual household income of $150,000, are just as likely to look for sales as those of more moderate means. When asked, affluent consumers said their latest purchase in 13 out of 14 product categories had been on sale or at a discount. The one exception-beauty products-rarely go on sale, but have a high level of gift-with-purchase activity, which cancels the need for sales, noted Pam Danziger, president of Unity Marketing.

Luxury marketers have long debated whether discounting lowers the value of luxury brands. Some companies, such as Hermes and Louis Vuitton, will destroy overruns rather than sell them through discount channels. Even those that have discount outlets don't often advertise those stores.

But some marketers have accepted discounting as a fact of life and worked out solutions to control the experience. Ms. Danziger noted Polo Ralph Lauren has developed an extensive network of outlets which maintain its brand image. Mr. DeJoseph also singled out Armani for creating outlet stores and training salespeople who help maintain the designer's image.

"They are able to see their product through the end of the line," Ms. Rothstein said.

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