"Revenge Spending" in the Spotlight for Home Office Marketers

After weeks of lockdown, many Chinese citizens are finally allowed to leave their homes again. This is a special moment when the pandemic is forgotten. It is finally time to let go, have fun and spend money again. Shopping stores welcome customers back. However, safety regulations remain drastic - with queues, limits on the number of customers allowed in the store at one time, and keeping a safe distance. But trade in China has picked up and is now picking up after plummeting as much as 80% at the height of the epidemic.

This phenomenon has a name: Revenge Spending or "Revenge Spending" in English. What is happening in China these days will most likely happen in the rest of the world by the end of spring. This means that sales and marketing professionals should expect a sudden upsurge in activity. But how do you prepare for it? What is the best possible planning?

The term "revenge spending" was originally used to describe the long-suppressed Chinese consumer demand unleashed in the 1980s after the chaos and poverty of the Cultural Revolution. Today, the term is reemerging to describe the phenomenon of massive post-crisis consumerism. Since then, the SARS pandemic in 2003, the MERS epidemic in 2011, and the Fukushima explosion in 2015 also triggered a drop in sales followed by "revenge spending." It is not unlikely that this cyclical process will be repeated after COVID-19.

Source: Infogram.com

While most businesses in Switzerland and the rest of Europe are currently closed, China is experiencing just the opposite - the beginning of the "Revenge Spending" phase. On March 16, the China Daily newspaper published an article whose title was "Recovery wishlist being drawn up" - a wish list of activities and products to do or buy to recover from quarantine. In addition, a hashtag was published on Weibo dedicated to everything one would like to do after quarantine related to COVID-19. This has been copied over 100 million times.

Among the things most missed are restaurants, travel, shows, parties with friends, movies, sports and, of course, shopping. While tourism was severely affected by the epidemic, the Chinese are planning to travel again. Demand for travel in early May (vacation season) increased by nearly 35% year-on-year, according to a study by Alibaba's online travel provider Fliggy. The upswing is expected to be explosive. This proves that travel was not cancelled, but merely postponed. This has already happened in the fall of 2003 during the "Golden Week" with three times as many trips as usual.

Currently, brands are in the midst of a period of abstinence and isolation. For most of them, this is not the right time to sell products. It is still difficult to predict the impact on advertising investment. An initial estimate from eMarketer shows a $21 billion decline on a global investment of $691 billion. Despite this, the market is still expected to grow 7% this year, compared to the projected 7.4%. In China, we're talking about 6% less ad investment than expected, with growth of 8.4% (versus the previously expected 10.5%).

Of course, these predictions are only estimates. But all this means that marketers should not stay in the crisis, but implement long-term strategies. This particular time is an opportunity to work on the vision and develop an aggressive action plan. Companies must not be pressured by pessimistic forecasts. Marketing and advertising must prepare today for tomorrow's campaigns: Concept, creation, planning, so that when D-Day comes, all they have to do is push the button.

In summary, brands go through three phases. Right now we are in the shock phase, the adjustment phase. Campaigns are either paused or postponed. In a second phase, brands adjust their strategies. Then comes the third phase, where Revenge Spending kicks into action.

At a time when Switzerland is staying at home, the fact that life and consumption are returning to China is at least encouraging news.