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Revenge Shopping – the unexpected saviour of the Luxury Economy

MARKETECH Expert, Stella Barry, Adludio

Bricks-and-mortar has taken a nosedive in recent months all over the world, and luxury is undoubtedly one of the hardest-hit sectors. But with lockdown measures easing up, the economy is starting to show signs of recovery via ‘Revenge Shopping’, a phenomenon that sees luxury stores opening their doors to shopping-starved consumers looking to avenge their months spent holed up at home during lockdowns. 

This is especially prevalent in China, whose shoppers make up one-third of global luxury sales. Hermes is said to have generated $2.7 million in sales on the day that their flagship store in Guangzhou, China reopened in April, marking this as one of the biggest single-day shopping sprees at a luxury outlet in the entire country.

Will discounts hurt the image of luxury brands?

In order to encourage shoppers to step out of their homes and shop outside, shopping malls and retail brands are incentivising consumers with vouchers and massive discounts to encourage this phenomenon. 

Luxury fashion brands, that were once perceived as unattainable, out of reach and reserved for a privileged few, have diversified their customer base in order to access the new breed of Gen-Z consumers as they reach shopping maturity and begin to demonstrate significant purchase potential. 

According to South China Morning Post, local governments are further fuelling the return of bricks-and-mortar shopping by issuing prepaid coupons, with at least 30 cities across APAC reportedly having issued residents over US$706 million worth of shopping vouchers.

Shoppers now have a vast spread of luxury options to splurge on, as luxury brands redefine their brand values and make them more accessible to the masses. But not all agree that discounting is the right strategy for luxury brands. 

“Having your products be more coveted is often something that can drive higher earnings,” said Sucharita Kodali, a retail analyst with Forrester Research. “That’s what makes the luxury sector unique.”

Is revenge shopping truly for everyone?

Despite its success thus far, qualms remain about the longevity of the revenge shopping phenomenon. Revenge shopping applies mainly to the happy few who can afford high-price-point items, keeping the wider population at arm’s length. According to a recent survey reported in Quartz, 41% of respondents would reduce spending to prepare for future crises. Only 8% expressed willingness to do more shopping after the outbreak. 

In another survey 68% of people say they expected their income this year to be lower. With many having been put on furlough, having had their salary decreased or having had lost their job altogether, the main consensus will be of wariness and care.

On the flipside, a recent study by Rakuten Advertising reports that Asian consumers are more likely to increase their shopping spend, especially when it comes to big holidays such as Christmas and Lunar New Year, compared to their Western counterparts.

The downsides of a swift economic recovery

While stores may be relieved about increased revenue after months of economic downturn, they would still face the issue of excess inventory. It might not be such good news for the planet, and scientists warn that returning to business-as-usual at an accelerated pace could bring about negative impacts to the environment. 

The fashion industry, already contributing 10% of global carbon emissions, is also a major driver of waste, unsustainable agricultural production and water contamination causing major harms to wildlife. With revenge shopping on the rise, it is likely that the bounce back in demand for fashion will reignite these environmentally destructive practices that make future pandemics more likely. 

As brands face the pressure of recovery and clearing stock to make way for new collections, e-commerce and affiliate marketing may help with targeting newer and a wider range of audiences.

A few weeks after the reopening of the economy post-pandemic, almost 80% of shopping mall merchants observed customer foot traffic at levels more than half of what it was before the Covid-19 outbreak, according to the China Commerce Association for General Merchandise. Looking back, during the financial crisis of 2008-2009, luxury was also one of the categories to recover the quickest. 

If history is any indication, the luxury economy may be forecasted to experience a healthy and speedy return to normality, thanks to revenge shoppers. However whether this phenomenon is sustainable for luxury brands themselves and the environment, that answer is yet to be discovered.

The author is Stella Berry, Regional Business Director of Adludio, a premier advertising platform for delivering brilliant creative on mobile devices.

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