Revenge Spending is happening. Is your brand taking advantage of it?
Over the course of these last few months, GDP in most of parts of the world has shrunk. An indication of Covid’s impact in the financial sector is clearly evidenced by the contraction of the Chinese economy which, over the course of a single calendar quarter, has shrunk threefold from 1 trillion USD to 350bn USD! A staggering statistic!
Obviously, prescient eyes lay on China and how its consumption will rebound from Covid’s devastating impact – gauging when and how spending will return to pre Covid 19 levels. While these answers are not yet evident, what is already discernably clear is that spending will contract – by how much still remains to be seen. In several sectors, China is responsible for 50% of overall sales generated– making this Asian powerhouse a market whose importance has arguably no peer. During 2020 a number of luxury brands pulled out of China completely, while others – though cautious – have been resilient and remain.
There are two schools of thought regarding the pandemic versus its impact on global spending figures: on the one hand, there are those who believe that as soon as the market returns back to within so-called “normal” parameters (however this new normal will be defined), consumers will rush back into the market, spending at restaurants, retail stores and shops like crazy – while those on the other hand predict a return to a far more prudent overall spending pattern for the vast majority of consumers.
One of the most oft-used terms in recent months has been “Revenge Spending”, but what does this phrase actually mean? Put simply, it describes the behaviour of those consumers emerging from isolation and seeking to spend more than they routinely had done so before the events of the pandemic. An anti-spendthrift mindset formed in response to months of imposed isolation and restrictions on movement and freedom – an almost child-like acting-out against being forced to eat ones own cooking or continue to wear last season’s clothing.
How Can Brands Take Advantage of Revenge Spending?
It is pivotal during this lockdown period that companies continue to communicate and engage with their consumers by adhering to a strong advertising strategy – only in this way can they ensure that, as soon as everything opens up, they will have TOMA (Top of Mind Awareness). Out-of-Home Media is a great advertising option to ensure continued brand awareness, while at the same time it can also provide brands the balance they are seeking between conversion campaigns and brand awareness campaigns.
With this in mind, brands would be best served by keeping an unwavering eye, not only on overall trends in “consumer behavior”, but also on the specific “revenge spending” phenomenon – keeping an ear to the ground and thereby ensuring that there are no surprises waiting for them around the corner.