Retail

How COVID-19 Is Redefining Luxury Spending

How COVID-19 Is Redefining Luxury Spending

Face masks have become a part of most people’s day-to-day lives as the physical world reopens with some restrictions amid COVID-19. The fact that the masks rapidly became the fashion-statement accessory of summer 2020 should surprise absolutely no one. Over the years, many things have been described as “must-haves,” but the face mask is possibly the only one that can claim that distinction literally.

But face masks as status symbols? That was a little harder to see coming, but it became clear this week amid reports that an Israeli jeweler has custom-made a $1.5 million face mask out of gold and 3,600 black and white diamonds. The bejeweled mask also contains a top-of-the-line N99 filter, because it really would be a shame to make a seven-figure investment in a face mask that didn’t actually offer any protection from COVID-19.

Mask designer Isaac Levy, owner of the Yvel jewelry company, identified the buyer only as a Chinese businessman residing in America. He said the mask weighs about a half-pound, which might not make it comfortable as a daily wear item. But then again, all that bling might be worth a little discomfort.

Levy told the New York Post that “money maybe doesn’t buy everything, but it can buy a very expensive COVID-19 mask. The guy wants to wear it and walk around and get the attention.”

The jeweler said he himself wouldn’t wear such a mask, but he’s happy someone wants to, because the order “gave us enough work for our employees to be able to provide their jobs in very challenging times.”

And while the diamond-bedazzled facial gear is eye-catching, it’s also one of a kind. It’s doubtful that this will become a trend, even among those wealthy enough to own one. After all, it takes a certain personality type to be comfortable displaying seven figures’ worth of wealth in the form of golden facial gear.

However, it does point to some notable shifts in spending patterns among affluent shoppers who are more immune to the economic angst that’s plaguing the average consumer these days.

As it turns out, not all consumers are spending less. Some are buying more – and buying differently – than they have before.

The Jewelry Boom

Decked-out face masks aren’t the only type of shiny thing seeing a bump in the pandemic period.

Jewelry store owners are reporting that despite shutdowns and some difficulties getting customers to switch to shopping online (people like to see jewelry in person), things are going surprisingly well.

“It’s amazing how busy we are,” jeweler Adrian Blanco recently told a Sacramento CBS affiliate.

Louisiana jewelry store owner Nora Buttross told a local ABC affiliate that it’s an outgrowth of the stimulus dollars that hit consumers’ bank accounts earlier this year. “The relief-package checks are making a difference,” she said. “I think people have stayed home too long. They’ve sat in their house … and they’ve looked at their jewelry that’s been in the jewelry box broken, and they’ve come in with a lot of repairs.”

But customers have also come in for new purchases – mainly gifts for graduations, weddings, engagements, anniversaries and just about every other celebratory event in life. Or, as Blanco noted, oftentimes just because consumers want to fill in for another desired luxury that’s not currently available.

“A lot of people are still celebrating [special occasions] despite everything going on right now,” she said. “If they cannot go to Hawaii or somewhere else, jewelry is the next best option.”

Sacramento jeweler Inessa Pakhnyuk concurred, noting that the jewelry sales bump has been a particular boon to mom-and-pop outfits with affluent customers who are inclined to shop locally during the pandemic.

“A lot of people have been coming to small mom-and-pop shops because a lot of places have been closed, so they like to support small businesses,” Pakhnyuk said.

The Country Home Makes a Comeback

The country or manor home was something of an upper-class staple of the late 19th and early 20th centuries, although it was somewhat more popular in Europe than America.

But it seems like country homes are making a comeback in the COVID-19 era. According to recent reports, affluent consumers are buying second homes in more pastoral, less densely populated and slightly harder-to-access locales to escape their also-luxurious primary residences in densely packed major metros.

“Business is heavy in vacation markets and second-home markets,” Anthony Hitt, CEO of Engel & Völkers Americas, told Fortune. “People are learning they can do their job as effectively [while working] remotely. They want that Manhattan property, but also that getaway in Park City [Utah]."

According to Fortune's analysis of 103 luxury-home markets, property values showed the largest gains in resort areas that cater primarily to second-home buyers.

Among the biggest gainers, Crystal Bay, Nevada, saw its price per square foot soar by 72.2 percent. Similarly, Aspen, Colorado saw prices per square foot increase 31.9 percent, while Chilmark, Massachusetts on Martha’s Vineyard saw a 30.6 percent bump.

Hitt anticipates that the trend will carry on as long as the pandemic continues. After all, affluent workers are better able to conduct business remotely, and densely packed urban areas are less appealing.

That’s not to say he believes that luxury markets in major metros are set to decline dramatically, or that urban centers will see the mass exodus of affluent consumers that some have predicted. The trend as notably been rising prices in areas that cater to second homes, rather than affluent people relocating their primary residences to the country.

But where the affluent go (even temporarily), high fashion follows. Gucci, Balenciaga and Louis Vuitton have all released bucolic, back-to-nature looks for those who want to social distance at their new country retreat and look good (and wealthy) while doing it.

Will the shifts of the high-end consumers power the recovery? Perhaps not, as some of these purchases are a little rarified. But they do show that commerce adapts to any market condition – sometimes in ways predictable, and sometimes in ways truly unexpected.

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