“You won June. Enjoy the money, I hope it makes you very happy. Dear Lord, what a sad little life, June.”
A slight paraphrase from an iconic ‘Come Dine With Me’ moment but oh so relevant! As I reflect on my own unusually prolific spending over June, my social media feeds suggested many people were leading parallel lives…so have we all been spending like Silicon Valley billionaires? There must be more to it.
With my curiosity peaked, I delved deeper to discover whether I had encountered a frequency bias known as the Baader-Meinhof phenomenon, or if many of us were in fact ‘revenge spending’.
What is Revenge Spending?
According to Collins Dictionary, the act is defined as spending excessively after a period when one has had limited opportunities to spend.
It is perhaps described more vividly by Jerry Patterson, senior vice president of retirement and income solutions at Principal: “To me, it's all that stuff you were going to do, but didn't because of COVID," he says. "All those things that were on the to-do list that you want to go back and almost violently spend that money [on]."
Built up frustration
During the pandemic, with non-essential experiences abruptly halted, we reluctantly saved more and spent less. According to the Deloitte State of the Consumer Tracker report, the personal saving rate at the end of 2020 was 14.2%, nearly double of what it was in December 2019.
Saving is good though, right? Surely, we’d be happy to have more disposable income? Well… not necessarily. This is due to an unpleasant motivational reactance evoked by restrictions. Psychological reactance is “the motivational state that is hypothesized to occur when a freedom is eliminated or threatened with elimination” (Brehm and Brehm).
Being told we can only partake and spend money on essential activities has created an urge for us to snatch that control back. Vaccine rates increasing, death rates decreasing, and employment stabilizing has meant the fears that once crippled us into coyness, are no longer at the forefront of our minds.
The latest Barclays UK Consumer spending report claimed “non-essential spending returned to growth for the first time since October 2020, increasing by 5.8% compared to the same period in 2019 as consumers supported re-opened non-essential retail and hospitality venues.”
How retail & hospitality businesses can take advantage
Revenge spending won’t last forever. While consumers are catching up on lost time, it is important for retailers and hospitality venues to do so, too.
Analysts have predicted a boom in retail and tourism, which means an increase in spending and those using cash as a means of converting their home currency.
However, several global establishments followed a trend to deny cash payments due to a fear of virus spreading (later debunked by the World Health Organisation). With masses wanting to spend their cash, why would you create an obstacle for people to pay?
With the worst of pandemic (hopefully) behind us, it about time those establishments dropped the self-detrimental cashless payments only services, or risk deterring potential customers and profit.
Having seen so many stories of a new normal, it will be great to finally revert to some of the good old normal. Remember, “If it ain’t broke, don’t fix it.”
To discover how Glory can assist you with your cash handling transformation, click here.
