Imagine bounding down the stairs on Christmas morning, hoping you’ll get that bike you’ve been hinting at for weeks. Except this bike is actually a $4,500 electric tricycle.
That’s the kind of merchandise you’ll find in the Neiman Marcus Christmas Book, a catalog published annually since 1926 by the high-end retailer. While much of the book is dominated by the standard Neiman Marcus fare – $3,400 handbags, $675 boots – it’s become most famous for its “His and Her” section, introduced in 1960. Since the first offering, a Black Angus steer complete with silver serving cart, the retailer has offered everything from a $20 million submarine to a $7,500 life-size edible gingerbread. The company boasts that the catalog has “evolved into the ultimate wish book.”
The Neiman Marcus catalog has also proven to be rather recession-resistant, says company vice president Ginger Reeder, who handles direct sales for the book. She says sales did not slow following the market collapse of 2008, and the company never gave any serious thought to discontinuing the catalog as the economy tanked. “People would have rioted,” she jokes.
That’s not to say luxury retail didn’t take a big hit during the recession. The retail sector as a whole sagged following the financial collapse in 2008, with average holiday spending plummeting 8% from 2007 to 2008, according to the National Retail Federation. The organization projects spending to increase only marginally for this holiday shopping season.
“There’s no doubt that the recession played a huge role in the luxury market,” NRF vice president Ellen Davis says. “When the stock market began to sink in 2008, many [luxury] retailers were impacted and had difficulty climbing out of the hole.”
The good news is that luxury retail sales are showing signs of recovery, with worldwide sales expected to increase 10% by the end of the year after falling 8% last year. Davis likewise sees the sector recovering, observing that high-end retailers “are starting to see the appetite for their merchandise come back.”
Absent such a recovery, though, the kinds of specialty items found in the Neiman Marcus catalog are not as affected by broader trends in the sector. That’s due in part to the fact that many of these "fantasy" gifts are bought not by the usual celebrities and high rollers, but by “somebody looking for exactly that thing,” Reeder says. She points to a couple who bought a tailored suit of armor for their son, a medieval enthusiast who frequented renaissance fairs in costume. For that couple, the suit of armor – passed over as quirky and ridiculous by most readers – represented the perfect gift, and worth every penny. While such items will never be big sellers (“saleability is not an issue,” Reeder says) there will always be buyers for whom the item is a must-have, whatever the cost.
The same cannot be said for more conventional big-ticket items, luxury or otherwise.
A survey conducted earlier this fall by Harris Interactive found that Americans were no more inclined to make big-ticket purchases – cars, boats, houses – than they were two years ago. And with the auto industry struggling mightily over the past two years, it’s hard to imagine too many people will wake up Christmas morning with a new car in the driveway.
But just as luxury retailers have recovered more quickly than others, so too have luxury automakers fared slightly better than the auto industry as a whole, says David Nordstrom, vice president of marketing for Lexus. “We see that luxury is recovering a little faster than the market,” he says, noting that Lexus sales are up 10% over last year. “Affluent consumers are recovering a little quicker, and their confidence is a little stronger.”
That’s good news for Lexus, which has striven to define itself as the go-to luxury vehicle for Christmas gifting since launching its annual “December to Remember” sales event in 2000. While Nordstrom estimates that only 10% to 20% of Lexus cars sold in December are given as gifts, commercials featuring a new Lexus sitting in the driveway with a red ribbon on top have become a staple of the holiday season. The bow is not just an advertising gimmick: People who buy a new Lexus as a gift can borrow one of the giant bows for presenting the gift, and can pay around $230 if they’d like to keep it. “We’re not making money on the bows,” Nordstrom deadpans.
Nordstrom says December is typically one of Lexus’s two best months of the year, and he’s optimistic about holiday sales. Still, he’s quick to note Lexus – and luxury manufacturers as a whole – aren’t out of the woods just yet. “We expect sales in December to do very well, carrying over from our current momentum,” he says. “But we’re not going to be back to our pre-2008 sales until at least next year.”
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