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  • Jennifer Marks

Upstairs, Downstairs

A couple of years ago, “affordable luxury” was a term used by chain retailers looking to elevate (slightly) their top tier price points by bringing in (somewhat) better quality goods.

Today, “affordable luxury” is a concept true luxury suppliers are promoting. It's a $279 queen set at Peacock Alley as opposed to the company's $652 queen duvet. It's a $305 queen ensemble at Sferra to create an opening price point less than half of its $760 ensemble. It's a $400 queen set at Scandia Down versus the company's $1,000 jacquard silk bed.

To be sure, luxury suppliers are still producing plenty of high-ticket goods. Each of the pricier items mentioned in the preceding paragraph is showing at the New York International Gift Fair/Home Textiles Week alongside the more economically minded luxury goods. There are still over-the-top luxury goods to be had, such as Frette's gold-dipped, white mink throw ($28,000) or some of Pratessi's Italian-made duvet covers ($1,100).

But clearly, things have reach the place where even well-to-do shoppers need some options.

On the other end of the spectrum, the race to the bottom continues. Last week, three major retailers were fairly upbeat about their second-quarter performance. Here's the kicker – their earnings. Wal-Mart Stores: 88 cents per share. Kohls: 75 cents per share. J.C. Penney: 0 cents per share.

Everything is relative, of course. While these powerhouses made out better than they anticipated, each reported that their customers remain very cautious about spending. These companies are no longer talking about affordable luxury; now it's simply about what's affordable.

Back-to-school for most retailers is getting off to a later start, so the big question for the second half is holiday. Will consumers give it up? Will they unleash their inner deal glutton and spend, spend, spend?

During previous economic downturns, consumers have pledged to rein in their holiday spending — only to shop at the same or slightly elevated levels as they had the year before.

The recessionary environment of holiday 2008 was dramatically worse than the recessionary environment of holiday 2002, and yet the 2008 year-over-year sales gain of 2.2% outpaced 2002's gain of 1.3%.

We'll find out the answer to the holiday 2009 question shortly. When we do, I wouldn't be surprised to see this headline: “Family Dollar Reports Its Best Holiday Ever.”

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