After 15 months of not being able to shop and eat out, consumers are spending money on everything they couldn’t. Learn about this latest retail and consumer trend.
As the economy starts to reopen, stimulus checks add more cash to many bank accounts, and vaccinations spread wide, some are expecting a phenomenon called “revenge spending” that is bound to positively affect the retail industry. After over a year of being cooped up inside, consumers are itching to get back to some normalcy, and they’re using their money to do it. Some analysts say, if what has recently occurred in China is any indication, we could be looking forward to a surge in buying in the next two quarters. This is what we’re hearing could happen.
What is revenge spending?
The combination of massive saving and the standstill in shopping for anything other than essential items, as a result of the pandemic, has brought about what some are calling “revenge spending.” This is the concept that consumers are adamant to spend money they have been unable to spend at unimaginable rates. As the economy completely opens back up, particularly stores that offer items that can finally be of some use today, retailers should be prepared to find customers looking to buy at higher rates, even near record highs.
Analysts point to what happened in China beginning in April 2020 as proof that the U.S. may mirror these consumer trends. As things got back to normal and the Chinese government lessened its restrictions, (much earlier than in the U.S.) luxury brands like Tiffany and Hermes saw enormous growth in sales from prior years. This growth was credited to a large Chinese population with disposable income who were eager to shop now that they could. Fair warning, however. Analysts caution that the economy in China is very different from the U.S., so the anticipation is that there will be moderate “revenge spending,” in comparison to China. In any case, retailers should be ready for this new customer and their current needs.
What is everyone spending on?
It’s predicted that consumers will be spending more on discretionary items. Think, clothing (less loungewear, more trendy pieces), travel products, electronics, home, and more accessories. In fact, we saw an uptick on discretionary purchases in January, following the $600 stimulus checks rollout. Department stores saw a nearly 21 percent increase in sales from the prior month. With the most recent one-time stimulus checks of $1,400 or more distributed to many Americans, this could mean an even stronger increase in the next few months.
What’s more, as millions of Americans become fully vaccinated, they are becoming more comfortable with shopping in-store versus online. According to a study on the COVID-19 vaccine’s impact on retail and ecommerce, 56.1 percent of consumers are planning to shop more in-store and 75.1 percent of consumers will purchase more clothing and accessories in-store.
If retailers can’t fully rely on “revenge spending,” they can be certain of consumers ready to spend more on different product categories than in recent months. Be sure to refresh your inventory in anticipation that consumers are finally getting back to restaurant dining, travelling, and being seen at the theater and other events. They’re going to want to make more purchases that help them look and feel good again, and if they can’t find it in your store, they’ll be looking to spend their dollars somewhere else.
In any event, it’s time to get ready as the U.S. economy reopens. It’s hard to know exactly how Americans will react to this new normal, but, inevitably, we know there will be change, and it’s important as a retailer to stay on top of what your customers want. Luckily, you can shop for new merchandise now at the ASD Online Market, where you have access to thousands of products from 700+ vendors, or join us LIVE when we return to Las Vegas for our flagship event, ASD Market Week. Hit the “Register To Attend” button at the top of this page to get on the ASD Market Week registration list for free and gain instant access to the ASD Online Market.