Inflation remains high. The same goes for consumer spending. In this week’s Halloween episode of “Behind the Numbers: Reinventing Retailour analysts have looked at a few silly and even spooky indices to assess consumer behavior in times of economic constraint.
The “lipstick index”: In tough economic times, consumers buy more lipstick because it’s a relatively cheap and justifiable luxury. At least, that’s what President of Estée Lauder claimed when the term was coined in 2001.
- “I think value is such a key element here,” said senior analyst Zak Stambor, noting that consumers are more focused on long-term use than immediate cost.
- Lipstick is an example of what lead analyst Suzy Davidkhanian describes as “little luxuries that are mood-boosting indulgences” that can help consumers feel better, even when it seems like “the world is collapsing”.
The “male underwear directory”: This phenomenon claims that men’s underwear sales go down when people have less money to spend, and go up when financial stress eases.
- “Men’s underwear [is] perhaps the least sexy purchase,” Stambor said, adding “at least for a lot of men.” Although underwear is a necessity, many consumers prioritize it behind gas, food and kids clothing.
- Like the “lipstick index,” this trend provides a limited understanding of gender-specific shopping, but the basic idea is that while consumers can splurge on small indulgences, less flashy necessities become less of a priority.
Halloween and holiday expenses: Despite rising prices, buyers will pass an all-time high $10.6 billion on Halloween this year, according to the National Retail Federation. And 36% of Americans will spend more on Halloween this year than they can afford, according to Lending Tree. Is Halloween spending seeing a “lipstick hint” style trend?
- The behavior is similar. “The whole ‘lipstick effect’ is the notion of hey, let’s live a little bit,” Stambor said. “And Halloween or the holidays ahead of us bring us some joy.”
- That said, the “lipstick hint” refers to buying items with “some kind of cache or bounty that makes you feel special,” Davidkhanian said. Holiday shopping doesn’t quite fit that definition, though the basic idea of a “little, progressive mood-lifter” remains.
What does this mean for retailers? “When times are tough, people don’t want to limit themselves to the bare minimum,” Davidkhanian said. Brands need to take this into account. “If you don’t have those impulsive little high-end luxuries, consider selling a range of fun but affordable products.”
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