Luxe City | Despite a waning economy, Portland's upscale merchants say customers still go for Gucci
In the center of Addo Novo, Congress Street's new modern furniture store, hangs a light called the "Big Bang." The Big Bang is a cluster of cherry red and white plastic sheets curved around each other like a psychedelic clump of linguine noodles, and its name about describes the effect purchasing the light would have on the average Mainer's wallet. The Foscarini design imported from Italy retails for $1,602.
Addo Novo's modern take on a chandelier isn't the only thing in town bursting with a colorful decadence that seems out of place in one of the poorest states in America. Since 2000, Portland has added dozens of upscale boutiques in the Old Port and downtown, all catering to the same relatively small but relatively wealthy consumer base of transplants and natives who have taken a shine to the metro chic lifestyle enjoyed in larger cities. You want a pair of True Religion jeans, for $200 a pop, to match your $200 haircut? We got 'em. Itching for a $3,888 Barcelona chair to complement the new HD-TV? No problem. Want to wow her with a diamond worth more than the Mercedes? Well, sir, you've come to the right working waterfront.
The affluent retail market is alive and well in Portland, even while consumer confidence nationally plummets for all but the very richest. According to the RBC CASH Index, which measures consumer spending, consumer confidence overall in early February dropped to a mark of 48.5, the lowest since the index began in 2002, trumping the previous record, 56.3, set in January. And while surveys show the average consumer is holding cash close, a January Elite Traveler/Prince & Associates 2008 Affluent Consumer Spending Survey found that one fifth of "mass affluent consumers," or those whose net worth is less than $10 million, also plan to rein in spending this year, and 34% say they will take longer to make unnecessary purchases.
Here in Maine's largest city, that consumer concern has caused sales to dip slightly among the upscale boutiques Mainebiz spoke with. But while shop owners say they're concerned, they maintain most of their loyal customers keep shopping.
Those loyal customers have shopped-till-they-dropped enough to foster a robust niche market. According to Janis Beitzer, executive director of the Portland Downtown District, a nonprofit organization supporting businesses downtown and in the Old Port, of the 72 jewelry, clothing, and home furnishing stores in the Old Port and downtown, just over one third are priced for the upscale crowd. Portland's recent obsession with good living — there are, for example, eight day spas in the Old Port and surrounding blocks, double the total just four years ago — has created a dense and diverse collection of boutiques catering to consumers with a net worth far outweighing the average in Portland and around the state.
According to the Maine Department of Labor, the top tenth of Portland wage earners, for example, in three of the state's most lucrative professions — business management, business and finance operation, and health care — earn between $88,000 and $143,000 a year. The lowest of these incomes is more than double the $34,986 net worth of a typical Portlander, without even factoring in additional wealth from assets or investments — elements Kit St. John, executive director of the Maine Center for Economic Policy, says tend to make up the bulk of upper class net worth.
Evidence of the buying power of the Portland affluent consumer is palpable. The average price of a home in Cumberland County is one of the highest in the state, and multimillion dollar waterfront properties in the city and its suburbs continue to be hot commodities despite the nation's slowing real estate market. The upscale supermarket Whole Foods Market is doing a booming business on Marginal Way, and classic chic stores like Coach and Banana Republic recently opened at the Maine Mall in South Portland. Affluent shoppers in Greater Portland can now buy everything from Betsey Johnson stilettos to hand-embroidered christening gowns locally.
But it's not only the affluent who support the upscale niche market in Portland. After all, you don't have to be rich to buy rich. Decades of lavish credit card spending and anemic savings have made the swanky available to even those with negative net worth.
Sadly, the Golden Age may be losing its luster. After months of blaring headlines about a withering economy, the New York Times declared in a February article that Americans were — horror! — beginning to live within their means. "The return to reality is on vivid display at shopping centers," the paper reported, "where consumers used to trading up to higher-price stores are now heading to discounters." The economy, it appears, has shaken up the consumer many upscale stores rely on for their bread and butter — the buyer with a modest to comfortable income the industry calls the "aspirational luxury consumer." Blocks from Addo Novo, a very different store with a very similar clientele is feeling its version of an economic pinch. At Stonehome Estate Jewelers on Exchange Street, the lighting is soft, the music retro, and the décor Great Gatsby lavish, but the worries are all modern.
"We do have a high-end clientele and we really haven't seen a change from them," says co-owner Paul Duchesne. "But we see a change in our bread and butter. People who think nothing about coming into the store to spend $2,000, now they come in and spend $500 to $750."
Duchesne says his bread-and-butters make up about 50% of his sales, and that Stonehome was 7% below sales expectations in 2007. Though Duchesne won't reveal revenue figures for fear of shocking other area jewelers — preferring to simply roll his eyes to the ceiling and slowly nod when asked if his sales are well above $1 million annually — his business partner, Attos Santana, pops out from the back room to emphasize that 7% dip is "significant."
Stonehome's challenge during tough economic times is representative of most high-end retailers in the city — their wealthy customers have not slowed their buying habits, but the workin professionals have eased off slightly. But Duchesne says Stonehome's in no danger of closing, and, in fact, is opening a second location in Kennebunkport to target the retirees there.
Around the corner at her eponymous boutique, Chantal Young says she too has seen a dip in sales lately — her holiday revenue was down 12% from the previous year. It was her slowest holiday since she opened the shop in 2005. Chantal, which last year generated between $500,000 and $750,000 in sales (Young is vague, like Duchesne, because of stiff competition), relies on exclusive contracts with around 25 designers for its edge. Her typical customer, females between the age of 30 and 45 with an average income of at least $150,000 a year, buy designer dresses for $250 or more, or pick from her wall of designer jeans costing an average of $175. Young, who that day was fashionable in embossed leather snakeskin boots despite being just days from giving birth, says surviving in Portland's suddenly populated high-end clothing boutique niche isn't easy, but she's confident she'll weather whatever slump the economy may be going through.
"Every season there's more and more people who are interested in looking at what's out there and buying," she says, pointing to the more than half-dozen clothing stores in a two block radius that cater to the same shopper.
Dana Gillespie Herzer, a lawyer for Liberty Mutual in Portland, rarely shops at the mall. She'd rather spend more in the Old Port and the downtown for products she considers of higher quality. In October, Herzer and her husband David, a lawyer with Portland firm Norman, Hanson & DeTroy, finished constructing their $600,000 house in Cape Elizabeth. To furnish it, they purchased a Desiron table and four stools for around $4,100, and a Blomus fireplace for $1,300, all from Addo Novo.
"You don't need to go to the big city to get nice things, unique things," says Herzer, 32. "I don't want to go to Boston, I want to shop locally."
Herzer says dips in the economy won't keep her from buying those nice, unique things.
"It might affect how quickly we buy things, but not what or how much we buy," she explains.
Finding the sleeker side
Michael Hillard, an economist at the University of Southern Maine, believes the national slump is so dramatic it may affect buyers like Herzer, though not to the degree it will affect average Portlanders. The U.S. is entering a recession, Hillard says, that combines both the asset deflation of the dot-com collapse with the credit crunch of the savings-and-loan collapse. It's a slump so severe even the affluent are feeling it, because it damages real estate and stock market investments — areas where the wealthy often hold their wealth.
"It would make sense to me that the very wealthy would cut back on some very expensive purchases, but whether or not they go and spend $100 on this or $200 on that, I think that would be less affected," he says.
Hillard says stores like Chantal could have to tighten their designer belts for one or two years to accommodate changing spending habits, depending on how the economy fares over the next several months.
Still, Shawneric Hachey, co-owner of Addo Novo, is for now focusing on the positive. His projected first year revenue is $400,000, and Hachey says sales since the store opened in April have been double what he expected. (Full disclosure: Mainebiz Circulation Assistant Tyler Sperry also works part-time at Addo Novo.) The slump, he says one day, sitting on one of Addo's couches next to a black-and-white cowhide ottoman, isn't something he dwells on.
"You've got to wonder how much a recession is going to affect our customers," he says. "If I thought about that stuff every day, I'd be in a crazy house right now."
Hachey, a lean 36-year-old in a chocolate cashmere v-neck and dark, fitted jeans, is relying on an aggressive marketing campaign in radio, television and print to get the consumers he believes are in and around Portland to his shop. Hachey is confident consumers seeking classic modern furniture exist here because he and his partner, co-owner Brian Latham, are two of those consumers. Both 30-somethings who landed in Portland from larger cities, Hachey and Latham are living the life their customers enjoy. Both maintain full-time jobs in addition to owning the store, both appreciate the sleeker side of Portland nightlife and, most of all, both appreciate a quality, classic piece of modern furniture.
Hachey hopes 10 years from now, Addo Novo will be surrounded by similar stores. Addo Novo, he believes, is changing the face of Congress Street one abstract lamp at a time.
"We get a lot of people coming in saying, 'I'm so glad you're in Portland,'" he says. "That's a great feeling. Portland really needs this."
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