Here’s my take on Revenge Buying and what it means for Indian Retail Brands

I follow Anand Mahindra on Twitter and recently he tweeted in response to Confederation of All India Traders' tweet about record-breaking retail Diwali sales in 10 years. He asked Twitter users about their views on this chart-buster sale in 10 years. View the original tweet here.

Image Credits - Whiplash.com

My response to these record-breaking sales is – Yes, it’s a short-term Revenge Buying but this also means retailers will slowly return to a slightly lower level of physical sales while digital channels will see an upsurge.

When does Revenge Buying happen?

Revenge buying occurs when people spend lavishly on luxurious items to make lifestyle more intensifying after a Frugal spending period.

During lockdowns when people were holding up all their work from home, a couple of sweatpants was adequate to keep up the style. But post lockdown scenarios are quite different, people are shopping recklessly to make up for the lost period.

As noticed, the scenario of India differentiates from other countries in terms of revenge shopping. India's GDP rank shrank 7.3 percent in 2020-21. This was the poorest performance of the Indian economy in any year since independence.

Developed nations like the US anticipated that their retail sales will shoot up to 6-8 percent in 2021 which is huge. As developed nations like the US and France were able to save 1.7$ trillion and 66$ billion. Henceforth, Revenge buying is highly observed in developed countries.

Whereas, developing nations like India Witnessed a completely different situation. Before the lockdown, the graph of the middle class was 99 million which came to 66 million as so many people lost their jobs and encountered heavy losses. Therefore, the central mindset in everyone's mind was to cut extravagant expenses. But when it comes to the population, we always win in the number games. And brands majorly cover upper-middle class and high-income segments who have been trading top-notch brands ever since the fear of the third wave has impaired from their minds. Henceforth, India saw a mountainous graph in terms of revenge shopping.

But the question to explore is:

Has consumer behavior changed because of the pandemic and what does it mean for Indian retail brands?

I presume the Indian consumer is always known for his smart bargaining. And in today's date, every consumer is preparing themselves for a safe Future. But, as restrictions begin to relax buyers are optimistic for an affirmative tomorrow.

I would say that consumer behavior has changed drastically, while retail brands were previously pushing and luring customers for digital sales, there’s a high pull that COVID-19 has created for digital sales.

Despite the regulatory environment tightening the eCommerce industry and spike in cybercrimes, the Indian eCommerce industry has added 40 million new online shoppers in just one year. The sales have reached $55 billion in 2021. As per Industry Pundits, the country’s online shoppers will reach $300 million in the next five years and tier II and tier III cities are strongly contributing to these numbers.

How does Indian Retail Brands can convert short-term Revenge Buying into long-term Loyal Customers?

I have recently attended a very insightful ETBrand Equity’s Session on The Future of Retail: Winning in the digital age with transformational CX. The panelists were – 1. Anita Nayyar, COO-Media & Communication, Patanjali Ayurved Ltd, 2. Deepak Gupta, COO, Bombay Shaving Company, 3. Abhishek Gupta, Senior Vice President, Growth (D2C Business), Honasa Consumer Pvt Ltd (Mamaearth), and 4. Ratnesh Mehra, Director, CX Strategy & Transformation, Oracle India.

I will tie back my key takeaways from this session to our original topic of Revenge Buying and how brands can convert this short-term Revenge Buying into long-term sustainable sales –

1. Data is crucial – First things first, just like any other part of the world, Indian retailers have also witnessed ten years’ worth of Digital Transformation in a year. Revenge Buying has created huge data with already existing data and now the onus lies on retailers to use this data for creating Phygital – seamless, connected, and personalized experiences.

Retailers have data across the customer journey – discovery, engagement, consumption, and post-purchase. This data mountain can be churned and crunched to study past purchases, search patterns, available demographics, and spending power to create personalized experiences across websites, mobile app, and other eCommerce platforms. Stunning developments are made in the areas of AI-ML to ensure that huge data volumes are used to enhance current customer experience models.

If retailers want to convert this short-term buying into long-term sustainable brand loyalty, this is the time to use data, build a seamless customer experience, and develop personalized offerings. And, if they won’t do it, competitors will.

2. Every Retail Story is Different – COVID-19 had moved customers online and Revenge Buying is the proof. I absolutely loved the statements from Anita Nayyar COO, Patanjali Ayurved. While brands are thoughtlessly jumping on the technology wagon, Anita made it clear that Patanjali is not exploring any such technologies for creating immersive experiences. And it makes complete sense for FMCG. No one is going to try toothpaste at a mall or D-Mart or Big Bazar. What they need is sure-shot availability of brands they have been using for years. They have brand-loyal customers who don’t want new offerings every day but need their products available across all channels. After all no one changes their dishwashes, toothpaste, soaps, and body washes every day, right?!

What they have done very brilliantly is solving the last-mile delivery problem by building their own logistics function called Pariwahan. They have their Supply and Distribution Platform which is developed, maintained, and run by a Patanjali-owned IT company called Bharuwa Solutions. She further added how Patanjali is using digital by having his presence on almost all digital channels like Amazon, Flipkart, Website, Mobile Application and that’s what they intend to do.

Brands need to learn that every brand story is different, and it is on them to figure out what makes complete sense for them – whether it’s building a robust supply chain or providing AI-AR experiences, or establishing personalized kiosks for their customers.

3. Single Source of Truth – With Phygital back from the sabbatical, both online and offline sales are picking up. Revenge Buying is happening across channels and this doesn’t mean that brands get over-whelmed and fail to capture this data. This means avoiding the mistake of past and collating all your data in a single source of truth – Be it your Customer Data Platform or Customer Relationship Management platform. Make sure your data is clean, crisp, and recorded properly. Then only brands can create experiences customers are looking for. This also helps in building the right sales attribution model and putting more budgets on the channels where sales happen, creating targeted communication strategies.

Wrapping Up

Revenge buying has created opportunities for retailers to move customers online and collect data to build models for sustainable sales in the future. God forbid, if something similar like COVID-19 happens in the near or late future, retailers are well-equipped with technology, data, and machinery to keep businesses in profit and customers loyal.