The luxury market is coming back, but its recovery is being driven by its wealthier customers. The "aspirational" shopper -- the working woman who adds one designer jacket or purse per season to her wardrobe, for example -- is staying away: Members of that market segment cannot yet afford to spend that kind of money again, say retailers.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% The luxury merchants at the National Retail Federation's annual conference are looking forward to a better 2010, thanks to the end of the recession -- at least among the wealthy -- and booming times on Wall Street. But the effects of weak job market and the hangover from the credit and housing market bust linger among the middle class, and that will take some of the growth margins off the luxury market.

"There is that aspirational customer that's not going to come back for a while," said Kimberly Grabel, senior vice president of marketing and advertising at Saks (SKS). The chain's core customer, who can spend up to $80,000 a year shopping there, is back, she said. For the short term, the luxury market will have to focus on getting the most out of that smaller segment of wealthy customers, she said: "This will be a market-share game, a share-of-wallet game."

As the NRF meeting got under way, Tiffany & Co. (TIF) announced it racked up a 17% increase in sales over November and December compared to the same period the year before, and a 12% increase in comparable-store sales. Due to that spike, the jeweler raised its forecast for net earnings to $2.07 to $2.12 per share for the fiscal year ending Jan. 31, up from its previous estimate of $1.88 to $1.98.

Exclusivity, Technology Are the New Luxuries


But just days earlier, the U.S. employment report had disappointed observers, who had expected improvement in job creation during the month of December. Retailers remained optimistic, but the weak jobs report tempered a lot of their enthusiasm for the longer term.

"I'm not sure the spending will go back to where it was," said designer Tory Burch. "It's not cool to be excessive anymore."

And shoppers are also changing what they call luxury, focusing less on status symbols and more on exclusivity and lifestyle, said retailers.

"People want to go to a Saks or a Neiman [Marcus] and get something they can't get elsewhere," said Saks' CEO, Stephen Sadove. He noted the store aims to have 20% to 25% of its stock be exclusive items, and it's working with designers to create that merchandise at the right prices for its audience.

The nature of luxury items is changing as well, said Marc Gobe, president of consultancy Emotional Branding. For example, designer jeans are not as big a status symbol among teens now as a new iPhone, he said. "Technology is the new luxury," he said.

Sadove said he expects the first half of 2010 will remain difficult, and the second half will be better. But he cautioned things are different after the recession, so even the wealthy are shopping carefully now.

"The consumer has changed," said Sadove. "Anybody who thinks we're going back up that V [curve] is kidding themselves."

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