WASHINGTON -- Last holiday season, literary agent Linda Chester bought herself a fur coat, a red Ralph Rucci evening grown and suede leggings from Norman Ambrose. This season, the bicoastal fashion lover settled for costume jewelry earrings from SoHo designer Iradj Moini.
"I am definitely tightening my belt this year," said Ms. Chester, who cited an uneven economic rebound and concerns over a possible stock market bubble, as well as a desire to spend more on charity.
It's not just low-income shoppers who are pulling back on spending for loved ones and themselves this holiday season. Wealthy folks are watching their dollars, too.
While the most well-heeled shoppers still think nothing of dropping $4,600 on an Hermes tote, cracks have appeared in the $94 billion U.S. luxury market, especially for companies that cater to "Henrys" -- High Earners Not Rich Yet.
Coach Inc. has said customers plan to spend less on gifts and that mall traffic fell sharply last month. Analysts predict Nordstrom's fourth-quarter sales may grow less than half the year-ago pace of 6.1 percent. Tiffany's third-quarter comparable sales in the Americas were barely higher.
With memories of the 2008 financial crash still fresh, some wealthy shoppers are questioning whether stock market gains to record highs are sustainable and cite conflicting reports about the economy, said Robin Lewis, a New York retail consultant.
While the Federal Reserve reported that home and equity market gains spurred household wealth from July through September, the so-called wealth effect hasn't resulted in a commensurate gain in spending. Some of the wealthiest will be less flush this year as Wall Street banks shrink bonuses. Goldman Sachs, along with the investment-banking divisions of six of its biggest U.S. and European rivals, allocated a collective 39 percent of revenue for compensation in the first nine months, down from 42 percent a year earlier.
"Since the luxury sector of smart, wealthy people are also captains of industry and finance," Mr. Lewis said in an email, the reports "will most certainly have a negative effect on their confidence and, therefore, spending."
Earlier this month, the Commerce Department reported that the U.S. economy expanded 3.6 percent in the third quarter, faster than initially estimated. Yet burgeoning inventories drove much of the growth, increasing the most in 15 years. If sales pick up this holiday season, retailers will be able to work through the pileup of merchandise. If not, chains may be forced to unload it at profit-pinching discounts.
Luxury merchants may not battle for customers as hard as discounters such as Wal-Mart Stores Inc. and department store chains like Macy's. Still, Saks and Neiman have been pushing pre-sales and flash sales online and ramping up targeted emails to shoppers, said Hana Ben-Shabat, a partner at A.T. Kearney Inc., a consulting firm.
Unity Marketing, a Stevens, Pa., research firm, divides American luxury consumers into "two percenters," with household incomes of $250,000 and more, and Henrys, who earn $100,000 to $249,999 a year.
Even the wealthiest aren't outspending Henrys the way they used to. Before the recession, the $250,000-plus crowd was spending as much as four times more on luxury goods than Henrys, said Pam Danziger, Unity Marketing's president. Now they're spending twice as much, she said.
"They're very restrained and feeling very uncertain about their personal prospects and the economy at large," she said.
In early October, Unity Marketing conducted an online survey of 1,200 affluent shoppers. Twenty-five percent said they'll spend less on holiday gifts this year than they did in 2012, while 60 percent said they plan to spend the same. Just 13 percent said they would spend more.
Half the respondents said the financial health of the country is worse now than it was three months ago.
Andrew Sacks, who runs his own New York ad agency and says his household income exceeds $250,000 a year, plans to spend about the same this holiday, though he'll focus not on Cartier baubles. Instead, Mr. Sacks, 45, will buy less-known brands.
"Luxury retail has become so ubiquitous, it's the same everywhere," said Mr. Sacks, who isn't reassured by the stock market advance. "It just feels disconnected from the rest of our country."