While the economy continues to reel under the impact of lockdown, the fortunate ones discovered their newfound love for the stock market during these times. We also came across a new concept called revenge spending, which could play a significant role to revive discretionary spending.
Economic sentiments continue to revolve around lockdown. Its effects and after-effects are going to stay with us for a long time to come. In an interesting trend that emerged during the lockdown, Indians seem to have discovered their newfound love in the stock market. This trend that picked up during the lockdown is where we see the irony died a thousand deaths.
Liquidity crunch and rising unemployment are presented as a major flip side of the ongoing crisis. While the concerns surrounding these issues are all valid, the fortunate ones seem to have embraced the growing trend of equity cult during these testing times.
Latest data from the Central Depository Services (India) Ltd says that Indians opened 12 lakh new Demat accounts in March and April 2020, higher than 9 lakh accounts opened in the first two months of the year. At the same time, 7 lakh new mutual fund folios were created in a month.
This story throws the light on the stark contrast that represents India. Under the same circumstances, while one India doesn't know where the next meal is coming from, the other one with plenty to spend decided to join the equity bandwagon.
Let's go shopping? Nah, Revenge spending is the new word!
Revenge shopping usually refers to the overindulgence to celebrate an occasion or to overcome frustration. It is like getting a chance to party after maintaining restraint for months.
After the lockdown, China was the first country to witness the trend of revenge spending. In several Chinese cities, consumers flocked the various brand outlets to beat the lockdown blues.
The French brand Hermes’ Guangzhou flagship store in China reportedly did $2.7 million in sales on the day it reopened in April. This is the biggest single-day shopping at a luxury outlet in China.
India witnessed a trailer of revenge spending on resumption of alcohol sales. A similar trend could emerge in the discretionary space that has been the worst victim of the lockdown.
Key takeaway:
Titan after reopening a few of its stores have reportedly observed a similar trend. The reopened stores have reported ~50% sales for Titan. The numbers are way higher than expectations. The response is phenomenal considering that India is still under lockdown and there is a clear preference for essential purchases over the discretionary spendings.
The trend could well spread into other discretionary segments. Many of them under lockdown have reported zero sales in April. One might call it pent up demand, relief buying or reverse spending; an autos dealer, AC or home appliance maker is desperate to welcome it with open arms.
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