As De Beers noted in its March Diamond Insight Flash Report, proprietary consumer tracking across the pandemic period indicated that those who had maintained discretionary income during the period found themselves with extra funds that normally would have been spent on experiential luxuries such as dining, entertainment and travel, or impulse luxury shopping.
Knowing that the global economy was volatile and uncertain, the report stated, and also feeling some guilt about shopping while many suffered, wealthier consumers selected to spend but chose fewe, although better things. What definitely was an added value with diamond jewelry purchases was that they were also stores of value likely to appreciate over time.
Fine jewelry took on a sharpened relevance in the pandemic context, the report noted, leading to a surge in purchases of high-ticket classics, such as engagement ring and solitaire stud upgrades and investment-grade watches.
It was not only diamond jewelry. Fine wine markets also experienced strong growth in performance, according to Miles Davis of Wine Owners, responsible for the Knight Frank Fine Wine Icons Index. “More than ever, this year has been about timing in the capital markets and, if you got that wrong, the chances are you got it expensively wrong. Not so for wine,” he said.
“Unlike after the global financial crisis, the wine market has held its nerve, merchants did not mark down prices and the market has been stable. Investors are about, and even Bordeaux prices feel like they are firming up,” Davis stated.
LEAN TO ITEMS REPRESENTING SECURITY, SAFETY AND VALUE
“In times of uncertainty or a crisis like 2020, consumers often lean to those items that represent security, safety and value,” said Caryl Capeci, CEO of Chow Tai Fook North America.
“Better quality, classically designed diamond jewelry fits this need perfectly – especially when connecting with those we love the most. Both Hearts on Fire and Memoire retail partners experienced this firsthand last year,” Capeci added.
Speaking to De Beers Diamond Insight Flash Report, Charles Stanley, president of Forevermark US, saw a similar pattern.
“One carat plus diamond rings and diamond ear studs were the stand-out pieces that sold especially well versus prior year, as did all classic diamond jewelry,” he stated.
“This clearly proves that the enduring value of diamonds resonated strongly with consumers, reflecting their desire to give gifts of meaning and lasting value this past holiday season,” Stanley stated.
Like high-ticket diamond jewelry items, fine wines also experienced strong growth in performance during the COVID period.
In times of uncertainty or a crisis like 2020, consumers often lean to those items that represent security, safety and value,” said Caryl Capeci, CEO of Chow Tai Fook North America.
EVERGREEN QUALITY FAVORED OVER AVANT-GARDE
But there were difference in the performance of luxury brands in the same sector, with conservative and evergreen brands and styles appearing to do better than their more trendy and avant-garde counterparts,
Thus, while the more cutting-edge luxury maison Gucci struggled with losses, Hermés, which is a maker of classic handbags, saw a 12.3 percent increase in Q4 sales. The brand attributed its performance to classic handbag styles in gray, black, and off-white colors. In New York it recorded its best year in history, with accessory sales up 30 percent over the previous holiday season.
Consumers had rational reasons for spending in the categories they chose, but psychological factors were clearly at play too, the De Beers report surmised. “Watching so many others in true financial distress, there was a need to spend in a way that felt conservatively value-conscious, rather than spending with a hedonistic, ‘mad money’ quality, the report noted.
Looking forward to the rest of 2021, De Beers said that 43 percent of American consumers polled in March said they were more likely to make a significant purchase in 2021 than in 2020.
The De Beers survey found that a majority of U.S. consumers remains firmly rooted in quality over quantity, with 88 percent declaring they believe that it is better to invest in fewer but better things than in items which are fashionable but may not last.