Following the last post about the price that La Garconne charges for a sweater, I wanted to share some excerpts from an interview with Jill Wenger, the owner of the high-end boutique, Totokaelo:
How do you deal with the cost of raw materials increasing?
If my prices increase, they increase. My customer isn't looking for the best deal, and I don't like working with that customer. If a customer notices the prices are going up, it goes back to educating your staff and your clients. It's important to explain that the cost of gold is rising therefore this gold necklace will be more expensive. The customer understands that.
Has the economy affected your customer base?
The clients that I lost when the economy fell apart were the younger crowd, like my hairstylist or the waiter down the street that relied on tips for that extra money. Our core customer remained the same, but I did hear more things like, 'I don't need another black dress.' Before all this happened, I didn't hear people talk about what they needed. People are buying less stuff and thinking more about their purchases. I can get behind that. I won't let people walk out of the door with a bunch of stuff they won't wear, and that's exactly why I don't pay my staff on commission. Our sales people can't have trust with their client if something is money-motivated. Our selling strategy and open return policy are the reasons why our return rate is so low.
I wanted to share that interview mostly because I wanted to point out that the luxury business isn't really concerned about the middle class. I mean if you think about it, (edited 01.25.2012) retailers can put out any kind of prices they want because there will always be someone buying it. The top income earners (if you make more than US$133, 000, you're in the top 20%) make more than enough to sustain the industry, which explains why Louis Vuitton has raised their prices by almost 50% over the last year even while people are losing their jobs. I think Wenger's statement that she doesn't want to work with people "looking for the best deal" says it all. I'm not sure exactly what she means by the 'best deal' but my over-analytical interpretation is that if you go in to Totokaelo and you're looking for something that is reasonably priced with all the perks, you're not going to get it. They're not a Hyundai dealership - they're catering to the Aston Martin crowd. So truth be told, high-end stores don't really want people who spend the bare minimum, they want people who can throw away $600 for a sweater without batting an eyelash. And that's exactly why La Garconne can afford to have a stupid return policy and bad customer service because someone is always going to shop there for the mere exclusivity.
The state of current affairs is depressing the heck out of me (see this article from The Atlantic), and I cannot, for the time being, allow myself to be sidetracked from reality by talking about shoes, bags and things that cost a three-month pay check. The unfortunate truth is that it's getting harder for the masses to have any form of upward mobility and that America is descending into a banana republic. It also explains why I've been missing from the blogosphere over the last month - I've been sitting and contemplating about my own finances and I've realized that sooner than later, I may no longer be able to afford imported prosecco or small batch raw cheese and I'll be that hairdresser or waiter who is no longer welcomed at Totokaelo.
P/S: Feel free to correct me if you think I misrepresented the interview. I'm probably the most pessimistic person I know and tend to over analyze and rant. I'd love to hear your thoughts.
Correction: This article was last edited on January 25, 2011.