Forget the early weight gain known as “Quarantine 15” or the wave of floppy-ear pandemic puppy adoptions—the latest COVID-19 trend is all about designer nannies and fancy cars, and it comes with a hefty price tag.
Call it revenge spending or call it yolo (an anagram for “you only live once”), but luxury goods are reporting bumper sales despite ongoing supply chain pitfalls, rising inflation and global uncertainty due to the pandemic.
Left to right: William Dickens, professor of economics and public policy at Northeastern, Christie Chung, professor of psychology and associate professor at Mills College, and Yakov Bart, associate professor, D'Amore-McKim School of Business. Photos by Matthew Modoono and Ruby Wallau/Northeastern University
Last week, the fine jeweler Cartier reported a 30% increase in sales in the last three months of 2021 compared to the last quarter of 2020, while the Italian fashion house Prada earned 8% more this year from pre-pandemic sales in 2019. Louis Vuitton, Dior, and BMW they have all been released earlier than expected in mid-January with sales far exceeding those of 2020 and even surpassing pre-pandemic sales.
So why do consumers spend a lot of money on ultra-luxury products?
“In the early days of the pandemic, the government did a great job of supporting disposable income, but even without a lockdown, many people avoided using face-to-face services. So spending on restaurants, entertainment and travel dropped like a rock,” he says William Dickensprofessor of economics and public policy at Northeastern.
“With disposable income waiting, this left people with a lot of money to spend on things like manufactured goods. Especially things you could buy without going out, things from the internet,” says Dickens.
Continued confusion caused by the delta and micron strains of COVID-19 kept travel and restaurant spending on the back burner in 2021, Dickens says.
Rolls-Royce, a handy statement vehicle long associated with affluent drivers in their prime, has also capitalized on the trend. the company announced record sales in 2021 around the world, selling more luxury rides last year than any other year in the company's 117-year history.
CEO of Rolls-Royce Torsten Müller-Otvös credited COVID-19 for the increase in sales during an interview with The Financial Times.
“A lot of people have seen people in their community die from Covid, it makes them think that life can be short and it's better to live now than to put it off for a later date,” says Müller-Otvös. “That helped Rolls-Royce.”
Christie Chung, a psychology professor at Mills College, says the pandemic has changed the way many people spend money.
“When we think about the pandemic, what we're seeing is that people are starting to ask, 'What is meaningful to me?' What can I use my time for if I really have a limited time to live?'' We started seeing people doing things that were a little different from their usual routine. They started to question whether they should use their money for something they've always wanted,” says Chung.
Instead of revenge spending, a fairly new term that describes a shopping binge after two years of pandemic savings and missed experiences, Chung says some of the luxury shopping may be about a new focus on meaningful items.
“People are starting to realize that they want to allocate their resources, which are usually limited to basic things, to things that are more meaningful to them,” says Chung.
The sudden flush of spending on designer yarns and prestige cars offers another insight into the pandemic, which has exacerbated an already deep gap between the super-rich and the lowly, according to in a January 17 report by Oxfam International.
“Essentially, these are the trends we see. The richest billionaires have increased their wealth by huge amounts and that is nowhere near what the average consumer experiences in terms of income,” he says. Jacob Bartprofessor of marketing and faculty associate at Global Resilience Institute in the Northeast.
The world's 10 richest men were earning about $1.2 billion a day since the start of the pandemic, Oxfam said. Meanwhile, more than 160 million people are estimated to have been pushed into poverty in the past two years, according to the report.
“That's where we see most of the luxury consumption,” says Bart.
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