With even the rich feeling financially pinched, businesses are quietly offering discounts on everything from spa services to private jets.
The Wall Street stockbroker had used FlatRate Moving, a high-end moving service, a half-dozen times over the years. They moved him from a modest apartment on the Upper East Side to a grander one on the Upper West. He called when he moved to an even better building in Midtown. Most recently, FlatRate helped settle him and his wife and child into a 3,000-square-foot loft in Soho, one of Manhattan's priciest neighborhoods.
FlatRate got another call two months ago. The client was packing up his family for a two-bedroom apartment in the less expensive Park Slope, Brooklyn. He had lost his job and was no longer in a position to pay the $3,000 to $5,000 a month he'd shelled out before.
"We did the move almost at cost"-for under $1,200, says Michael Kessler, FlatRate's vice president of marketing and sales.
Now, FlatRate gets calls for "downgrade" moves about once a day, Kessler says, mostly from clients in the financial world, many of whom are leaving Manhattan for Brooklyn or Queens. The company just introduced an "economy" moving package that leaves out extras like an on-site liaison to supervise the move; photographed inventory of the apartment; and complete packing and unpacking service. With the new package, FlatRate hands off some used boxes and clients-like the client who lost his job at Lehman Brothers and moved from the Upper East Side to Astoria, Queens-pack up themselves.
The economic downturn isn't just hitting the middle class; the wealthiest layer of consumers is also getting pummeled. More than 110,000 Wall Street jobs have been lost this year. and bonuses are expected to plummet Many C.E.O.'s have seen their net worths tank along with stock prices. Hedge funds, those secretive bastions of wealth, aren't doing much better, having lost $130 billion in the past three months.
In response, providers of luxury goods and services-elite movers, exclusive spas, exclusive restaurants, and even private-jet charter companies-are introducing promotions and deals, often for the first time ( view slideshow of luxury deals). These are the types of wares that don't normally go on sale, since they fall into the "If you have to ask." category. Still, businesses are quietly reaching out to consumers battered by the economy but not ready-yet-to give up their high-flying lifestyles. (See a slideshow of discounts here.)
"We don't want to give something away if we don't have to," says David McCown, senior vice president of Air Partner, a jet charter company that is based in New York. "But we're willing to do it."
Air Partner is offering discounts on the company's jet cards, which start at $4,700 an hour, for light jets like a Citation 5, Lear 35, or Beech 400. The cards are available in increments of 10 hours and up. Now, because of softening demand from clients and a recent drop in fuel prices, those hourly rates are being discounted as much as 10 percent.
"The economic crisis has directly affected demand, especially from the financial industry," says McCown. "Hedge funds, investment banks, private-equity firms, venture capitalists: When we go talk to them as our clients, they're walking cautiously."
Still, he has no plans to broadcast the new prices aggressively, preferring instead to get the word out through his sales force when the topic comes up. After all, he says, what if Air Partner committed to the new low pricing, and the economy turned around?
Hence, sizeable discounts on luxury goods are being doled out discreetly. Canyon Ranch, the chain of spa retreats, personally phoned clients in the past few weeks to offer 25 percent off a stay if they brought a guest. Cornelia Day Resort, a spa on Fifth Avenue in Manhattan, is slipping $30 credits toward gift-card purchases into clients' lockers. And 3Lab, the exclusive skin-care company whose standard face cream sells in Saks and Barneys for $400, is offering free facials with any purchase at Barneys across the U.S.
Retailers like Elie Tahari and Bergdorf Goodman are offering free shipping, "private" discounts, and earlier-than-usual sales. This week, Women's Wear Daily reported that department stores were asking designers to launch collections with lower price points. Tori Burch said she was hoping to start creating more "affordable" evening wear.
Over the next few months, Dana Telsey, the chief research officer at the Telsey Advisory Group, an equity research and consulting firm specializing in retail in New York, predicts that consumers will see an unprecedented barrage of sales and special offers.
"This holiday season is poised to be more promotional than others, given the volatility of the financial markets, which is having an impact on all consumers, both high-end and low-end," Telsey says.
On Manhattan's Upper West Side, Ed Brown, the chef and owner of new restaurant Eighty One, has extended and modified the prix-fixe menu he created over the summer to accommodate clients hurt by the financial crisis. The menu offers two courses for $42 dollars, allowing customers to save about $20 per person on the average check.
Brown's clients, who mostly come from the moneyed stretch of Central Park West that encompasses luxury buildings like the Beresford, have displayed a range of reactions to the financial crisis.
"The 30- to 45-year-olds that still have young families, they take the hit much harder," says Brown. "Their retirement and kids' education plans got a whack. The guys who make $1 million a year may make nothing this year. People just aren't sure what to do yet. Do we stop going out?"
If they don't, at least they just might get a deal.VisitÂ Portfolio.comÂ for the latest business news and opinion, executive profiles and careers.Â Portfolio.com© 2007 Condé Nast Inc. All rights reserved.
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate