From The New York Times March 12, 2009:

For Spring Clothes, a Lost Season?

By STEPHANIE ROSENBLOOM

ON a recent afternoon, Bergdorf Goodman was library-silent. At Saks Fifth Avenue, mannequins stood in for shoppers. In Henri Bendel, sales staff pounced on anyone who came through the doors. All along Fifth Avenue, the designer spring collections — an annual shopping ritual for the well-heeled and winter-weary — have largely arrived in stores.

No matter.

Bangles and handbags on slabs of marble and glass are going largely untouched, like artifacts in museums.

“Last year you’d run in here and say, ‘I need these shoes, they’re going to sell out,’ ” said Stacey Widlitz, a retailing analyst, as she turned over a strappy Fendi sandal in the Saks shoe department on Tuesday. “You felt an urgency. Now you come in and the store looks more like a museum than a department store and you think to yourself, I can wait.”

And why not? The spring collections are being sold at full price: $800 jeans, $1,500 blazers, $10,000 necklaces. If consumers learned anything during the Christmas shopping season, it was that if they sit on their wallets long enough, they could eventually snap up elite brands for fire-sale prices.

The mistletoe and tinsel are long gone, but consumers have yet to break the habit. And in the retailing game of chicken, the odds are in their favor.

February retail sales at Neiman Marcus, Saks and Nordstrom were some of the worst in the industry. Barneys New York, which does not publicly report monthly sales, is seriously ailing. Moreover, high-end stores order their spring merchandise months before the season arrives. So while they were able to cancel or return some orders as the economy plunged into recession last year, their inventory is not yet in line with weakened shopper demand.

“What’s flowing into stores this spring and summer reflects expectations from nine months ago, which were not low enough,” said Ms. Widlitz, who works for Pali Research in New York.

That means more discounts are on the way, though they will not be as stunning as those at Christmastime.

“That’s not going to happen again in our lifetime,” said Marshal Cohen, chief industry analyst for NPD Group, a retailing consultancy.

That is partly because luxury chains have managed to trim at least some of their inventory. It’s also because fashion companies were incensed during the holidays when their prestige labels were being sold at bargain-basement prices that competed with their own stores. Some designers said they are still smarting and deciding whether they will continue supplying certain chains.

Responding to the call for lower prices, designers are working with stores like Neiman Marcus to roll out items with mid-tier prices.

That couldn’t come a moment too soon for Neiman’s, which said Wednesday that it suffered a $509.2 million loss for the three months ending Jan. 31, compared with a profit of $44.3 million a year earlier, and that it plans to drive sales with additional promotions and other events.

While the spring discounts may not be as deep as last fall, analysts say they will come early. In high-end stores, merchandise usually stays on shelves at full price for 8 to 10 weeks before it is marked down. This season, however, analysts predict it will remain at full price for half that time.

Retailers, of course, loathe price cuts because they erode profits. But selling designer collections at full price in this economy requires more than a pretty face. It necessitates a battle plan.

At Saks, the plan is multipronged, beginning with the company’s spring advertisements. Historically they have included minimal text because the photographs of clothes, bags and shoes are meant to do the talking. This season, however, Saks is beefing up its copy to highlight the reasons why a product is special, or — to put it another way — why consumers might want to plunk down precious dollars during a recession.

For years, decadent consumer spending and free-flowing credit meant no luxury chain had to justify why a sweater cost more than a flight to Rome.

“We’ve definitely seen — I think everyone has seen — a drop-off in this idea of shopping for entertainment,” said Kimberly Grabel, Saks’s senior vice president for marketing. “People are shopping in a very focused way: What is it that they need?”

Saks’s other tactics include collaborating with its suppliers to introduce some lower-priced accessories and other items. It is also focusing on what is known as “clienteling,” or calling and sending e-mail messages to its best customers with ideas on how to spruce up their existing wardrobes rather than replacing them entirely. And a new women’s fashion area in the store called WEAR offers name-brand clothes at more affordable prices. A manifesto on the inside of the catalogue reads: “At a time when many of us are re-examining the more frivolous things in our lives, Saks has sought out items of authentic value.”

Kit Yarrow, a consumer psychologist in San Francisco, said affluent consumers are returning to an older way of shopping: buying one or maybe two exceptional pieces rather than a designer’s entire line. “That used to be the way people bought luxury items,” she said. “They didn’t buy the T-shirt from Armani. They bought the jacket.”

Retailing professionals are not in agreement about whether this economy has irrevocably changed consumer spending habits.

Burton M. Tansky, president and chief executive of Neiman Marcus, has said in telephone conferences with investors that it is too early to make such pronouncements. Some industry professionals disagree, though, saying consumers are clearly gravitating toward a simpler way of living that is in sync with the nation’s growing environmental sustainability movement.

“I feel really strongly that this is a permanent shift,” Ms. Yarrow said. “There really hasn’t been a time when we’ve been quite that frivolous in spending money. It’s a correction.”

Indeed, after years in negative territory, the national savings rate jumped to more than 3 percent during the holidays.

“Luxury is going to have to learn it’s for a very unique class of shopper,” said Mr. Cohen, of NPD Group.

He calls it the Rolls-Royce theory of retailing. “Pure luxury is not about price,” he said. “Does a person who’s buying a Rolls-Royce or a five-carat diamond ring start negotiating for price? The cachet, the image, the quality, the service — price is not the determining factor. It’s at the bottom of the list, if on it at all. Luxury is going to have to exist in a smaller space.”

After all, the “aspirational” shopper — the customer who could not afford designer brands without skipping meals and running up debt — has disappeared. For more than a decade, global brands like Louis Vuitton and Gucci rode to glory by selling this customer a taste of prestige — a $600 handbag instead of a $3,000 dress. Now that strategy is being severely tested.

“It’s not to say luxury is dead forever,” said Robert S. Drbul, a managing director at Barclays Capital Equity Research. “It will come back. But it may take a few quarters. It may take a year.”

He paused before continuing.

“It may take something longer than that.”

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I highly recommend clicking on the link and reading the reader comments. It’s eye-opening. I have severely cut back on my shopping, even though Brian and I are both still working and everything is fine for us, for now. But it just makes sense. We already have pretty healthy savings accounts, we’re just making them healthier. If we buy things, they are needs, or at least intelligent wants, like supplies for a vegetable garden, or in my case, maternity clothes. We are making a trip to Value Village this weekend, I hope. I hope Bremerton isn’t too picked over.

So in short, no I’m not getting that Burberry coat. Someday! Just not now.