There’s an interesting story in the New York Times today about the coming bonuses that rescued banks will begin doling out to its employees. Setting aside the furor over whether it’s the right thing to do, I want to look at what happens after the money is awarded.

The article suggests that those who get the bonuses will indeed accept them. However it will be a quiet affair, not a flashy, borderline show-off event. Purchases made with bank bonus money are treated with secrecy, as one New York Times reporter found:

In the Hamptons, where real estate agents court bankers looking for summer homes, the sales are also expected to be a boon for contractors, movers and groundskeepers. “A community like the Hamptons depends on house trades,” said Diane Saatchi, an agent with Saunders and Associates who just sold a home to a banker for $4.9 million. “Don’t ask to talk to him about it, because he won’t,” Ms. Saatchi said of the buyer, deflecting a reporter. “They don’t want anyone to know they are buying.” That includes the banker’s extended family, she explained, because he is worried they will ask him for money.

A by-product of the global recession has been how people feel about wealth. More specifically, how people feel about individuals who have great wealth.

Instead of being seen as the fruits of hard work and business savvy, it’s instead being seen as a sign of extreme greed and selfishness. It’s too early to tell if this will be a short-term side effect, or if the public psyche has been forever altered by it.

The torrent of populist rage against bankers enriching themselves in the midst of a global recession has had an impact inside the banks, according to the article:

“Bankers are being told by their bosses to be careful,” said Janet Hanson, who was an executive at Goldman Sachs for 14 years and is a founding member of 85 Broads, a professional women’s networking organization. “I mean, how does it look if you got a $1 million bonus from Goldman Sachs and you are sporting around in a new Audi TT? People will hate you.” (To deflect criticism, Goldman announced last week it would pay its top 30 executives in stock only.)

As the global economy continues to recover, it will be very interesting to see what the longer term affects that the recession will have on people’s perception of wealth.

Was the rage and, at comes, contempt, because others around were suffering? Or is it the build-up of years of frustration? If it’s the latter, then perhaps we will see this phenomenon continue, long after the economy has fully recovered.

If the the 39-carat diamond auctioned by Christie’s recently, which went for $5.4 million, is any indication, then the luxury jewelry industry may be bouncing back quicker than other industries.

However the New York Times is suggesting something greater: that the entire luxury jewelry industry may, in fact, be recession–proof. Mark Dunhill, chief executive officer of Fabergé, is quoted:

“During times of economic uncertainly real luxury comes back,” Mr. Dunhill said. At the same time, however, “there is a tendency to approach special purchases in a more discerning and discreet manner.”

Jean-Christophe Bédos, Boucheron’s chief executive calls the new approach ‘Beyond Luxury’: “[A] unique expression of excellence in design and craftsmanship.”

What Mr. Dunhill calls “real luxury” are the kinds of things that Lambda personalities prefer — the truly exclusive products and experiences that bestow status.

This is consistent with what some in the luxe industry are calling a return to the roots of luxe. I wrote previously that it’s possible the only way back for the luxe industry is to go exclusive. Not all agree, however it will become a strategy for some brands going forward.

Interesting story in the New York Times this week about working at Christie’s in New York. While the auction house has reduced employee perks and will have to lay off some staff due to the downturn, many of the (mostly) women who work there have felt almost vindicated as they keep the jobs they love while their friends lose much higher paying (but less satisfying) finance jobs.

How much money does it take to be happy? It’s a question that has been on the minds of many in recent weeks and months. Those bankers and financiers who have lost their jobs will almost certainly need to curtail spending and may find that their standard of living has dropped. But people used to a ‘normal’ or even ‘poor’ standard of living, who are happy with what they have, might not see much of a difference in how they’re living.

As I’ve said before, luxury depends on how one interprets what luxury is, and knowing what makes one happy is a true luxury. The things or experiences that give a Theta or Lambda pleasure may still be expensive, but if you know what it takes to make you happy, less time and energy need to be focused on other, less important things.

Unbranded shopping bags, secret shopping parties at homes, purchases made to look like gifts–these are the lengths to which people are going to hide their spending from their husbands, wives and the public this holiday season.

The New York Times and the Daily Beast have both recently run articles about how people who don’t want to be seen as insensitive to the financial crisis are finding more discrete ways to spend money. Who are these people (mostly women judging from the reports), and what do their new habits say about luxury?

I believe that many of these women are classic Thetas–they seek affiliation and control, and want to contextualize themselves in a group of like-minded women (a group that often gets together and has these secret shopping parties.). They are not acting like Lambdas, who seek achievement and uniqueness and want to stand out.

Said an editor at Allure, a likely Theta:

Shopping is almost embarrassing, and a little vulgar right now.

Despite this sentiment, people are still going out of their way to consume luxury secretly; there’s still demand for it. Thetas are seeking it out on their own–perhaps more attention should be placed on reaching Lambdas during the recession to unlock their desire for things they need.

As the economic crisis turns into a recession, luxury companies are showing signs that they’re being affected negatively. According to this New York Times article, Marc Jacobs has cancelled his lavish annual holiday party, Mastercard SpendPulse estimates that luxury spending dropped 20.1% in October, magazines are reporting cutbacks, and luxury companies (including Graff Diamonds and Brioni) are purchasing fewer advertising page.

Surely these budget cuts and delays in marketing plans are a worry for luxury companies. But a greater worry is that the credit crunch will change peoples habits and make them less willing to spend on the very best. Wealthy people may no longer think it’s appropriate to wear $280,000 earrings to events while so many others are losing their jobs. Will the recession force conspicous consumption to end and make people stop buying luxury products all together?

I’m hopeful that the answer is no: if people stay true to themselves and they way that they interpret luxury, they’ll continue to buy what gives them the most pleasure. Thetas will find perfect things for affiliation, and Lambdas will find things that make them feel truly exceptional. Economic conditions may make the luxury buyer’s budget smaller, but if he or she is buying something (like a diamond) that represents love in a relationship, such affection won’t be suppressed by difficult economic times.

The provenance of a luxury good and its exclusiveness are two characteristics that matter a great deal to luxury consumers. Just ask Jessica Dunne–she had always loved perfumes and wanted to create a fragrance that appealed to the olfactory memories she associated with her grandmother, a fragrance that would be classic and familiar. Her desire to create a homage to her grandmother led to create ‘Ellie,’ a modern floral perfume with a “vintage ladylike properness” says the New York Times.

Dunne worked with a perfumer in France to create the scent and designed the packaging with the help of friends and family. She sent a sample to the Henri Bendel store in New York, and Claudia Lucas, the perfume buyer there, decided to give ‘Ellie’ a shot.

Sensing that women would like the perfume’s backstory as much as they liked the scent, Lucas noted that “a brand is always a story well told.” Dunne’s story of creating a modern interpretation of her grandmother’s femininity appeals to people looking for familiarity and stability in uncertain economic times. The limited run of 2000 bottles and limited availability in Bendel’s and a few other stores also makes the perfume something that other women won’t have.

A great raison d’être and healthy amount of exclusivity makes it easier for people to interpret a luxury product and understand the difference it can make in how they feel and what they do.

Photo by Ayala Moriel.

Ahh, wine. Beginner and expert connoisseurs alike can appreciate it for different reasons. I was reminded of this earlier this month when I saw this story about wine psychology in the New York Times. Food writer Robin Goldstein has written a book called "The Wine Trials" in which he found, in a survey of 500 volunteers, that less expensive wines were being rated higher than more expensive wines in blind tests. However, there’s more to the story than that–he found that novice wine drinkers don’t appreciate the same things as more experienced drinkers, and that, as Eric Asimov notes in the article:

Most people in the wine trade understand that consumers have any number of reasons for their buying decisions, whatever their psychological and financial state. Some are reassured by easy-to-understand labels with friendly animals. Others want only naturally produced wines or bottles with a modest carbon footprint. Some are status-seekers and score-chasers, while others are contrarians, or only drink red wine.

The story also mentions how people seem to appreciate wine more when they think it’s more expensive (something we’ve noted on Janus Thinking before). When people are interpreting an item and figuring out it’s value for themselves, how much should the price matter, and how much will this differ among beginners and true connoisseurs?

[Photo by rpeschetz]

Recently I came across a fascinating article in the New York Times archive from 1912: "The Etiquette of Jewels: The Woman Who Takes Care Not to Wear Them for Mere Garish Display Can Add Much to Her Appearance." It describes how diamonds and other jewels can enhance a woman’s "natural loveliness."

It’s interesting to observe the rather ham-handed way that women are portrayed in the article by today’s standards. While the author makes a point that it’s important to pay attention to proportion and harmony when choosing jewels, he also notes how women should be acutely aware of their imperfections, rather than comfortable with their natural beauty "for where a woman fails to mentally admit her own shortcomings, she is more apt to emphasize them to others." She instead needs "the calm calculation of a soldier planning a battle, thus intelligently facing the difficulties to be dealt with."

Women need to wear not necessarily what they like and what gives them the most pleasure, but rather items that are the "most correct" for, and I quote, "her height, the contour of her face, her age, (or rather, to express it in the modern phrasing, her dignity,) the definite proportion of each feature, and her hands and arms." The article goes on to describe which stones go best with which complexions and hair colors (because heaven forbid, you wouldn’t want to produce "an unpleasing, gypsy likeness."

While this advice is questionable at best, there is one bit at the end that rings true to me:

The appeal of jewels, however much may be said to the contrary, is not a woman’s vanity, but to her love of the beautiful.

Women must choose diamonds and other jewelry that they interpret as truly beautiful, diamonds that makes them feel alive and truly unique. There is no automatic process to determine the "most correct" diamond for someone; beauty is in the eye of the beholder.

Jeff Klein, luxury hotelier, recently published a nice guest post on the New York Times Style Magazine’s The Moment blog. Klein operates The City Club in New York and Sunset Tower in Los Angeles, and in doing so has come to define ‘luxury’ in a very Janusian way:

The word luxury means different things to different people. Some may like to have scripted lines thrown at them. On a service level, luxury comes down to a connection between the customer and the employee. This can be exemplified by something as simple as remembering the customer’s name.

As luxury always depends on how the individual interprets it, customizing an offering to take account of a customer’s individual needs is an excellent strategy for delighting customers and offering luxury that they’ll appreciate. Klein offers a few examples: the maître d’ bringing a diner to his favorite table with his favorite drink already on it, or a housekeeper remembering not to put a homemade brownie on the madame’s pillow because she’s on a diet. Certainly those in the diamond and jewelry business can and should cultivate similar relationships with their customers.

A mid-century modernist house in the desert of southern California, outside Palm Springs, will go on auction next spring as part of an art auction through Christie’s on postwar and contemporary art.  It has a listing estimate of $15 to $25 million.

As prices in the art market have surged over the last few years, the idea that classic architecture (in this case, a design by Richard Neutra) is a form of high art is creating new opportunities in the luxury art market.

The home was bought about 15 years ago and had been advertised as a tear-down, according to a recent article in the New York Times.  After an exhaustive restoration, the home now has been restored to its original condition.

The huge range in the pre-sale estimate indicates that certain buyers might be willing to pay much more for a home with such a pedigree and shows the way that luxury retailing is making its way through every sector of the economy.  It also indicates that the preservation of classic architecture might be served well not only by public interest bodies but by private enthusiasts with the money to spend.