What Consumer Psychology Reveals About Our Urge To Splurge

Furniture World News Desk on 5/30/2023

Deloitte is out with new research that found the urge to splurge is universal, indulged in by nearly equal measures regardless of the consumer’s age, income or gender.

Its survey, which spanned 23 countries and over 114,000 adults, found nearly 80% said they made at least one splurge purchase to lift their mood in the past month despite only 42% saying they could afford to make such indulgent purchases.

“It wasn’t a surprise that people will make purchases to treat themselves, but the fact that it is happening so much among so many people globally was a big surprise,” explained Justin Cook, Deloitte’s U.S. consumer products research leader.

Shopping to lift one’s spirits is the very definition of retail therapy. “We know that spending behavior is about more than just acquiring stuff. It is often about satisfying deeply felt emotional needs,” said consumer psychologist Chris Gray Psy.D., the Buycologist.

“When I look at spending patterns, I think of them like Rorschach inkblots because they give us insight into the internal lives of people doing the spending. They often reveal emotional needs that people may not even be aware of,” he continued.

Every Body Does It, Not Just People Who Can Afford It

While high-income consumers have a greater ability to splurge spend, the propensity to make such purchases cuts across all income levels. Looking at the U.S. consumers specifically, Deloitte found high rates of splurge purchases regardless of income, including 71% among low-income consumers (< $50k), 79% of middle-income ($50k to $99.9K) and 84% high-income (over $100k).

While high-income consumers spent almost twice as much as those with middle or low incomes – median spend of $50 compared to $27 for middle-income and $20 for low-income  – there is virtually no difference in their preferred indulgence: food and beverage, chosen by some 42% of U.S. shoppers.

“Food and beverage do more for us than just provide nourishment,” Gray shared. “It plays an important part in our emotional lives, like self-soothing, comfort and entertainment when bored. And we get rewarded by trying new flavors and tastes, like some new flavor of ice cream.”

He also noted food and beverage is an indulgence we often do with family and friends, so it is a shared activity.

“It gives us a chance to socialize and make connections with people. After coming out of a place where we were forced into isolation, we are having an epidemic of loneliness.” So indulging in food and beverage experiences with others can be a cure for that.

And Deloittte’s global retail, wholesale and distribution leader Evan Sheehan added that food and beverage is a highly experiential category that will continue to enjoy the “splurge effect” even if the economy slows.

“People have been spending more on travel recently, so this is a miniature version of that. They may not be able to take an expensive summer vacation if the economy forces them to tap the brakes on spending, but they can still have friends over.”   

Spending Varies By Category

Although food and beverage is the most popular treat, and it tends to be a lower-spend category as well, the Deloitte survey found significant differences in spending levels in fashion and personal care categories based on income.

High-income consumers spent on average 70% more than middle-income consumers on personal care purchases and 76% more than middle-income consumers on clothing and accessories.

In personal care, higher-income consumers can reach for premium luxury brands, like a $45 tube of Chanel lipstick, whereas lower-income consumers may opt for a more widely-distributed lipstick brand with an average retail price of $10, still an indulgence but one of lesser scale.

In clothing and accessories, the $100 price point is a threshold where different priorities emerge. For purchases below $100, consumers primarily want to make practical additions to their wardrobes that will last a long time. At price points above $100, the desire for function plummets and self-expression kicks in.

“People do a lot of post-purchase rationalizing for their indulgence purchases,” Gray observed. “Spending up to $100 is pretty easily rationalized. But it gets harder to rationalize spending over $100 on a t-shirt, for example, when perfectly good t-shirt brands sell for much less. That’s where the emotional factors become the leading driver for those purchases.”

Men Do It And Spend More

One of the other myths about splurge spending dispelled in the survey was the idea that women are the primary emotional shoppers. “There is a lot of talk about the ‘lipstick index’ as an indicator of women’s splurges, but men are equally likely to splurge and tend to spend about 40% more when they do,” Deloitte’s Sheehan reported.

“That makes sense when you think about men as not being as price conscious or price aware as women,” he explained, pointing to men’s indulgence in the premium spirits category. “Instead of just talking about women and the ‘lipstick index,’ the ‘bourbon barometer’ may be a more accurate reflection of men’s splurges,” he suggested.

Gray explained the psychological underpinnings of men’s tendency to splurge. “Traditionally, men have less permission to express their emotions openly, particularly vulnerable emotions like sadness, fear or loneliness. They have to find other outlets for expressing them, often done through sports or physical outlets. But when they shop, they can buy their way to meet those emotional needs without openly speaking about them.”

I’ve often observed this in the luxury market, where men are more motivated toward status-seeking purchases. The ‘peacock effect’ causes men to purchase extravagant ‘plumage’ to bolster their attractiveness to mates and their social standing.

And the Deloitte study showed, even as millennials spent the most on their splurges overall, that millennial men are significantly more indulgent than millennial women.  

Motivating Factors

Regardless of who they are and how much they spend, the motivating factors behind their purchases were consistent. “Wealthy people are looking for the same things as everyone else – practical comfort and stress relief,” Deloitte’s Cook said.

Various motivating factors were included in the survey specific to the most expensive splurge purchase people made. These included various stress-relief motivations, such as being comforting or relaxing, as well as utilitarian values, such as being practical or useful or long-lasting. Also included were other factors, such as being a way to express one’s self and offering a temporary escape.

Overall, offering a temporary escape scored low, while stress-relief and utilitarian purposes scored higher across the various splurge categories. But consumer psychologist Gray notes people’s post-purchase justifications may skew these findings.

“I’m always a little skeptical when I hear we’re surveying people about their emotions because so much of our emotional lives are not really known to us,” he observed. “When we ask people to pick A, B or C in a survey, we’re not getting to the underlying factors driving behavior.”

He points to the idea of escapism that didn’t rank highly as a motivating factor in the Deloitte survey. “I wouldn’t discount escapism. The term has a negative connotation like I’m avoiding problems and not dealing with my life.”

If the term had been presented as “taking a break” rather than “temporary escape,” that motivation might have ranked higher. “It’s important when talking about emotions to realize these are sensitive topics. We need to look at more subtle ways to get their emotional expressions,” Gray added.

Taking a break from the daily grind and rewarding oneself with a special treat is a far more positive motivation that likely underlies retail therapy. For example, one study found that making decisions while shopping is a way for people to take control of their environment – the very opposite of escapism – and that act alone improves people’s mood.

Revenge Isn’t The Motivator; Delight Is

Coming out of the pandemic, the concept of “revenge spending” was widely circulated as the reason why consumers came back in full force after the immediate threat of infection subsided. Psychologically, it makes sense since people want to reward themselves after being deprived of something, like a cheat day when dieting.

But here again, the negative connotation of the revenge term gets in the way. “When you’ve gone through a period of deprivation and feeling down, buying something, particularly a splurge item, is a mood booster. At the biological level, spending releases powerful neurotransmitters that make us feel pleasure and give us a sense of well-being,” Gray said.

So Deloitte’s Sheehan suggests we put a more positive spin on the term. “If living well is the best revenge, that’s the only reason I’d call these splurges ‘revenge spending.’ Our data shows people are looking for comfort and relaxation – that doesn’t sound like revenge to me,” he concluded.

About Pam Danziger: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992 where she leads with research to provide brands with actionable insights into the minds of their most profitable customers.

She is also a founding partner in Retail Rescue, a firm that provides retailers with advice, mentoring and support in Marketing, Management, Merchandising, Operations, Service and Selling.

A prolific writer, she is the author of eight books including Shops that POP! 7 Steps to Extraordinary Retail Success, written about and for independent retailers. She is a contributor to The Robin Report and Forbes.com. Pam is frequently called on to share new insights with audiences and business leaders all over the world. Contact her at pam@unitymarketingonline.com.