Buyers Swing to Quality

Behaving like Europeans, U.S. consumers find that it pays to spend more

"Nobody knows what prices will be like years from now, so people look on quality as an investment. They find that if it costs $20 to $30 more for an item that will last twice as long as something cheaply made, then the money is welt spent."

--Caqui Carrillo, Miami retailer

The quest for quality certainly seems to be the guiding principle for more and more cost-conscious shoppers this year. With the inflation-warped economy throwing off mixed signals, retailers are having trouble making guesses about how good (or bad) business will be during the Christmas selling season that started last week. But from cars to cookware to winter clothing, one trend is clear. Flash, fads, frills and planned obsolescence are on the way out. Consumers are going instead for long-lasting, quality-made goods. They are moving back to time-tested standards of design and taste, even if they have to scrimp on some purchases in order to splurge on others.

In short, American consumers are beginning to behave more like Europeans.

With a new attitude of less can be more, they are buying fewer but better goods than in earlier years. They are learning that paying premium prices now often leads to real saving in the long run.

Quality products do not have to be replaced so frequently because they do not break down or wear out so fast. Classically designed clothing and accessories can be worn for many years, even decades, because they never really go out of style.

This trend may well result from the new conservation ethic. Because resources are scarce and goods are costly, there is a fresh appreciation for their value. Waste is gauche; goods should last--and that requires moving up to quality.

In department stores, boutiques and shopping centers across the country, the fastest selling items tend to be the top of the line: gold jewelry over costume trinkets, timeless women's suits over one-season dresses, silk blouses over polyesters, cashmere and Shetland woolen sweaters over cheaper fabrics. Sales of expensive but faddish furs like coyote, fox and lynx are slowing, but demand remains as strong as ever for costlier, classically tailored ranch minks, which not only remain permanently in fashion but also preserve their value and are durable enough to last a lifetime. Even at discount stores, where blouses or shirts are priced at $2.99 to $11, the $11 items sell best. Retailers commonly echo William McCarthy, district manager of Chicago's Montgomery Ward chain: "People have been trading up for some time, and if the style is right, then price is no object." Adds Joseph Ellis, a Wall Street retailing analyst: "A growing number of consumers really are aware that shoddy merchandise is no bargain."

As shoppers become more discriminating, they increasingly demand value for money. Women are resisting paying an outrageous $140 for shoes that sold a year ago for $90. This year parents are passing up cheap, gimmicky plastic toys and instead are choosing well-made, simply designed ones.

Rather than lay out $400 for an off-brand color TV that may have to be replaced in a few years, consumers are choosing $600 and $700 Sonys, the industry's standard of excellence, whose sales are up substantially. At Beverly Hills' trendy Coffee Bean and Tea Leaf shop, the all-metal $99.50 Eva brand coffee maker outsells by 3 to 1 the part plastic $79.95 Braun coffee brewer. Sales of Kodak's low-priced Instamatic cameras have been sluggish, but sales are really clicking for Nikon, Olympus and Canon cameras, which retail for some $250 and up, and provide all the features that most people are ever likely to want in a lifetime. The understated lines and craftsmanship of the Cartier tank watch, starting at $450, keep it as popular today as when Louis Cartier first designed it in 1917 to commemorate the U.S. Tank Corps in France Advertising campaigns, such as the one for Black & Decker power and home workshop tools, increasingly stress quality and craftsmanship. Thom McAn, once the proud purveyor of low-cost shoes for kids, now also promotes upscale footwear for women, and ads extoll features like cushioned and arched insoles for its new line of track shoes. Maytag Co. commercials emphasize that their repairmen are "the loneliest people in the world" because the company's washing machines are so well made that nobody needs to have them repaired. Whirlpool, which also produces washing machines, links craftsmanship to patriotism. Its commercials show inspirational scenes of eagles in flight, while a voice-over intones that pride of workmanship made the nation great. Even the fast-food industry is catching the trend. Wendy's touts the quality of its hamburgers instead of the industry's traditional message of "eat fast and cheap."

Quality sells partly because so many women have gained paying jobs. Out in the working world, earning their own money, they have become more discerning, demanding shoppers. Another major factor is that many consumers are moving into a group that Stephen Frankfurt, director of creative planning for Kenyon & Eckhardt, has labeled the "maturity market." They are the folks in the 34% of U.S. households that are headed by adults aged 45 to 64. They have the highest family income in the nation. More important, they have worked hard for their wealth and do not want to waste it on tinsel. Says Frankfurt: "The maturity market is careful in spending its money. This is a market that wants to be told facts instead of buried in gimmicks. You can't put something over on these people."

Value-conscious consumers, of course, are not the only people paying premium prices. Some upmarket shopping is strictly self-indulgent and "Me Generation" snobbery. Candy consumption is down, but status-hungry consumers are still gobbling up items like Godiva, chocolates at $12 per lb. L'Oreal hair-care products push the message to shoppers: "L'Oreal is more expensive, and I'm worth it." Still, says Lord & Taylor Chairman Joseph E. Brooks, "I do not think there will be promiscuous luxury buying of gifts."

At the other end of the scale, inflation is cutting into sales of lower-priced products by eroding the buying power of families that are less well-off. When prices go up faster than wages, as has been the case since last fall, families that earn the least are squeezed the most. The median U.S. income for a family of four will hit $18,467 this year, according to the Tax Foundation, but in real purchasing power, after inflation and taxes, it has fallen 8% since 1972.

Yet except for big cars and houses, consumer spending remains strong. This is remarkable in view of the exploding cost of consumer credit, which runs as much as 19% to 20% for money borrowed from finance companies. If the trend in spending holds up for the next month, retailers can look forward to a respectable, if not blushingly robust, season. Certainly those merchants who offer quality, durability and reliability will enjoy a nice green Christmas.

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