Investment spending
When the pandemic hit in early 2020 the world was sent into a state of flux. Uncertainty reigned and the financial markets reacted accordingly with increased volatility.
Consumer behavior changed and Amazon shares soared (and have continued to do so) as we all adopted online shopping as the norm. It’s not just behavior, however, that has changed but also attitudes.
A crisis always presents an opportunity and never more so for someone with a high disposable income. The enforced restrictions meant consumers were no longer spending on luxury travel and expensive restaurants and with nowhere to go, there was less need for designer clothes and accessories.
With money to spend and uncertainty in the stock market the savvy consumer has seen the potential in investment purchases which serve the purpose of providing a sense of indulgence and sentiment yet are also asset classes in themselves. Sales of high jewellery, art and fine wines have increased. People have been looking for something with value that will provide some form of security. Jewellery and art in particular have intrinsic value, they endure through generations, create lasting legacies and carry memories. Historically, together with gold and diamonds, they also provide a relatively less risky asset in a financial crisis.
The auction houses, Sotheby’s and Christie’s have both reported buoyant sales in fine art and jewellery as well as unprecedented online activity. It seems that it’s not just Amazon and Waitrose that are booming through lockdown sales; the HNWI is shopping online for jewels and bidding online for fine art. Despite having nothing to dress up for, people still have birthdays and anniversaries and jewellery remains culturally significant as a gift. The upward trajectory in sales of contemporary art has continued despite the lockdown with the auction houses reporting favourable figures from their online Contemporary Art Auctions. Importantly, the younger generation is also investing in art. Many are starting to build a collection, recognising that they can appreciate and enjoy their assets and investments if they are hanging on the wall.
Whilst there have been shifts in spending habits, there have also been clearly defined shifts in attitudes. The increase in “investment” purchases perhaps points to a more considered, thoughtful, consumer less concerned with a short-term trend and a flippant purchase.
The economic future remains uncertain but what we do know is that the wealthy still have money to spend and still want to invest. Businesses need to take note that consumers have become more discretionary and more investment focused. Understanding motivations and finding opportunities and possibilities for the future is crucial for success in a world where value matters. A strategic and well thought out approach to engaging the consumer is the best way to seal the bid.