Forget about the Quarantine weight gain, or the spike in floppy-eared pandemic puppy adoptions. The newest COVID-19 trend focuses on designer duds. And it comes at a high price.
You could call it revenge spending, or a case yolo, which is an anagram for “you only have one chance”; luxury goods are seeing record-breaking sales in spite of ongoing supply-chain snares. Inflation is on the rise, and there is global uncertainty because of the pandemic.
Cartier, a fine jeweler reported a 30% rise in sales over the past three months of 2021 when compared with the quarter of 2020. Prada, an Italian fashion house earned 8% more in 2019 than the pre-pandemic sales. Louis Vuitton, Dior, and BMW all have released earlier-than-expected reports in mid-January boasting sales that have far surpassed those in 2020, and even outpaced pre-pandemic sales.
So why is it that consumers are spending big on a luxury lifestyle during pandemic?
“In the early days, the government did a great deal to support disposable income. But even without lockdowns, many people were refusing to use face-to-face services. Therefore, spending on restaurants, entertainment and travel fell like a rock,” says William Dickens from Northeastern’s professor of economics.
“With disposable income increasing, that gave people lots of money to buy manufactured goods. Dickens said that there were many things that could be bought online without having to go out.
Dickens states that travel and restaurant spending were kept on hold by the ongoing confusion caused in part by the omicron and delta COVID-19 strains.
Rolls-Royce, long associated with well-to-do seniors, has also capitalized on this trend. The company has announced record-breaking global sales for 2021, with more luxury rides sold last year than any other year in its 117 year history.
Torsten Muller-Otvos (Rolls-Royce CEO) credited COVID-19 with the sales boost in an interview with The Financial Times.
Muller Otvos says that “quitta lot of people saw people in their community die from Covid,” and that it makes them realize life can be short. Roll-Royce has benefited from that.
Christie Chung is a Mills College psychology professor who says that the pandemic has affected the way people spend money.
When we think about the pandemic we find that people are beginning to ask themselves, “What’s meaningful to me?” When I have limited time to live, what can I do with my time? We began to see people doing things a little different from their regular routine. Chung says they began to wonder if their money should be used for things they had always wanted.
Chung believes that luxury spending is not about revenge, which is a relatively new term that refers to a buying frenzy after two years’ worth of savings and missed experiences. Instead, Chung says some luxury purchases might be about a renewed focus on meaningful objects.
Chung states that “people start to realize they want their resources, which are often limited to basic items, to be put into things that have more meaning to them.”
According to Oxfam International, a Jan. 17 report reveals that the sudden increase in spending on designer clothing and expensive automobiles has contributed to the growing gap between the ultra-wealthy versus those earning a living wage.
“Essentially, these trends are what we’re seeing. Yakov Bart is a Northeastern marketing professor who was also a faculty affiliate of the Global Resilience Institute.
Oxfam reported that the top 10 richest men worldwide earned an average of $1.2 billion per day, since the beginning of the pandemic. The report estimates that more than 160 million people were pushed into poverty during the last two-years.
Bart states, “That’s the place we see most luxury consumption.”
