“REVENGE spending” is real for upmarket Indonesian consumers who plan to go on shopping sprees as they emerge from pandemic lockdowns, a survey has found.
The post-coronavirus outlook is sunny for discretionary consumer spending, especially when it comes to lower-ticket items, such as clothes and skincare products.
Retailers should work to “radiate value” in reaching customers, and show strong personalisation for each market segment, according to the report from consulting firm McKinsey. That’s as consumers will deal-hunt after the lockdowns, while retailers have overstock to clear.
“This entails rethinking which ‘star products’ to highlight, as well as reconsidering overall product assortment and promotional calendars to effectively lower the customer hurdle by highlighting relevant products and offers, and by offering accessible entry price points,” its analysts wrote.
Still, McKinsey found that bigger spenders were more confident about reopening pocketbooks.
For instance, Indonesians who typically spend at least US$200 on clothing had a 40 per cent net intent to spend more now than before the outbreak, against just 4 per cent of those who spend US$10 to US$50 a month.
Similarly, those who spend more than US$350 a year on skincare were roughly twice as likely as those who spend less to increase spending, according to the poll.
Net intent represents the difference in the share of survey respondents who plan to spend less after the virus outbreak, and the share who plans to spend more.
Meanwhile, respondents - especially fashionista shoppers in Indonesia - indicated that they can’t wait to get back to physical stores, although McKinsey believes that “multi-category online marketplaces could be poised to gain the most momentum in the coming months” too.
“A number of the themes we are seeing cut across markets - the desire for value (with nuances that value does not only equate to low price) and the acceleration of online platforms,” McKinsey partner Simon Wintels, one of the report’s co-authors, told Asean Business.
“However, Indonesian retailers could consider which aspects most create delightful experiences in-store. This is because, while Indonesians seem to still look forward to going back to bricks and mortar, digital habits picked up or accelerated during Covid-19 will likely be sticky - which creates implications about how retailers think about the role of stores in the next normal.”
The firm has suggested that retailers rethink stores and blend their digital and bricks-and-mortar sales channels, “to create a mutually reinforcing customer ecosystem”.
“We saw consumers interacting with multiple channels and touchpoints, such as official brand websites, social commerce, online platforms, exclusive-brand stores, and multi-brand stores,” it said in its report.
“As consumers use more channels, it is important for companies to ensure that their experiences at each touchpoint are consistent, generate delight, and further enhance companies’ understanding of consumers.”
More than 3,600 urban consumers in China, India and Indonesia were polled from April 28 to May 10 on their post-pandemic shopping plans.