Buying Luxury At a Bargain Store

Dec. 3, 2005 — -- A $24,000 diamond ring, a $1,000 bottle of cognac, and a $4,000 plasma TV.

It's not on Rodeo Drive in Los Angeles. It's at Costco and Sam's Club.

Jewelry and other pricey items are lining the shelves at America's discount chain stores more than ever. The discount chains aren't abandoning their middle-class roots, but they are trying to reach out to higher-income shoppers. And while they run the risk of alienating the price-conscious, it is a risk they are willing to take.

Retail analysts say despite recent dips in consumer confidence, the demand for luxury goods this year is surprisingly strong.

"The U.S. consumer has developed a higher sense of taste, a higher sense of fashion and expectation," said Emme Kozloff, a senior retail analyst at Sanford C. Bernstein. "Luxury and good taste are no longer limited to the elite."

According to an ABC News poll, the average shopper will spend more than $1,000 on holiday gifts. Competitive discount stores know there's money to be made.

"They're buying more expensive things, but they're buying just one of it," said Maureen O'Daugherty, who manages a Sam's Club store in Secaucus, N.J. "They're pooling their resources together."

If you are looking to buy that one big fancy gift, there are some real bargains: A particular Chopard diamond watch costs $4,900 at the Chopard store, but at Sam's Club you can buy it for $1,000 less. And a Montblanc pen that retails for $215 at Montblanc costs only $128 at Sam's Club.

For discount shoppers like Tex Banks, who went to the Sam's Club in Secaucus to shop for a diamond necklace to surprise his girlfriend, there is only one inherent risk involved -- that the recipient might find out where an object was bought and how much it cost.

"I want her to think it costs a lot of money, which it really don't," Banks said.

ABC News' Gigi Stone originally reported this story on "World News Tonight" on Nov. 27, 2005.