Little Luxuries Faring Well In Flagging Economy It's no surprise that many businesses are doing poorly in the down economy. But there are bargain-type businesses and, paradoxically, businesses in the luxury goods and services markets that are doing well, surprising even themselves.

Little Luxuries Faring Well In Flagging Economy

Little Luxuries Faring Well In Flagging Economy

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Business that offer luxury goods and services are doing well with consumers who are cutting out big expenses but spending more on smaller indulgences, like chocolate body massages. hide caption

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Looking for who's doing well in a down economy? You'd expect that bargain-type businesses, like thrift shops, would thrive in tough economic times. But, surprisingly, a slew of businesses that deal in more luxury-type goods and services are also doing well.

The 1-On-1 Self-Indulgence Spa, in Concord, Mass., a lush and exotic retreat, offers everything from couples massage to a chocolate body wrap or an afternoon of pampering in the "hands and feet sanctuary."

Owner Cindy McCullough is the first to concede that she expected to be selling fewer such indulgences in a down economy.

"I told my staff, 'Brace yourselves,' " she says. "It may be slow. We may be dead. We may not have anybody."

But instead, McCullough says sales are up some 10 percent over her previous record high, and she has had to hire more massage therapists.

"It's shocking," she says. "You know, you check the books twice, and when you look at the numbers, I go to my business partner and we're just ecstatic."

McCullough says she keeps hearing the same story: People are cutting out their big expenses like vacation and travel — and spending more on smaller indulgences.

That's exactly what 50-year-old Donna Tito, from Charlestown, Mass., is doing. She says she's been working extra nursing shifts since her husband, an investment real estate broker, saw his income cut in half.

So when it came time for vacation, she says, "I tried to get my husband to go away, but he said 'no way.' So, I said, well, I'll just stay home and get a massage and maybe some facials, and try to take care of myself and treat myself a little."

Just across the street, there's a similar story at a studio called Yoga And Nia For Life. In a jam-packed dance class, two dozen women stretch and breathe to relaxing music. In the back is 48-year-old Lisa Daigle, a small-business owner from Harvard, Mass., who decided this year to cut the expense of her usual exotic travels, and to instead stay home and indulge in more of what she calls "self-care."

"I've been on safari to Kenya, and I've seen Mount Kilimanjaro," Daigle says. "I've seen the sunset at 11 o'clock at night in Copenhagen, I've seen whales come up in the middle of the ocean when I'm sailing, and I'm not saying I would not go on these vacations again — don't get me wrong — but I don't feel regrets or denial [by staying home], because I can go to two classes a day, and then go out to the coffee shop and get a new pair of shoes and a massage, and it's probably a quarter of what I would spend if I went away.

"And when I go back to work, I don't have to worry if revenues are down or if some extra expense came in," she says. "I'm totally relaxed, because I'm going to a dance class that's designed to really nurture your mind and your body and your spirit, and I think there's a very transformative effect."

That's exactly the kind of "comfort consumption" that experts say always spikes during stressful times like a recession. Add in the substitution effect — that people are traveling less, eating out at restaurants less and staying home more, and it's no wonder business is booming as well at liquor stores.

Shopping at Murray's Liquors in Newton, Mass., customer Peter Buechler says the down economy just forced him to close his consulting business. As he looks for a new job, he says he's reallocated what money he has, so trips to the theater, restaurants and football games have all been cut, but his line item for liquor is way up.

"When my wife had her 50th birthday, instead of a big, expensive party, we had pizza and wine at home," he says. "And instead of going to see a Patriots game now, we get some bottles, sit around the tube and watch it at home."

Nationally, liquor store sales are up as much as 10 percent, though Murray's owner, Mark Greenberg, says it's mostly the cheaper stuff now that's driving sales.

"The $50 Chardonnays are being weeded out, and the $100 bottles that we sold last year at Christmastime for special gifts are not very strong this year," he says. "But we have certainly increased our 'twofer' department — 2 for $10, and 2 for $12 — and we're seeing a lot more activity there. So people can still enjoy a good meal and bottle of wine by buying it in stores and taking it home."

On one day, Greenberg's store gets a boost from another industry that tends to do well in a down economy — he's just received an $800 order from a gathering of bankruptcy lawyers.