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Mini luxuries can mean big payoff

Jennifer Collins May 27, 2009

Mini luxuries can mean big payoff

Jennifer Collins May 27, 2009


Bill Radke: Zale’s, the diamond retailer, reports quarterly earnings today. They’re expected to be lackluster, what with customers cutting back on the luxuries. Some makers of luxuries are cutting back too — quite literally, as Marketplace’s Jennifer Collins reports.

Jennifer Collins: If you’re looking for the latest in luxury, you could ask your butler. Or you could always turn on the Colbert Report:

Stephen Colbert: Times may be hard, but they’ve led to some exciting new products. Like the popular new smoke for the elite, Nubs. Which are shorter, cheaper versions of luxury cigars.

At four inches, Nubs are kind of like half cigars. And at $6.50 a piece, they cost about half as much as a typical cigar.

Sam Leccia created the small smokes. He says they’ve caught on:

Sam Leccia: I mean, it did close to $8 million in its first year. And those are really big numbers for a brand right out the gate.

Nubs are among several luxury products going small to make it big. The affluent aren’t spending like they used to, so high-end restaurants are expanding their appetizer menus. Tony hotels are promoting shorter stays. Even perfume is going petite.

Harajuku ad: Welcome to the world of Harajuku Lovers Fragrance.

Pop star Gwen Stefani launched the Harajuku Lovers Fragrance line in the fall. The bottle designs are inspired by the Harajuku fashion district of Tokyo.

Karen Grant is a health and beauty care analyst with NPD Group:

Karen Grant: These were about a third of an ounce and extremely successful. It was one of the best-selling launches that we had for 2008.

So successful — that a few companies — including the one behind Stefani’s line — are planning to launch other small bottles next year.

Milton Pedraza is the CEO of the Luxury Institute:

Milton Pedraza: I think it’s just adapting to what the consumer needs. It’s still a premium product, it’s still efficacious, it’s still beloved. It is still a very high price, but it is more affordable on a by-the-slice basis.

Pedraza says luxury consumers are loyal to their brands. And if more companies took a cue from cigars and cologne, they, too, may find that less is more in a shrinking economy.

I’m Jennifer Collins for Marketplace.

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