The RMIT academics cited Statista’s 2021 data on revenge spending in Seoul (South Korea), which recorded expenditure of 20% on electronics followed by 13.1% on luxury goods and fashion items from 2020 to the first quarter of 2021.
Australian consumers are also predicted to make a significant purchase once restrictions ease with a keenness to purchase big-ticket items of between AUD500-2000 (around VND8-32 million), according to a survey by Shopper. There is also growing expectations to spend on dining out and entertainment, reflecting sentiments in South Korea.
Dr Seng Kiat Kok warned that “these trends are not without risk, as the potential for return to lockdown arrangement looms”.
Citing findings by Reuters, he added that “while consumer spending has improved on 2020’s figures, foot traffic and ‘door-buster’ rushes have been replaced by a growing focus on online shopping”.
According to Think with Google, consumers in Vietnam are turning to e-commerce platforms to refresh themselves, their homes, and buying gifts. For instance, Tiki noted a 50% year-on-year jump in transaction volume in January 2021 in the lead up to the Lunar New Year, also called Tet in Vietnam. And in a study of Google Consumer Survey in May 2021, 39% of consumers shared they plan to make more online purchases during the 2022 Tet season.
According to Kantar, after the intensive lockdown for almost half a year, suffering from financial difficulties, and having no big celebrations, Vietnamese consumers are looking forward to Tet. 44% of consumers in Vietnam are planning to shop for Tet two weeks before Tet. Kantar emphasised that over the past few months, people shopped less frequently but more per trip. This new habit will change the way people shop for Tet 2022. Therefore, brands and retailers should push more combos to maximise the potential of bulky trip trend.
Ms Hua My Sang commented: “There is a need to balance the opportunity and risks involved with revenge spending. The looming cloud of COVID-19 can continuously threaten recovery, as new outbreaks and COVID-19 variants can be a constant worry.”
She also said that not all populations are keen to revenge spend. The South China Morning Post, for example, recorded a greater tightening up of expenditure in 52% of Hong Kong residents planning to increase their savings, reflecting similar trends in China and Singapore.
Likewise, Passport forecasts that consumer expenditure per household in Asia Pacific is set to remain among the lowest globally, due to not only a focus on savings but also as a product of economic inequalities and disruptions in supply chains, hampering both business and consumer confidence.
Ms Sang remarked: “Consumers seem to be taking a more pragmatic view, focusing on savings and maintaining basic needs.”
The RMIT associate lecturer elaborated that while the Statista data found 33% of revenge spending in South Korea was on tangible items, a large proportion of the remaining expenditure was focused on food (44%). In Vietnam, basic necessities spending increased drastically from 2019 figures, and due to lockdown conditions, consumers have been spending more time at home alongside preparing their own meals, as found by Deloitte’s Vietnam Consumer Survey released in February 2021.
Ms Sang pointed out that “while the retail marketplace and food and beverage sectors might be the first to gain since the end of lockdown conditions, the trend of revenge spending must be viewed with caution”.
“Consumer sentiment is strongly aligned to not only savings but also reflects a cautionary focus on expenditure with a view that economic conditions are still highly uncertain,” she explained.
Deloitte’s 2021 report affirms this with an increase of 30% from 2019 of surveyed respondents seeking to reduce expenditure. The high saving ratios in the Asia Pacific are further evidence of this trend, as Passport has observed. While there is indeed revenge spending, consumer discretion with purchases has been more prudent.
Dr Kok advised that in light of these trends and the uncertain new normal, “businesses in Vietnam need to navigate the recovery process carefully”.
“Inevitably, there is a keenness to return to business as normal, with increasing investment, expenditure and a focus on catching up on lost income during the lockdown. What businesses don’t want is a spiralling of not only debt but where opportunity becomes a threat to their survival,” he said.
He further remarked that revenge spending and Black Friday consumer sentiment may only be a short-term respite from the economic uncertainties brought about by the pandemic.
“The longer-term trends suggest the consumers will be more careful with their money where better value-added services and products need to be even more enticing before they decide to spend”, he said.
Citing Deloitte’s 2020 Vietnam Consumer Survey, Dr Kok noted the trend that consumers in Vietnam are becoming more informed and selective, and with growing affluence of the population, price points are less of a concern where instead quality attributes have become a major consideration.
Still, South East Asia is projected to remain the largest and the fastest-growing consumer market for the coming period of 2021-2040 – mainly due to being highly urbanised and economically developed – according to findings by Passport. With major conurbations in Vietnam accounting for high levels of consumer expenditure, the RMIT academics believe there are strong avenues for expansion and recovery.
“Much like consumer sentiment, a prudent approach towards a post COVID-19 future will see not only a balanced and considered approach to success, but may be the appropriate mindset of 2022,” both RMIT academics advised.
