When the economy struggles, many assume people will cut back on spending and focus only on necessities. However, reality often tells a different story. During uncertain economic times, a phenomenon known as the Lipstick Effect emerges, where people continue to spend on small indulgences that bring emotional satisfaction, even if they are not essential.
This phenomenon highlights that even when purchasing power declines, people still seek ways to enjoy life—whether through entertainment, experiences, or small luxuries that provide instant happiness. So, what consumer trends remain strong despite economic challenges? Let’s explore.
What Is the Lipstick Effect?
The Lipstick Effect is an economic psychology theory that explains how, during financial downturns, people still purchase small luxury items that offer emotional gratification. Instead of splurging on expensive items like cars or designer bags, they opt for more affordable alternatives that still bring them joy.
First introduced by economist Juliet Schor, this phenomenon has been supported by various studies showing that sales of cosmetics, entertainment, and collectibles remain strong during recessions or economic uncertainty. It reflects the fundamental human desire to feel good and control personal happiness, even in tough financial times.
Consumer Trends That Persist During Economic Hardships
Despite economic instability, some consumer habits remain resilient or even grow. Here are a few key trends:
Concerts as a Priority Entertainment Choice
Even with rising ticket prices, many people are willing to set aside money to see their favorite artists perform live. Concerts are considered unique, irreplaceable experiences, making them a high priority despite financial constraints.
The Fear of Missing Out (FOMO) plays a significant role, as fans don’t want to miss once-in-a-lifetime opportunities. Major concerts continue to sell out, proving that experiences hold more value than material goods for many. People are willing to invest in memories that last a lifetime.
The LaBubu Craze and Collectibles Market
The trend of collecting limited-edition items—such as LaBubu figures—continues to rise, even in sluggish economies. LaBubu, a unique and highly sought-after collectible, has captivated pop culture enthusiasts and collectors alike.
Owning rare items provides emotional satisfaction and an escape from financial stress. Additionally, collectibles like LaBubu often appreciate value over time, making them a fun indulgence and a potential investment.
Skincare & Makeup Sales Stay Strong
One of the most classic examples of the Lipstick Effect is the steady demand for beauty products, including lipsticks, skincare, and makeup. Even if people cut back on luxury purchases, they want to look and feel their best.
Beauty products are often seen as affordable self-rewards that boost confidence and overall mood. Studies show that when individuals feel good about their appearance, they tend to be more optimistic and resilient when facing daily challenges, making skincare and makeup essential, even in tough times.
Conclusion
The Lipstick Effect proves that despite economic downturns, people prioritize emotional well-being through small indulgences. Trends like attending concerts and purchasing collectibles such as LaBubu demonstrate that spending habits shift rather than disappear entirely.
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