Pomp and circumspect
Lifestyles
Several times in recent years, Stephen and Bonnie Meyers and their two girls have left their Lake Tahoe, Nev., home and headed to Cabo San Lucas, on the southernmost tip of Baja California, to soak up the Mexican sun. When they arrive, a local "host" meets them at the airport, cuts through red tape, and leads them to a serene whitewashed villa with terra-cotta tiles and a pool overlooking the Pacific. The kitchen comes with whatever provisions they've requested--and a chef to cook for them if they wish. Their host acts as a sort of on-call private secretary, arranging golf and dinner reservations, a fishing boat rental, and once, when one of their kids had an earache, a doctor's house call.
A house of their own on Cabo could cost $1 million or more. But the Meyerses have found a simpler solution--and one that's easier on their wallet. They joined Private Retreats, a members-only club with more than 40 properties in the United States, Mexico, and the Caribbean, plus three yachts, a houseboat, and now, exotically, an island off the coast of Belize (203-255-5502, www.private-retreats.com). Members pay a $195,000 initiation fee, plus $7,250 in annual dues and $150 a night to stay at one of the properties. That's not exactly cheap, but Stephen Meyers, 54, president of the Great Outdoor Clothing Co. chain of retail stores, considers the money well spent. "I get to stay in far nicer houses and have a far nicer vacation than I would on my own," he says, remembering the $350 to $500 a night he used to pony up for an unremarkable hotel room or minisuite for the family. "It's comforting to know I've locked into a set price," he says, "so I know what family vacations will cost for the foreseeable future."
In these uncertain times, even the wealthy want more value for their money. The well heeled aren't in dire straits--despite the recession, the number of households with a net worth (not including their home) of over $1 million actually increased from 3.9 million in 2000 to 5.4 million in 2002, according to SRI Consulting Business Intelligence, a consulting and research company in Princeton, N.J. But uncertainty takes a toll, even on the rich. SRI's 2002 survey of financial attitudes found more people at all net-worth levels reporting they were "not very" or "not at all" confident their household would reach its financial goals. "Two years ago, when the market was peaking, everybody was saying they'd retire early," says Larry Cohen, director of SRI's consumer financial decisions group. "Now they're not so sure."
Image and reality. Even if their exuberance was irrational, people still want to live large. "The consumer is saying, `I'm not going to do without. But if I have to cut back, I don't want to look like I'm doing it,' " says Marshal Cohen, copresident of NPD Fashionworld, a market research firm in New York.
Just ask Maggie Edwards. The promotion manager for Wired magazine admired a necklace made of a triple strand of rose quartz, priced at $3,000 in various shops. She got a nearly identical piece for $400 from Femmegems, a store that opened just last November in Manhattan's trendy Nolita neighborhood (212-625-1611, or femmegems.com to place a Web order). At Femmegems, patrons mix and match semiprecious stones to create a look all their own, at a fraction of the regular retail price. "People might bring in something they found in an ad for Bergdorf's for $10,000," says Lindsay Cain, the founder of Femmegems. "We'll figure out how to do it for $300." That's why Edwards is now a regular. "In this economy, you may not want to go out and buy a $1,500 suit," she says. "But with accessories you can buy something new and fresh without making a major investment." Department stores like Bloomingdale's, Lord & Taylor, and Saks have tried to capitalize on accessories' growing appeal by moving these departments to the main floor so customers pass through when they enter the store.
On sales. Indeed, low-end luxe is a fashion hit. Designers' lower-priced lines like Marc by Marc Jacobs are thriving, says David Wolfe, a creative director for the Doneger Group, a retail consulting firm that specializes in luxury merchandising. Shoppers can find other designers' entire collections on sale, depending on the store. Look for regular discounts on Donna Karan, Tommy Hilfiger, and Ralph Lauren, says Cohen. Meanwhile, brands that have always offered affordable splendor are booming. For the second half of 2002, sales for Coach, the handbag and leather goods manufacturer, were up an impressive 30 percent, to $501 million, compared with the same period the year before. "Why do you think their business has been so good?" asks Cohen. "Coach has been able to stay at the lowest price point in the luxury market." Coach bags range from about $150 to $350. Louis Vuitton might cost twice that and Dior twice that again.
Carmakers have learned the same lesson. Customers clamor for cars in the $30,000 range by luxury manufacturers like BMW, Jaguar, and Mercedes. Even Bentley is introducing a new entry-level model at year's end, if a $149,000 auto can be deemed a starter car.
Even jet-setting has taken on a whole new meaning. Kirby Cramer could certainly buy his own plane. But the retired chairman of Hazleton Laboratories has never considered it. Instead, he bought a 1/16 share in two jets from Flight Options, one of a handful of companies that specialize in "fractional aircraft ownership" (216-261-3880, www.flightoptions.com). Cramer owns shares in a five-seater he uses mostly for business and in a seven-seater Cessna Citation V he uses to ferry his four children, their spouses, and his 14 grandchildren between their homes and the Cramer homes in Seattle and Indian Wells, Calif. Cramer paid a one-time fee of $312,500 for his share. If he uses the total 50 hours of flight time he has bought, he'll pay $100,000 in fixed and flight costs this year. Compare that with the $7.5 million he'd pay for a new Cessna Citation Encore, the successor to the Cessna Citation V. "It's definitely more cost effective," he says.
Of course, savvy spending doesn't have to involve millions, or even thousands, of dollars. Bruce McAlpin, a real estate developer in Pensacola, Fla., travels nearly every weekend for business or pleasure. A foodie by any definition, he has sampled the fare at many of the best restaurants in the country. But these days he is opting to lunch rather than dine, especially in pricey cities like New York. Three of his favorites--La Caravelle, La Cote Basque, and La Grenouille--serve an excellent prix fixe lunch for a fraction of what he would pay at dinner. He can enjoy a three-course afternoon meal at La Cote Basque--maybe the house-smoked salmon as a starter, followed by filet mignonettes cooked in a red wine and truffle sauce, and a lemon souffle to finish--for $38, or he could pay $70 for an almost identical meal at night. But at lunch, the service is just as impeccable, the room just as beautiful, and the food every bit as delicious, says McAlpin. Besides, conspicuous consumption feels out of step with the times. "The freewheeling '90s are over," says McAlpin. These days, consumers are making a feast of frugality.
This story appears in the March 31, 2003 print edition of U.S. News & World Report.