Business and Finance

NEW YORK — The rich are tightening their belts, too. Even if it’s still a Gucci.

Faced with the sharpest decline in net worth in nearly 50 years, wealthy Americans are re-evaluating their priorities and slashing their spending at a rate unseen in decades — a move that could have dire consequences for the economy, luxury stores and high-end brands.

In response to the increasingly subdued shopping mood that began late last year, luxury brands are cutting their inventory, changing the assortment of products they offer and tweaking their advertising message.

Sure, many of the ultra-rich aren’t exactly scrimping. Some still drop $100,000 on a fur coat or $600 for a pair of shoes — but increasing numbers who were never bargain-hunters are picking through mounds of discounted designer goods to save money in an uncertain time.

And why not? Deep discounts are making it a great time to stock up on high-end clothes and accessories, whether its a Chanel suit, a Prada bag or a $1,000 pair of Christian Louboutin shoes.

Luxury sales overall dropped 34.5 percent in the first week of December from the same period a year ago, according to SpendingPulse, a data service provided by MasterCard Advisors, and were down 23 percent in the five weeks ending Dec. 6.

Such behavior differs dramatically from even just a year ago, when luxury stores couldn’t keep up with the wealthy’s appetite for extravagance. A-listers wanted $5,000 handbags, not the $500 versions they bought in the past.

But the financial meltdown has deflated the demand that reigned for much of this decade, resulting in plummeting sales for many luxury purveyors. That has forced high-end stores like Saks Fifth Avenue and Neiman Marcus to offer discounts of up to 70 percent before the traditional start of the holiday shopping season — akin to their downscale competitors.

Aspirational luxury shoppers, those whose average annual salary is about $150,000, began cutting back a year ago, according to Milton Pedraza, chief executive of the Luxury Institute, a research firm. That spiraled up the economic scale after the economy worsened. Single-digit millionaires began pulling back starting in March, when Bear Stearns nearly collapsed and was bought by JP Morgan in a fire sale, Pedraza said.

And the ultra-wealthy with a net worth above $10 million — who make up about 60 percent of sales and 20 percent of top luxury stores’ customer base — started cutting back in September, when the financial crisis ballooned, Pedraza said.

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"This is no longer a state of mind, or what feels right," said luxury consultant Robert Burke. "This is a reality of where people’s bank accounts and investment portfolios are."

But he and others are also taking note of a fundamental change in shoppers’ psyche, which could linger for a while in what’s feared to be a deep and long recession.

The cutbacks by the wealthy are clearly different from the grocery-aisle economizing so many Americans have begun making. For one, the rich typically don’t trade down to lower-price brands and stores, luxury experts say. Instead of six pairs of Manolo Blahnik shoes at $700 each, they will buy two — not browse the shoe department at J.C. Penney or shop at Nine West.

It may be hard to sympathize with such trade-offs. But millionaires saying no to that third pair of shoes is worrisome for us all, say economists, because it deepens the trough consumer spending has fallen into. Michael P. Niemira, chief economist at the International Council of Shopping Centers, says the economy depends on spending by the wealthy because of their dominance in discretionary purchases, from boats to furs.

But such over-the-top spending isn’t prudent anymore. Americans’ wealth fell 4.7 percent to $56.5 trillion in the third quarter from the second, the biggest decline since the second quarter of 1962, according to Scott Hoyt, senior director of consumer economics at Moody’s Economy.com.

Offering deep discounts can cost high-end retailers beyond falling profits, risking the cachet of their brands. Retailers may also confront problems trying to raise prices once the economy improves as consumers accustomed to deep discounts balk at buying items at regular prices.

"It is hard for us to tell what the true mindset of the customer is at this point," said Ginger Reed, a spokeswoman at Neiman Marcus, where profit dropped 85 percent in the quarter ended Nov. 1. "We do know she is still shopping — both regular-price items and sale items — but not in the quantity she has in the past."

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