They’ll always have money for lipstick. While saving is suddenly chic, even in turbulent times, “people need to spoil themselves a little bit,” says Steve Kates, associate professor of marketing at B.C.’s Simon Fraser University. That’s the theory behind the Lipstick Index: makeup sales rise as the economy slumps. Here’s a look at how other categories are making the most of the appetite for affordable luxuries:
• Some boldface fashion names are discounting, with Chanel, Versace and Christian Louboutin reportedly slicing 8% to 10% off most products in the U.S. In Toronto, Birks & Mayors ran full-page newspaper ads to tempt holiday shoppers with a “buy one, get one half off” promo—an atypical move for the jeweler. The economy hasn’t stopped H&M, which can still stoke a frenzy with its runway-inspired clothing and low prices (prominently highlighted in its glossy ads). The perceived value of its designer collaborations draws long lines worldwide—as seen in November, when the retailer’s hookup with cult-favourite label Comme des Garç;ons launched. Prices ranged from $30 for a jersey top to $349 for the showpiece dress, a fraction of Comme’s usual thousand-dollar tags.
• “We see that our customers find our business concept of fashion and quality at the best price even more attractive during economic downturns,” says Emily Scarlett, H&M’s Canadian spokesperson.
As diners gravitate toward lower-priced venues, McDonald’s is seeing sales surge. Meanwhile, one of Toronto’s top chefs, Marc Thuet, has introduced a $48 Recession Buster tasting menu at his Bite Me restaurant. “Everybody has a different perception of ‘value.’ It’s an intangible feeling, the sense that I got my money’s worth, plus a great dining experience,” says Joel Cohen, founder of the Cohen Restaurant Marketing Group. But he warns against price cuts: “Discounting is the penalty you pay for being unremarkable.”
• “Messages about products being a ‘smart buy’ are more likely to resonate with consumers—a luxury car brand promoting superior engineering that produces higher gas mileage, for example,” says marketing consultant Denise Lee Yohn.
BMW Canada’s advertising indirectly plays into the idea of affordability: “One of our big campaigns is going to be the launch of diesel in Canada,” says John Cappella, BMW Canada’s regional manager of the central region, who also works on creating tactical ads.
• Meanwhile, high-end hotels have favoured value-adds like giving bonus nights, and discounting is becoming more common, says Karen Weiner Escalera, chief strategist of KWE Group. In September, Marriott International chopped 20% off fall weekend rates at more than 2,500 hotels. Enhancing loyalty programs is another effective strategy: Starwood Hotels & Resorts Worldwide just scrapped blackout dates for airfare reward redemptions and touts its points program as a way to travel “without spending a cent.”
Morgans Hotel Group is addressing the recession head-on in its ads, but with a cheeky, defiant spin befitting the brand—including a print and web campaign with slogans like “F*ck the Recession.”
“Even when times are bad,” says Escalera, “people will spend to pursue a passion or special interest.”
WING SZE TANG is a freelance writer in Toronto
