Frugality in the Face of Less

Unity Marketing released a survey of luxury spending by wealthy consumers yesterday, and the results are not really surprising. In the last quarter of 2008, these consumers (average yearly income just under $200,000) reduced their luxury spending (which includes "luxury fashion accessories, kitchenware, electronics and upscale home furnishings") by 6.4%. Clothing retailers, in general, are facing a tough consumer environment for at least the first three quarters of 2009. Ironically, one of the impediments may be the deep discounts they offered during the holiday season; getting people to pay full price after all those 75% off bargains may be tricky. Several of the articles I have read speculate that this new frugality may be permanent, and in my case, they might be right.

Right now, my financial situation -- a full year sabbatical at half pay -- is enforcing serious frugality. Although I have a wish list of purchases for when my income returns to normal (mostly electronics), I am also looking at retirement within 5-10 years. So if economists are looking for me -- and near-retirement Baby Boomers like me -- to help the retail picture in 2009 and beyond, they're going to be disappointed. These days, my discretionary dollars go to supporting my local yarn shop, my local brew pub, my church and Amtrak. It feels like I have a lifetime supply of clothing, and most of what I see in the stores is not very tempting. I wonder, is this an age thing, a class thing or something bigger?