Fancy Gifts Vs. Necessities: The Shopping Divide

Guest

Ylan Mui, retail reporter, The Washington Post

Economists declared the recession officially over, but the pace of recovery has been starkly uneven across income levels. While high-end stores like Tiffany report significant gains in sales, Wal-Mart sees a flood of shoppers rushing to buy baby formula as soon as unemployment checks clear.

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NEAL CONAN, host:

Retailers report cheerful news this Christmas shopping season. Sales are up over last year, but way, way up in high-end stores, like Tiffany's; while Wal-Mart reports brisk sales on baby formula on the days when unemployment checks arrive. We want to hear from retailers. What's moving? What isn't? Are shoppers buying Coach bags or the knockoffs this holiday season? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

Ylan Mui is a retail reporter for The Washington Post and wrote a story on this polarized Christmas season. She joins us by phone from her office.

Nice to have you back on the program.

Ms. YLAN MUI (Reporter, The Washington Post): Oh, thank you for having me.

CONAN: And give us a bit more details. It's not just Tiffany's doing well but the high-end items at Tiffany's.

Ms. MUI: Right. What we're finding is that you're seeing a sort of divide in how Americans are recovering in this post-recessionary environment, and we're finding that high-end retailers or luxury retailers are doing quite well this holiday season. In fact, so far, sales at luxury stores are up about 7 percent compared to last year.

But we're finding also at the same time is that some of the stores that cater to low and middle-income shoppers are having a harder time. Their sales are not quite as much, and they're reporting that the shoppers still feel the financial strains of the recession, even though it's been officially declared over.

CONAN: It's interesting. We got this email from Fred, who owns a flower shop in - a kind of retail flower shop in Concord, New Hampshire. He reports that sales are up over 2009, but he says we continue to be affected by the recession. But interestingly here in New Hampshire, the basis of this recession is more psychologically driven. Unemployment remains in the 5 percent range, but people continue to spend in a much more conservative way.

Ms. MUI: Uh-hmm. Yeah. I think that part of what you saw during this recession was not only that people had less money to spend. Perhaps if they lost a job or had their hours cut back or took a pay cut of some sort but also people who had jobs and whose situations hadn't change were afraid to spend, even if they had the money to do so. And so that you really had sort of two things happening - less money to spend and even those who had it being unwilling to part with their dollars, and that's part of the reason why spending during '07 - '08 and last year really declined so much.

CONAN: We mentioned Tiffany's. The example you gave on the other end of the spectrum was a family dollar store.

Ms. MUI: Yes. Though Tiffany's announcement - most recent earnings call, that it's seeing sales of some of its most expensive items increased by double digits, while sales of its silver line, its sort of less expensive line, that had gotten into to sort of be more accessible, affordable luxury actually have declined. And so again, even among the high-end retailers, we're seeing that split.

Meanwhile, family dollars are reporting that one way it's trying to ensure that its customers come back to its stores and spend that money is they're stocking things like groceries, which are things that people have to spend money on because we all have to eat it at some point. So that's another way that you're seeing that disparity among retailers.

CONAN: You write while it's always been the case that lower-income families find themselves financially strapped more often than wealthy ones, the great recession was also a great equalizer. What do you mean by that?

Ms. MUI: Well, I think that part of the challenge writing the story was sort of pinpointing what is different now. You know, it's certainly the case that rich people are rich, and poor people have less money, right? And what is the difference about what's going on in our economy right now, and the difference is that everyone really felt the impact of the recession. It wasn't just one class of worker. You know, we saw the Wall Street banker lose their job as well as the person who was working in construction, so it really hit across the board. And there was no group that was insulated from this. However, now, as we move out of that cycle and try to move to a recovery, we're finding that certain income groups are recovering at a faster pace than others.

CONAN: Let's get some retailers in on the conversation. Call and tell us what's moving at your store, 800-989-8255. Email, talk@npr.org. Chris is calling from Salem, Massachusetts.

CHRIS (Caller): I work for a high-end electronics retailer, shall we say, and really, all year, back-to-school up till now, it's been what recession in our store. People spend money like they sweat it. It's -and every day I'm stunned at the amount of money that people are spending. And now, holiday-wise, people are coming in and they're saying, this is what they want. This is what I'm buying. And there seems to be very little budget consciousness with our customers anyway.

CONAN: And plasma screens, big ones, that sort of thing?

CHRIS: Sure. That's more in the computer realm but - people don't really seem to be pulling any punches, you know, the holiday specific. I mean, there are occasionally people who come in, they want to get something for a kid and they'll downsize that a little bit, but it is more to being a kid than anything. But daily, I am stunned the amount of money that people will drop and walk out of the store with product, especially now, like a couple of years.

CONAN: We have this email from Peter in Chesterfield, Missouri. I wonder if you would agree with this, Chris. I've been working at Best Buy for the last three years, that's three Black Fridays. And I've never seen any item so hot as the iPad. All of the Best Buys in the area have been sold out for some time now. We still have people coming in daily looking for them, even willing to take the $829 version, even if that wasn't what they were looking for.

CHRIS: I have moments where I will kind of gauge what it is that the customer wants and what they think that the person will need. And regardless, you know, rather than spend - saving the $300 and getting what the person really needs, they just say, just give me the whole, you know, the whole shooting match and I'll spend the $800.

CONAN: Very interesting, Chris. Well, thanks very much and continue and good luck to you.

CHRIS: Thank you.

CONAN: Bye-bye. And Ylan Mui, that's seems to bear out the high-end spending and unrestrained.

Ms. MUI: Yeah. It does - you know, part of the inspiration for the story was actually in just talking to retailers and listening to their conference calls and hearing a very, very different tone, depending on the type of retailer that I was speaking to. You know, when you listen to Coach talk about their earnings and them saying that their customers have the highest spending attention in the past years and, really, being sort of surprised by how well they've been doing. You know, you're hearing this idea that the recession is moving - people are moving past the recession.

Meanwhile, today, actually, I just spoke to a top executive at Wal-Mart who oversees toys. He said, you know, their customers are still feeling really challenged and that's having an impact on their sales. And quite frankly, I was surprised to hear her say it. But, you know, their customer is still caught in the grips of the downturn.

CONAN: Let's go next to Nicole, Nicole with us from Vancouver in Washington.

NICOLE (Caller): Hi, there.

CONAN: Hi.

NICOLE: What I'm seeing, which I think is sort of ironic, is that with the economy as it is, there's been a lot of press on in TV and press of, you know, making your dollar stretch and what you can do, and so I think that there's a segment of the economy that, perhaps, would - perhaps shop at a mall like behind (unintelligible) for antiques and collectible dealers. Sure, I can save.

Whereas these people are now - it's okay to come in and look around. It's okay to buy secondhand per se or - and is that - I supposed that might be to some benefits for us as well, people rediscovering that if a piece of furniture has been around for 70 years, perhaps this might be a better made piece of furniture than what is made supposedly today. So I think we're seeing, perhaps, some benefits, unfortunately, from the economy as it is.

CONAN: So, because used furniture stores or antique stores - depending on the age of the used furniture, I guess...

NICOLE: That's right.

CONAN: And you're doing relatively well?

NICOLE: Well, we're doing relatively well. And I think that's because our prices are - even for this good quality, older furniture, less than what you pay for the new furniture that is not as well-made. And I think that's just because they're looking for a better deal, they're rediscovering places like us. And I understand that a lot of the secondhand clothes stores as well are doing much better because you can't afford to go buy that new. So, you know, and various - some benefits in that, I think.

CONAN: All right.

NICOLE: There are options for people who have a tighter budget.

CONAN: Nicole, thanks very much. Appreciate it.

NICOLE: It works to our benefit.

CONAN: Thanks very much. Happy Christmas.

NICOLE: Thank you. You too.

CONAN: This email from Sally. I work at an L.L. Bean outlet store. The most popular item for sale is - and she puts this in very big capital letters - socks. They are cheap.

(Soundbite of laughter)

CONAN: Everybody needs them. There's no need to return them after the holiday.

Ms. MUI: Well, that's certainly is a very practical gift, I would say. And my feet do get cold during the winter. That is true. But one thing I want to point out that the other caller mentioned about pricing. I think that there has definitely been some meeting in the middle between the retailers and consumers.

Retailers, during the past few years, have been lowering prices on their products. Not just by sales or discounts, but actually reducing the cost of items. So, for example, J. Crew used to sell ballet flats that sold for $118 as a starting price point. Well, they created a new ballet flat that's a little bit less fancy that sells for $98, as their starting price point. So retailers have sort of accepted that consumers are repricing things in their head or rediscovering the meaning of value. And so there has been some decrease in the actual prices of items. And that's part of what we're seeing as well that's allowing consumers to say, okay, well, maybe something is worth it at this price point. Whereas, five years ago, I might have paid something a little bit higher for that.

CONAN: And you mentioned in your piece that the bags or the fancy bags are, indeed, 10 percent less than they used to be.

Ms. MUI: That's right. Coach made a very concerted effort to lower the price of its luxury handbags by about 10 percent. And, you know, partly because of that, they're seeing sales increase dramatically.

CONAN: Let's go next to Barbara, Barbara with us from Rochester in New York.

BARBARA (Caller): Thank you. Jumping off of the purse discussion, the Susan B. Anthony out here in Rochester has suffered of course, losing a lot of grants, et cetera during this recession. And the board came up with this wonderful idea of making a purse that's a take off on Anthony's famous alligator bag.

CONAN: Mm-hmm.

BARBARA: And it's an alligator purse. It's very glamorous, designed by a local woman. And all of the profits are donated to the house, et cetera. So it's been just a terrific experience. But the point here is that they are $250 apiece. And at the opening of, you know, selling these at a local glamorous jeweler store here in Rochester, people were walking out with - some of them two in hand. So glamour is still the way regardless of the recession, apparently.

CONAN: I guess...

BARBARA: (Unintelligible) the Susan B. Anthony House is so thankful for that.

CONAN: I guess it's too much to ask the gift store at the Susan B. Anthony House be a dollar store?

BARBARA: Yes, because we don't get government funding, you know, so we're on our own to raise it. And this was just a wonderful opportunity. And people out there are responding.

CONAN: Barbara, thanks very much for the call, and continued good luck with the bag.

BARBARA: Thank you.

CONAN: We're talking about retail sales this holiday season and a polarized Christmas. You're listening to TALK OF THE NATION from NPR News. And our guest is Ylan Mui of The Washington Post. And let's see if we can get another caller on the line. Let's go now to Sandy, Sandy with us from Milford in New Hampshire.

SANDY (Caller): Hi, how are you?

CONAN: Very well, thank you.

SANDY: I just had a comment. My husband and I were in Boston yesterday for a dinner, last night. And my comment really was we were in the Copley Place Mall, which is a very high-end mall in Boston, as well as on Newbury Street. We were in Tiffany's and it was dead. There was no one around. We were just shocked. Before I heard this program, I would have said the economy looked horrible.

As I say, my comment (unintelligible) it was really interesting. And in Tiffany's, the clerk I was working with had told me - I said, where is everybody. And she had said, oh, they'll all remember on Thursday and Friday that it's (unintelligible) holiday.

(Soundbite of laughter)

SANDY: So I thought that's just an observation, as I say I'm hearing this. But I was physically in Boston yesterday and I just didn't see a crowd.

CONAN: Well, it's interesting we report those sales figures off of last year up tremendously at the high-end stores, Ylan Mui, but last year was terrible.

Ms. MUI: Last year was terrible, so, you know, the retailers are facing what they call easy comparisons, right? So anything looks good compared to bad, right? So that is something to consider. However, I will say that I have talked to several retailers and several mall managers who say that their sales are back at the levels that they were in 2007. So that there is some - there is some strength among a certain segment of the population. Now, one thing we haven't talked about yet is, you know, the elephant in the room, which is unemployment.

CONAN: Mm-hmm.

Ms. MUI: And obviously, many folks say that the big impediment to a robust recovery - overall in the economy, and particular in consumer spending, is jobs. Folks are still finding themselves in a tough spot to get a job and are still - those who are long term unemployed are still finding that coming back into the workforce can be very difficult.

And some of the analysis that I looked at showed that those people who had lower incomes and had lower levels of education actually had unemployment rates that were higher than the national average, about 15 percent. So those folks are really finding themselves stretched because not only do they not have a job but it's harder to find one when they're out looking for it.

CONAN: Sandy, thanks very much for the call. Appreciate it.

SANDY: Thank you. Bye-bye.

CONAN: And here's an email from Carina in Wakefield, Rhode Island. I have a small retail kid's clothing and accessory store. I'm selling Jess Brown handmade rag dolls for $189. In general, my store is kind of high end, with lots of handmade things. We're having a wonderful holiday season, much more than last year.

At the same time, you're mentioning the unemployed, Ylan Mui, the - your piece ended with a story of a woman who was going to try to distract her kids from the lack of gifts under the tree this Christmas season with a big breakfast and some crayons.

Ms. MUI: Yes, she was very inventive. You definitely have to give her credit for that. So her plan was when the kids woke up immediately to, you know, have the pancakes going or have some syrup or something to distract their senses from what may or may not be under the tree.

So, you know, this woman found that actually it was difficult to figure out what am I going to get for my kids. How many things is appropriate? And how am I going to make sure that they have, of course, don't have to worry about the things that she's worrying about in terms of budgets and jobs?

CONAN: Let's go to Melissa, Melissa with us from Charlottesville, Virginia.

MELISSA (Caller): Hi, there.

CONAN: Hi.

MELISSA: Thanks for taking my call.

CONAN: Sure.

MELISSA: I think that things have been going really well for me this season. I'm an artist and jeweler. I do handcrafted goods with fused glass and copper. And I started doing this about two years ago and I have not sold a thing. I am not kidding you. I give it away all the time because I love to do it. But it's an expensive habit. And I've tried selling it at craft shows. And I have an online site at FB and ArtFire and I haven't sold anything until Black Friday. I said, this is my last craft show, this is what I'm doing and I'm done. And I sold almost everything I had. It was unbelievable.

CONAN: Can you tell us the price range you were selling things for?

MELISSA: My low end starts around $20. And beyond that, I go up to about $75.

CONAN: So...

MELISSA: I do some beadwork, but mostly like I said the handcrafted work with the copper and fused glass.

CONAN: So we're not talking Tiffany's here?

MELISSA: No, no, definitely not. But it's, you know, it's handwork and I make everything myself from cutting the silk that it's strung on to the copper and glass.

CONAN: So you're going to stay in the business, Melissa?

MELISSA: I'm good. It's really inspired me and I really thought this was going to be just a last-ditch effort and I'm in it for the long haul, I think.

CONAN: Melissa, congratulations. And I know you'll have a happy holiday season.

MELISSA: Thank you. You too.

CONAN: Bye-bye. And our thanks to Ylan Mui as well, a retail reporter for The Washington Post. And we hope you have plenty under your tree.

Ms. MUI: Oh, thank you so much.

CONAN: You can read her article on the Christmas divide through a link on our website. That's at npr.org, click on TALK OF THE NATION. She joined us by phone from her office.

Tomorrow, just in time for the holidays, our movie pal Murray Horwitz joins us with the best holiday parties on film. What's the movie party you'd really like to have attended? Email: talk@npr.org. Plus, at the end of 2010, what's changed for Latinos? That's all tomorrow in this hour on TALK OF THE NATION from NPR News.

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