article

12.15.08

What Rich People Don't Want You to Know About Their Spending

Hide the Hermès orange and the Tiffany blue—today's wealthy consumers are asking for unmarked bags to disguise their luxury purchases. The Daily Beast investigates.

Last week, Kathleen Fuld, wife of Lehman Brothers C.E.O. Dick Fuld, stopped by the Hermès boutique on Manhattan’s Madison Avenue to buy some holiday gifts. As she paid for her purchases, she vetoed the store’s signature orange bag and asked for a plain white one instead.

It’s become a common request, an Hermès employee told The Daily Beast. Sales associates at this temple of good taste have gotten used to passing out plain white shopping bags to clients eager to hide their $10,000 Birkin habits in the current economic environment.

Mrs. Fuld has been a regular client, visiting the boutique once a week and spending $5,000 or $10,000 each time. But now, she doesn’t want any one to know.

At Hermès and a handful of other exclusive retailers, “secret shopping” has becoming the winter season’s newest trend. Anyone who can still afford, say, the three cashmere throws at $2,225 each that Mrs. Fuld bought when she stopped by the store that day isn’t likely to advertise it. Instead, the city’s most extravagant shoppers are ferrying their purchases home in unmarked bags; delegating delivery to assistants; or manipulating credit card bills to disguise their spending from outsiders—and their spouses.

“We kind of respect it,” says the sales associate, who’s worked at the store for several years and sees a white bag twice a day now, up from once a month in August. Skipping the trademark citrus bag, with its thick paper, brown cord handles, and logo, Hermès’ biggest spenders are “trying to be discreet.”

Indeed. Since the Lehman Brothers bankruptcy, Mrs. Fuld has still been a regular client, visiting the boutique once a week and spending $5,000 or $10,000 each time, says the associate. Now, she doesn’t want any one to know. (Through a spokesperson, Mrs. Fuld declined to comment on this article.)

Typically, brown paper bags conceal contraband—alcohol, pornographic magazines. Have luxury goods become the new dirty little secret among the ultra rich?

“People are feeling guilty and they’re feeling confused and they’re feeling like they didn’t earn their money, especially within the financial community,” says Milton Pedraza, C.E.O. of the Luxury Institute, a market research company for purveyors of luxury goods and services.

Pedraza has heard of several retailers offering plain packaging, or shipping in unmarked boxes, including Net-A-Porter, the online designer boutique that traffics in labels such as Chloé, Missoni, and Jimmy Choo. (The company didn’t return a call to confirm.) A quick trip to Tiffany confirmed that the Fifth Avenue store in Manhattan has white bags available too, although a salesperson there said the store has offered them, as an alternative to the classic blue bags, for at least seven years.

In a recent conversation with a top executive at a New York luxury retailer, which Pedraza didn’t identify, the executive observed that sales were down at his stores only partly because no one wanted to splurge. The bigger factor among shoppers of means was that they “don’t want to be seen as consuming luxury,” says Pedraza.

In response, the executive introduced enhanced personal shopping services, where buyers could shop and try on clothes in private rooms in the store, and extended the store’s home delivery policy.

Lucy Ann Barry, who owns an exclusive consignment store on Manhattan’s Upper West Side and offers personal shopping and styling, says stealthy spending by the cosseted clients she shuttles between Bergdorf Goodman and Barneys is nothing new.

“They’re always trying to hide it,” says Barry. “But I’m seeing more stealth maneuvers” since the economy tanked.

A few weeks ago, a female client from the South spent $1,200 on a Gucci snakeskin bag from Barry. “She said, ‘Please ship it with a gift card wishing me a happy birthday, so my husband doesn’t kill me,’” says Barry. “So I didn’t put the invoice in the box. I just put a card that said ‘Happy Birthday, I hope you love the bag!’”

Barry has recently seen women split a purchase among several credit cards—Hermès, for example, will divide a purchase among a maximum of three cards—to avoid a single credit card bill that could give a spouse sticker-shock. She’s had clients pay half in cash, half on a card. Or they pay for part of the item up front, and return to pay the rest later.

Luxury boutiques and department stores are happy to enable such secret shoppers, keeping them afloat in a grim environment for high-end retail.

“Underground shopping has gotten to the point where retailers recognize a need to cut the labels out of the clothing,” says Marshal Cohen, chief industry analyst with the NPD Group, a market research firm for the retail industry. Of course, that’s only at the top end of the market. “The lower end wants to keep the label in.”

But back at Hermès, not everyone is orange-bag shy.

“I understand the concept that people don’t want to be seen spending a lot of money,” says Bruce Culmer, a 62-year-old resident of Washington, D.C., in town visiting a friend. Culmer is leaving Hermès with his purchase—three silk ties—proudly swinging in an orange bag.

“People shouldn’t be flaunting what they have. But it’s kind of silly to hide it.”