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Revenge Spending Expected
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Joyce L. Gioia, CMC, CSP --  The Herman Group Joyce L. Gioia, CMC, CSP -- The Herman Group
Austin, TX
Thursday, March 11, 2021

 

The Herman Trend Alert

March 10, 2021

Revenge Spending Expected

CAVEAT: Sadly, the Governors of the several of the Republican-controlled states have decided to prematurely lift their mask mandates and open restaurants (and bars) to 100 percent capacity. This misguided move may result in proliferating virus mutations and thus, variants. If that disease spread comes to pass, as expected, it will cause a delay in the arrival of Normal 3.0 (our Post-COVID environment), which is when we will see Revenge Spending.

On Monday, I attended a meeting of the Carolinas Chapter of the Institute of Management Consultants USA. One of the featured speakers was my friend Clicksuasion's Dr. Michael Barbera. A couple of weeks ago, I wrote a Herman Trend Alert, I wrote about his "6 Top Consumer Trends for 2021." One of the trends Michael talked about first was "Revenge Spending."

Restrictions=Pent-Up Demand

The restraints imposed by the COVID-19 Pandemic have been onerous for many of us. We miss eating out at restaurants; we miss traveling and seeing new sights; and we miss going to plays and concerts. Many family events have been postponed due to limitations on the sizes of gatherings. This pent-up demand will result in what is called "Revenge Spending."

Not Just a US Phenomenon

Because the Pandemic initially appeared and was first resolved In China, Revenge spending was first seen in China in May with luxury goods. For example, in May, Tiffany saw a 40 percent drop in its global net sales, but a 90 percent increase in spending in China. Some companies, including Suitsupply and AEO Inc., the parent company of American Eagle have seen their business in China grow substantially. Those companies also expect significant increases, as Europe and the United States recover. But fashion and ready-to-wear are only the beginning. The now-vaccinated people in the US who have been staying home to protect themselves and their families will, once again, take to the skies and the roads---domestically, at first. They will visit the open restaurants in record numbers. . . and more dining establishments will open to serve these now free-to-spend consumers.

Who Will Benefit?

The main beneficiaries will be the airlines, hotels, and restaurants which have been operating at low levels, if at all. Travel and hospitality---at least domestically---is in for a boom, not seen in recent history. Since many countries outside of the US have not vaccinated their citizens in sufficient numbers, people from North America are unlikely to travel there. Plus, for a while, travelers will still be concerned about the extra precautions we have been taking for SARS-CoV-2. The few cruise lines (notably Viking Cruises) that have invested in onboard screening, labs, and treatment will be rewarded with passengers; others will continue to struggle. For the most part, international leisure travel will be slow to return to previous levels.

Who Stands to Lose?

Consumers will abandon the home improvement retailers, that have seen double-digit gains, in favor of other avenues for spending, like travel and leisure. The food delivery services, like DoorDash and UberEats, will see their businesses decline, as the customers who ordered the deliveries, now choose to get out of the house and sit with friends in local restaurants. Also, I think restaurant patrons will be better tippers, at least for a while, as an expression of appreciation for what they know their favorite servers have lived through.

How Long Will it Last?

My best guess is that this revenge spending at local restaurants will continue for at least 6 to 9 months. Expect the stock price for OpenTable to rise. Travel and leisure revenge spending will continue for years, especially when international travel becomes available once more.

Special thanks to Mike Barbera of Clicksuasion for the thought-leadership behind this Herman Trend Alert.

Next Week's Herman Trend Alert: Unhappy Employees are Ready to Bolt

For years now, I have been waiting for a new survey to give us current numbers on the state of employee engagement. From Gloat.com, the internal talent platform, comes a brand-new study worth looking at in detail. More than half of the employees surveyed expect to change jobs within the next year. Tune in next week for more details---and what to do about it.

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News Media Interview Contact
Name: Joyce L. Gioia, CMC, CSP
Title: Certified Speaking Professional and Management Consultant
Group: The Herman Group
Dateline: Austin, TX United States
Direct Phone: 336-210-3548
Main Phone: 800-227-3566
Cell Phone: 336-210-3548
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