High style for those with low budgets

A gaggle of women peer into the long black case, a spotlight shining on the single item inside: a 150-carat sapphire brooch once owned by the Duchess of Windsor.

The women oooh and ahhh and titter about how they'll just "run right down and pick one up," knowing they could never afford such luxury.

Or could they?

The fact is, the idea of luxury in America is changing, and it's pulling high-end designers along with it. To stay competitive, haute couture houses, luxury car companies, and exclusive jewelers are coming out with less expensive lines aimed at attracting customers who want "affordable luxury."

"The idea of luxury has really been stood on its head over the last few years," says Lucian James, president of Agenda Inc., a San Francisco brand strategist. "And certain brands are having to reestablish what it means to be a luxury brand."

Cartier, for example, is trying to reach out to a new customer base by hosting dazzling publicity events - such as the more than 200 pieces of Cartier jewelry on display at the Museum of Fine Arts in Houston as a way to remind people of the company's allure, while, at the same time, creating more "entry-level" jewelry.

The idea of mass marketing in an industry that depends largely on the aura of exclusivity is a tricky one, says Mr. James, but it's becoming increasingly necessary.

In the $2.3 trillion retail sales market, luxury brands can no longer ignore the importance of middle-market consumers.

"Luxury used to serve the social purpose of proving that you were better than other people," he says. "But increasingly, luxury is about indulging yourself in things you feel you deserve."

In recent years, designers such as Tommy Hilfiger, Calvin Klein, and Ralph Lauren have been introducing less expensive lines in upscale department stores.

Last fall, Isaac Mizrahi designed a line of clothes for Target, which was wildly successful, without damaging his couture business. Many more are following his lead.

This fall, Michael Kors - of mink beach towel fame - has been touring the country introducing his more affordable line, Michael, which ranges in price from $30 to $300.

Oscar de la Renta recently launched a moderately priced O Oscar line. And Karl Lagerfeld, who also designs for Chanel and Fendi, last week introduced clothes priced from $2 to $200 through the chic and inexpensive H&M stores.

The idea, says Pam Danziger, president of Unity Marketing and author of the upcoming book, "Let Them Eat Cake: Marketing Luxury to the Masses - as Well as the Classes," is to create lifelong consumers.

So luxury brands, such as Cartier, Christian Dior, and Mercedes-Benz, are creating all types of entry points for consumers: Witness the new Mercedes C-Class, which sells for $30,000.

The thinking is that if people buy the C-Class when they're in their 30s, they might move up to the E-Class in their 40s, and the S-Class when they reach their peak earning potential and the children are grown.

The concept of luxury began changing in the mid-1980s with the baby boomers' "don't tell me what to think" attitude, and took 20 years to mature, says Ms. Danziger.

"Old luxury was about the thing itself and was defined by the company. New luxury is about the experience and is defined by the consumer. The company is no longer in charge," she says. "If today's consumer says, 'That isn't luxury to me. That's just overpriced,' you've lost."

In addition to the change in attitude about luxury, Americans' buying power is getting stronger - thanks in large part to women entering the workforce. The middle-class consumer has enjoyed a doubling of real per capita income during the past 30 years, says Michael Silverstein, a senior partner at Boston Consulting Group and author of "Trading Up: The New American Luxury."

"Affordable luxury is the idea that a vast middle-income consumer is trading up in two or three categories of goods," he says. "These products ... leave the consumer feeling richer and more emotionally taken care of. Think cars like the BMW, handbags from Coach, lingerie from Victoria's Secret, coffee at Starbucks."

"But there is danger in becoming more approachable," says James, the San Francisco strategist. "With more people buying into your brand, it begins to have less cachet."

Tommy Hilfiger, for example, became so ubiquitous in the 1990s with casual sportswear, that the designer recently released a new upscale and more expensive line of clothes. The H Hilfiger line is limited to slightly more than 100 stores, to help preserve the designer's prestige.

Instead of the all-American teens who used to grace the ads, rock star David Bowie and his supermodel wife, Iman, model the new line in a posh Amsterdam hotel.

"It's a new luxury at Hilfiger," the designer told Women's Wear Daily. "The woman in America wants luxury, but she wants it to be affordable and accessible, and we're giving it to her."