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Could ‘Revenge Spending’ Spur a Luxury Rebound Post Virus?

Confinement leads to frustration leads to revenge leads to (potential) salvation.

calendar | ic_dehaze_black_24px By Brice Goulard | ic_query_builder_black_24px 2 min read |

It’s no secret that the current situation with COVID-19 has had dramatic effects on the consumption of luxury goods, including watches. Manufactures are closed (Rolex, Patek, AP, TAG Heuer and many more have ceased operations for a couple of weeks), and even though shops might be opened in certain regions, the mood isn’t ripe for spending USD 10,000 on a luxury watch, simply because no one can predict how the situation will evolve in a couple of weeks from now. The industry has started to suffer from the effects of Coronavirus and a crisis is to be expected. But what if something known as ‘revenge spending’ could be the positive outcome to put some cash back into watch brands’ pockets?

Beijing, China, 10 March 2020 – Chinese women wear protective masks as they walk by a luxury store – Photo by Kevin Frayer/Getty Images

The idea of ‘revenge spending’ isn’t new and was already used to describe the Chinese consumer demand that was unleashed in the 1980s after the chaos and poverty of the Cultural Revolution. Now that the situation seems to be under control in China, a certain (cautious) optimism is seen in major cities and citizens have been spotted walking into luxury stores – and spending! And when you know that China accounts for about a third of the luxury industry’s sales, this isn’t anecdotal. And now that there are “signs that China’s own outbreak is coming under control“, it might be time for revenge spending to rear its head again. And let’s hope that this will be the case in Europe and in the US. Once confinement is over, we’ll need to recover from weeks of frustration and luxury consumption could help. And this could be the salvation for the luxury watch industry.

Check out the full story on ‘Revenge Spending’ here, at Bloomberg.

4 responses

  1. The theory is quite sound but I note the photograph at the start shows a Rolex boutique. I very much doubt Rolex will benefit from “Revenge Spending” as there are very few stainless steel sports models available now and probably after the crisis. Of course Rolex might make many such watches available after the crisis which would be confirmation of their deceit as the watches always were available but were being withheld to generate false exclusivity. Rolex might try to cover their deceit by arguing that they used the crisis to stock up on stainless steel sports watches but of course that would be entirely dishonest since Rolex have stopped production. So Rolex has a dilemma – to benefit from any “Revenge Spending” they have to reveal their lies or they will suffer as consumers turn to other brands.

  2. I hope they crash and burn, the way ADs treat people who are spending big $ and the way the grey market is going is a disaster, let the market regulate and clear up the BS. I’m not shedding a tear or loosing sleep over some ADs and brands going out of business.

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