Selling Affordable Luxuries

The struggling economy has left us all thinking, “How do we not just keep afloat, but succeed in this difficult business climate?” So companies need to puzzle out which products are going to appeal to cash-strapped consumers.

While McDonalds has succeeded with cheap eats, concentrating on the value proposition, other companies propose looking at more hedonistic approaches. When asked “How is the global recession affecting your customers?” in an interview for the 2009 World Retail Congress Vittorio Radice, chief executive of major Italian retail chain La Rinascente says that although they are reluctant to spend for high ticket items, they are willing to spend on lower ticket luxury. That’s why market research firm The Nielsen Co. calls the candy business “recession-proof.” Many consumers are willing to invest in a dollar or two of chocolately Nirvana, vs., say, a case of $250-a-bottle Cristal. A treat is good, excess, not so much.

While that’s good news for the confectionary business, it could be tough to translate into other segments. After all, there’s a chemical explanation for the feel-good effects of chocolate, and some of the candy craving is linked to the security of nostalgia. There may be other approaches. Perhaps, for example, marketers of a high-end mustard might convince the formerly flush populace that, if you must eat hamburger every night, a dab of their elixir might make it all bearable. The trick is to figure out where to convince folks that a little money can buy happiness.

   —Lynn A. Kuntz