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Revenge spending’ by the rich could drive luxury recovery

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A luxury rebound in China is fueling hopes of a rapid recovery for high-end brands. Yet analysts say the wealthy are likely spend very differently in the post-pandemic world.

Many of the biggest brands in China — including Louis Vuitton, Hermes, Gucci and Prada — are seeing rapid bounce backs in sales as stores reopen in China, according to Claudia D’Arpizio, partner at Bain & Co who focuses on luxury. After a steep and sudden drop in the first quarter, many top brands will end up positive for 2020 in China given the strong sales, she said.

The Hermes store in Guangzhou, for instance, hauled in $2.7 million in sales the day it reopened in April —believed to be a record for a boutique in China. The burst of sales has created a new retail term for the post-lockdown rebound: “revenge spending.” The idea is that consumers were shopping starved during their quarantine and are overcompensating by splurging more than usual. 


“We’re seeing people come back to the stores quite quickly,” D’Arpizio said. “It’s not yet at the same levels yet as it was before the crisis. But revenge spending is happening — and also to some degree in Europe. The people who are coming back into the stores are strongly motivated to buy. 

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