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Consumer Reports


Meet the very happy American consumers who never make it on the news

http://www.jewishworldreview.com | (KRT) Public-relations executive Kristin Dormeyer works hard for her extra cash, but some people might say she doesn't spend it wisely. She buys face cream that costs $50 for 2 ounces and splurges on all-inclusive vacation packages in the Caribbean.

During a recent visit to Three Dog Bakery in Ladue, Mo., she bought $40 worth of gourmet dog treats for her Italian greyhound, Mr. Peabody.

"I know people might think it's a little strange," said Dormeyer, 34. "(But) it makes all the hard work feel like it's worth something on a personal level."

Experts on consumer behavior say Dormeyer's spending isn't strange at all. She's part of a growing group of middle-market consumers who trade up, spending more in certain product categories in return for an emotional payoff: comfort, a boost in self-image or a feeling of closeness with a loved one.

"One way to look at this is, consumers are idiots," said James Twitchell, author of "Living it Up: America's Love Affair with Luxury."

"Another way to look at it is that we're quite rational. ... The reason these seemingly ridiculous products from seemingly ridiculous places command the prices they do is that when we get near them, we feel powerful feelings."

And for Dormeyer, who has no children, pampering her dog is worth the money. Besides, she's not a big spender across the board. She clips coupons for laundry detergent, and she won't buy a box of cereal unless it's on sale.

"It's the products I have an emotional connection to that I don't mind paying more for," she said.

Companies like Panera Bread Co.; Limited Brands Inc., which owns Victoria's Secret; and Callaway Golf Co. prosper by selling higher-priced goods - from sexy lingerie to technologically superior golf clubs - to customers who are trading up, said Michael Silverstein, co-author of "Trading Up: The New American Luxury."

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"Consumers live today under pressure in terms of time, job performance and family," Silverstein said. "They have turned to goods ... to help them feel better."

Ron Shaich, chief executive of St. Louis-based Panera Bread Co. said part of the demand for this new luxury is rooted in baby-boomer nostalgia for a time when more goods and services were produced at a local level.

"(Baby boomers) grew up in a mass-marketed society in which every (product) was the same," he said. "Now, we want to feel special in a world in which nothing is special."

Shaich said trading up isn't driven by advertising, but by the quality and experience of a product. "The most important marketing is what happens over the counter every day," Shaich said of Panera Bread, which sells lunches and breakfasts made from fresh-baked breads and natural ingredients. "The trick is to hold their confidence and their trust."

Shaich points to Boston Beer Co., which makes the Samuel Adams brand, as a good embodiment of a company that, early on, did not rely on marketing. When it first came out with the Samuel Adams brand, it relied on word of mouth, or "apostle marketing," to compete with bigger brewers like Anheuser-Busch Cos. and Miller Brewing Co.

"The best customer was, like, a stockbroker, because they talk to people on the phone all the time, and they need something to talk about," said Boston Beer's chief executive, Jim Koch. Now, the company advertises its product in television commercials as beer that will make businessmen seem more sophisticated when they order it. Personal branding, as Silverstein calls it, is another important component to new luxury.

"People are interested in being more individualistic and making a statement about themselves," Silverstein said. "It's not about tattoos or body piercing; it's about having a fantastic kitchen that says you're a serious cook."

Patrick Connolly, chief marketing officer of Williams-Sonoma Inc. of San Francisco, owner of the Williams-Sonoma and Pottery Barn chains, said that while the chains have upscale products, the brands are accessible to almost anyone.

"Someone can participate in the brand without having to buy a $300 toaster," Connolly said. "They can buy a pair of wooden spoons, but they're still great spoons."

Connolly said Williams-Sonoma is benefiting from Generation Xers and baby-boomer empty nesters taking the time to learn how to cook and entertain, in addition to a desire for homey comfort stemming from the 2001 terrorist attacks.

And when it comes to comfort and individual style, it's working women who mainly drive the new-luxury trend, Silverstein said.

Chesterfield lawyer Kristen Maly, a 40-year-old single mother of twins, said she has a tendency to spend money when things aren't going well in a relationship or when she wants to treat herself.

She once bought an expensive ring for herself on a Valentine's Day when a relationship wasn't going well. Though she initially felt some guilt for purchasing it, she wears it proudly now.

"It's an expression of independence," Maly said. "It's kind of like, `I deserve this,' regardless of what anyone else might think."

Paul MacFarlane, co-founder of the Experiment, a downtown St. Louis advertising and marketing agency, doesn't see the trend as particularly positive.

"The idea of defining who you are by what you buy is one of the saddest commentaries on our modern culture," MacFarlane said. "If people think buying something is going to tell them who they are, what they need to do is sit in some place quiet, unplug their TV and work their way through that."

But he'll spend more for organic milk and produce instead of the cheaper conventional products because he sees a health benefit, not because he wants to foster his image.

Twitchell, the author, said he sees the trend as a way for middle-class people to enjoy luxury. His only concern is for people who might have the desire to partake but not the means: "That is the problem with modern consumer culture," he said. "It's wasteful. It's shallow. ... It's brutal to the poor."

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