The ‘trade up’ and ‘trade down’ trend continues- - and if you read over holiday retail reports you can find lots of conflicting information on what has happened at retail this Holiday season… shoppers are proving to be a more cautious consumer and the words “value” and ‘quality’ are back on everyone’s lips.

A recent issue of Luxury Business: The Luxury Marketer's Report revealed that even among shoppers in the top 5% of households based upon income, luxury consumers are becoming increasingly cautious with their money and strongly motivated to get maximum value for the money they spend.

In a press release before the holidays, The Boston Consulting Group (BCG) revealed that this season the Middle-Market American consumer was seen as reducing their overall spending during the holiday season - - it also reveals that 40% of consumers were planning to spend less over the next three months and only 23% are planning to spend more.

Don’t get me wrong.. this does not mean that consumers have totally shied away from the ‘trading up’ trend. While still splurging on few luxury items in some trading up categories [travel for one] caution needs to be thrown to the wind right now on luxury goods and services. The study shows a smaller percentage of consumers willing to ‘trade up’ this year vs. last year on things such as cosmetic procedures, spa services, personal information appliances, and oral care products.

The events of 2005 - from tsunamis to hurricanes to tornados to rising gas + oil prices [not to mention the unstable political climate] more and more people are looking for high end goods and experiences that mean something to them.

A C&C research study found that kids asked for less this year on their Christmas lists also, more than half of kids (55 percent) said victims of hurricanes Katrina and Rita deserved the most gifts -- nearly three times more than naming themselves as the most deserving. Kids are putting their money where their mouths are as 51 percent said they planned on donating a new holiday present to hurricane victims.

All this ‘do good’ doesn’t necessarily mean cashing out a life’s savings and planting trees in Africa…but it does mean a shift where spending money to spend time with family and friends will become increasingly important. Personal time spent to ‘refuel’ and feed the mind and soul will also become important.

Pamela Danziger, author of “Let Them Eat Cake” was quoted as saying that the new luxury is about tapping into consumer psychology and reaching a new level of experience that contains deeper meaning, profound feelings, and greater enjoyment. Note the growing popularity of travel focused on education and discovery. Websites such as anotherland.com are appearing [this site allows people to book an African Safari that will benefit the African Villages you travel through] with great fanfare from consumers.

The pattern that I see is the amount of people buying luxury products and services for emotional reasons “I deserve this” but justifying them with large scale rationalizations “because I have worked hard and do not have a [insert product here].” A lot of people are writing about “needs” instead of “wants” these days….