Upscale LI retailers seeing more customers

During the past several weeks, Elisa Ruroede has encountered a heartening sign: Potential customers who are new to boating have come into Port of Egypt Marine Inc., a high-end, family-run boat dealership, marina, hotel and restaurant complex in Southold.

"I have people coming in I already know and some brand new people who are new to boating, [and] we haven't had that in a while," said company president Ruroede. "I wouldn't say we're out of the hole, but we are feeling the love."

The hibernating luxury customer has begun to stir.

Many of Long Island's upscale retailers say they have begun to see an increase in customer traffic and, in some cases, a consistent, if modest, growth in sales this year. The stock market has bounced back, and customers also are showing more confidence about their own finances, they said.

Economy's still fragile

Last month, chain-store sales rose 2.6 percent for stores open a year or more, according to the International Council of Shopping Centers, with the luxury segment showing the strongest gain, 6.6 percent.

Yet, even with signs of some stabilization, retailers acknowledge the economy and the high-end market are still not on firm ground.

"We are seeing a resurgence in the luxury market but not to where it was in its peak," said Stephen Sadove, chief executive of Saks Inc. "The customer is back, and I've been pleasantly surprised in the strength of purchases at higher price points." But he later added, "This is clearly a fragile economy."

During the recession a large part of the luxury customer base put the brakes on spending. Upscale retailers lost the aspirational shopper, for whom luxury items are more of a reach economically and who had been helped by once abundant credit, noted Marshal Cohen, chief industry analyst for the NPD Group, a Port Washington market research firm. Many in the industry estimate luxury sales fell by up to 25 percent.

"They [retailers] were selling to customers who really weren't theirs," Cohen said.

A new survival strategy

Upscale merchants had to quickly adapt during the past year, keeping inventory tight, expanding offerings to include less expensive merchandise and stepping up their marketing activities with more events, direct mail and social media tools and calling loyal customers. All the while, they said, they have maintained their high service standards.

Marshs, a Huntington upscale clothing store owned by the Connecticut-based Mitchells Family of Stores, began offering a wider selection that included the $2,700 suit as well as the $795 suit, dress shirts at $395 and those priced at $95, said Chris Mitchell, who manages Marshs. "Luxury" was replaced by the concept of "approachable style," advertised on the store's front windows.

The strategy fit the mind-set of their consumers, who didn't really trade down brands during the recession but did sit out a few seasons. The company has seen solid growth this year and, in March, acquired the high-end San Francisco area clothing retailer Wilkes Bashford. In May the company merged with upscale Woodbury men's retailer Thomas Miller, bringing Miller, his core staff and inventory to Marshs.

"We [Mitchells company] should be back at peak volume this year through organic growth and the acquisitions," said co-president Russ Mitchell.

Sales at Beltrami, also an upscale men's store in Huntington, have seen a slight increase from last year, but store owner Ben Youdim said the luxury market has a long way to go.

Beltrami, which relocated in July to a larger and better location, has adapted to its customers' shifting shopping behavior. Youdim said he is concentrating on suits within the $750- to-$1,000 range. He offers suits made of the same cloth used by the luxury clothing company Zegna but not made in Zegna's factories, he said.

"We are still giving the fine look and tailoring to customers used to a better-end suit, but he doesn't have to spend that kind of money," Youdim said.

Not until the end of summer did Bayview Kitchens & Baths begin to see an upswing of about 30 percent in customer traffic, said owner Walter Boaro. But, he noted, the pending proposal to end tax cuts for upper-income earners could hurt many businesses, he said.

"Even the luxury market is reluctant to spend, and if we start hitting them with a tax that will take that money away, that will crush this economy," said Boaro, who has cut his staff in half since 2008. "There are hundreds of people who get affected by one little sale. The old trickle-down economics is real."

Whole new retail world

Overall, luxury merchants say they are learning to work in a reconfigured retail world.

In Southampton at The Elegant Setting, customers were in much better spirits this past summer, and sales were somewhat better than last year, said Stephanie Finkelstein, owner of the gift shop. But she had to do a lot more work to keep sales coming in. Gone are the days when customers spent between $120 to $225 on hostess gifts. This summer the price range was more like $50 to $75.

"Last summer they were uncertain and uptight, and this summer they got adjusted to what their new normal was," Finkelstein said.

Since the beginning of the year, 37 percent of affluent consumers said they were spending less, down from 42 percent in 2009, according to an August survey conducted by the Luxury Institute.

For consumers like former bank executive Cindy Verunac, the pendulum has swung back to the middle.

While the economy has made her more conscious of price and waste, her cutbacks are due more to a lifestyle change - her daughter's family has moved in with her and her husband. A cancer survivor, she believes in living life to the fullest. Weekend fine dining and traveling are her luxuries.

"I think everybody, including myself, was shell-shocked and making a lot of changes," said Verunac, 61, of Smithtown, referring to the recession.

"I think a lot of people now say, 'I need to make adjustments, [but] I am not going to deprive myself of everything.' "

Seeing more traffic

Chris Mitchell

Manager of Marshs, a Huntington upscale retailer and part of the Connecticut-based Mitchells Family of Stores.

Sells: high-end women's and men's clothing and accessories, ranging from a Diesel flap-pocket men's shirt for $120 to a $1,295 Lela Rose cocktail dress.

Walter Boaro

Owner of Bayview Kitchens & Baths, a Port Jefferson business that sells and installs high-end cabinetry for all rooms.

Sells: cabinet brands like Wood-Mode, including the brand's semi-custom line for mid-range to high-end projects.

Elisa Ruroede

President of Southold's Port of Egypt Marine, a boat dealership and marina, hotel and restaurant operation.

Sells: Boats, from 18 feet to 36 feet in length, ranging in price from mid-$40,000 to $500,000.

The List price for the 2011 Grady-White 330 Express pictured is $389,236 dollars.

Garrett Hayim

President of Ferrari-Maserati of Long Island. Consumer demand for Ferrari automobiles remained high during the recession, he said.

Sells: Ferrari and Maserati automobiles, including the Ferrari California, which starts at a base price of $192,000.