How brands can help consumers make ethically consc...

robinmak · ‎06-30-2021

What is revenge shopping

Literally “spending for revenge”.

The phrase revenge shopping (in Chinese bàofù xìng xiāofèi 报复性消费) was first used in China in the 1980s to describe the pent up demand for foreign products that had been denied its citizens when the nation was closed off to the outside world, before Deng Xiaoping instituted the opening up policy of the late-70s and Western brands began flooding into the welcoming embrace of a new and open marketplace.

The phrase is now used to describe how shopping-starved consumers will come out of quarantine and social distancing overcompensate by making more purchases than normal. These shopping-deprived consumers are embarking on huge spending sprees for more of the finer things that many felt they were deprived due to the pandemic including luxury items like apparel and accessories, jewelry and travel.

The trend started very quickly in China last spring after the pandemic became under control. Now, revenge shopping is emerging everywhere especially in UK and starting to ramp up in US.

Physical stores across the world are seeing more foot traffic when non-essential stores reopen. London high street stores saw a surge of shoppers with an increase in footfall of 660 percent compared to last year after non-essential stores reopened across UK in April. The reopening of indoor hospitality in May has further boosted the retail destinations as many indoor venues are located in high streets and shopping centers. In US, department store sales increased 21 percent after the last stimulus in January.

Anna Wintour was among the latest to predict that the advent of revenge shopping has led to revival of the retail industry and Roaring 2020-style resurgence in consumption, indulgence and excess in the post-pandemic future.

The revenge shopping opportunity within the omnichannel ecosystem

Now the proof has arrived.

LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group released its first quart..., announcing a 45% increase in revenue for fashion and leather goods. Hermès, the maker of the iconic Birkin bag reported its first quarter 2021 sales is up 44 percent and Kering , the conglomerate that owns brands like Balenciaga and Gucci, is up 25.8 percent. The figures add to evidence the luxury sector is on the upswing driven by strong performance in China, the upturn in US and a good resistance in Europe from the revenge shopping trends.

Retail and direct-to-consumer brands are already gearing up for the surge in spending driven by revenge shopping. Ultra-fast fashion brand Misspap, owned by Boohoo Group, has already added a “21st June Prep” browsing tab to its homepage, referring to the date the UK expects to end its social distancing restrictions. Misguided, a rival, updated its homepage with a “Lockdown Exit Outfits” tab.

With the upcoming summer holiday season in Europe and US, consumers will start ‘hope buying’ - hoping to have a summer to enjoy. The shift in consumer behavior is also driving revenge dressing as the trend takes hold in the US and Europe - driven by a sense of optimism, whether delusional or merely precarious, that global vaccination rates are steadily increasing will soon make partying and formal gatherings a reality.

With more border re-openings, revenge travel will only accelerate revenge shopping as travel will be a major driver for apparel sales this year. Without the opportunity to splurge on trips and dining out last past year, some consumers will be spending their money on vacation attire as travel becomes a possibility again.

“We’re all dying to go out these days. We’re all fantasizing about Zoom turning into a nightclub or a rave.”

Naza Yousefi, Founder of Yuzefi brand

Continuing a trend of accelerated growth in online shopping, revenge shopping will likely take place online but will also see shoppers more in-store as consumers become more comfortable and feel safer.

In terms of non-essential or discretionary items, an analysis of online spending as a share of total expenditure by The Economist Intelligence Unit offers the biggest clues on future customer propensity to buy online. Overall, consumers increased their online spending share for footwear, clothing and accessories; consumer electronics and appliances; and furniture and home decor—all products for which assessing the fit, look and feel are critical, according to the latest research by The Economist Intelligence Unit.

In an effort to stimulate spending, shopping malls and retailers are giving vouchers and discounts to encourage consumer spending both in-store and online and create e-commerce opportunities. For example, luxury brands are partnering with social commerce platforms such as WeChat and AliPay’s to make shopping more attainable to more consumers by providing credit feature with online shopping. Dior, Fendi and Gucci have set up WeChat mini programs to boost e-commerce opportunities. WeChat has also rolled out video accounts and saw Dior and Prada testing the ground on a social platform with more than 1.16 billion active monthly users.

This echoes what The Economist Intelligence Unit finds in a recent research program “The Influential Shopper”. Baby Boomers and Gen X seek access to deals and discounts in-store (31 percent of each cohort cite this, compared with 27 percent of Millennials and 22 percent of Gen Z), whereas the younger cohorts consider access to deals and discounts an important feature of online shopping (37 percent of Gen Z and 35 percent of Millennials cite this, compared with 27 percent of Baby Boomers). Deals on products for older cohorts could therefore be a more prominent part of in-store displays, whereas deals on products for younger cohorts may need a digital marketing strategy.

Sustainability and growth heading towards a collision course

Brand’s sustainability promises and its growth ambitions are heading towards a collision course as a result of the current culture of overconsumption from revenge shopping. Sustainability and green marketing in many cases is feeding the issue, putting an eco-friendly wrapper on a call for consumers to buy more. The growth of e-commerce is leading to more single-use plastic waste and carbon emissions due to packaging. Online purchases must be packaged one extra time (as compared to bulk B2B items) to protect them during shipping. In many cases, these purchases require more packaging than bulk items headed to a store. For instance, an item may need air pillows to protect it because of additional handling.

This is happening even though environmental consciousness has become a common value in much of the world, evidenced in part by consumers’ willingness to pay more for sustainable products. On the one hand, consumers want sustainable products but they also demonstrate an unwillingness to compromise on taste, convenience, quality and price for sustainability.

As more brands promote products they claim are better for the planet such as Prada’s Re-Nylon collection of recycled nylon products and sustainability-focused brands like Veja, growth in the fashion industry generates a continuous stream of appealing new products and unfortunately, an equally continuous stream of greenhouse gas emissions, pollutants, and other waste. If the industry doesn’t change its practices, it will create an estimated 148 million tons of waste by 2030, or 38.5 pounds (17.5 kilograms) of waste for every person on the planet. Yet this crisis could also create a runway for new opportunities to satisfy customer demand for both new looks and new ways of doing business, according to SAP Insights.

The business of returning things: “I’ll buy five items and only keep one of them”

The pandemic continues to reshape the retail and consumer products landscape, compelling customers to move from brick-and-mortar stores to the safety of stay-at-home online shopping. The rise of online shopping has contributed to a 33 percent increase in the return rate of overall retail sales which implies multiple purchases of the same item. Return rates for purchases in traditional retail stores are estimated at nine percent, according to Sourcing Journal.

With e-commerce revenues growing at 15 percent annually, return rates are likely to escalate. Customer-friendly return policies lure shoppers and improve market share, but they also can increase the likelihood of returns – and their labor-intensive processes and wasteful costs. This has been compounded by recent changes in customers’ online purchasing behaviors. For instance, many customers now buy multiple items at a time and simply return the ones they don’t want. This increasingly common practice, known as bracketing, is driven by the promise of free shipping and returns as well as customers’ desire to mimic the in-store experience of trying on clothes to find the perfect fit and size.

The biggest challenge with returns is not about low profitability - it is the negative impact on the environment. Transporting returned inventory in the US creates over 15 million metric tons of carbon dioxide emissions annually. What’s worse is that five billion pounds of returned goods end up in US landfills each year, resulting in a huge environmental footprint. At the same time, customers are increasingly weighing companies’ sustainability commitments (or lack thereof) into their buying decisions, according to SAP Insights.

Man using tablet, tower of cardboard boxes beside him, returning items to stores

The future interface between sustainability and growth: What should brands focus on

Stay in steps with the consumers. Prioritize building long-term relationships with consumers.

As consumer confidence returns, so will spending, with revenge shopping sweeping through retail and consumer products sectors as pent-up demand is unleashed. Consumers expected to take part in revenge shopping and ultimately drive the behavior are those with discretionary income who have been spending and have prioritized saving during the pandemic. However, the experience of going through the pandemic has led consumers toward conscious spending shifts that range from choosing sustainable brands to saving more money for retirement and emergency fund.

These rapid shifts have important implications for retail and direct-to-consumer brands. Because many of the longer-term changes are still being formed, retail and direct-to-consumer brands have an opportunity to help shape the next normal with the right strategy to build a winning customer experience and their sustainability credentials with consumers. To better organize for a post-pandemic future, marketing leaders should embrace four imperatives in the quest to redefine business success through sustainability:

Create resharing through subscriptions and personalized subscriptions that let people wear items a few times before returning them for something else. Ralph Lauren has launched its own subscription service earlier this year, while Selfridges has expanded the rental service it introduced in-store to online. For Days is another brand that built recycling into its business model with a lifetime subscription to its T-shirts and recycle the worn shirt from customers.

Form a holistic view and develop a deeper understanding of the contours of the future consumer to meet the demands of both segments of consumers in the post-pandemic K-shaped recovery and be a part of the consideration set when consumers are ready to spend. Unify data and making the data available easily to drive more effective engagement at every interaction across all channels in real time.

Communicate the brand’s position on environmental and social issues to consumers as they want brands to align with their values and for good reasons - this can help brands strengthen customer loyalty, improve employee morale, boost brand reputation, and even drive profitability.

Use technology to enhance the customer experience and meet consumer demand for more customization and personalization, from custom-tailored clothes created on demand to trying things on virtually. Use artificial intelligence (AI) and machine learning (ML) to spot color, pattern, material, and design trends and make faster, more accurate predictions about what customers will want next and deliver personalized product recommendations.

While consumers continue to confront uncertainty through and beyond the pandemic, one thing is certain: buying a new pair of jeans to mark the next Earth Day won’t change anything. Quite the opposite.