Consumer's want to enjoy affordable luxuries

 

Consumers may be careful with their expenditure, but they will be spending on products that will make them feel special

 

As we bid farewell to 2023, a year where consumer spending unexpectedly surged due to hyperinflation, economists predict that 2024 will see shoppers continue to tighten their belts.

However, this doesn’t imply a halt in spending. Instead, the focus of purchases is expected to shift. With factors like inflation, high taxation, and a depreciated Rupee at play, consumers are likely to steer clear of high-priced items such as electronics, opting for smaller, more affordable luxuries instead.

In these uncertain economic times, consumers are becoming more selective about their purchases. There are essentials, and then there are “affordable luxuries” - items that aren’t necessary but are considered indulgences that won’t break the bank.

This craving for affordable luxuries, often seen during economic downturns, is sometimes referred to as the “lipstick index”. This term describes a minor economic boost driven by budget-conscious consumers seeking out relatively inexpensive indulgences, like cosmetics and treats.

In 2024, expect to see consumers splurging on small luxuries in the food and beverage sectors, such as specialty restaurants, snacks, and premium treats. Additionally, with stress levels high, shoppers are likely to prioritize wellness and personal care items. These range from small “glamour” items to self-care products like anti-aging serums and “clean” skincare.

Despite the economic climate hitting lower-income consumers harder, the desire to treat oneself remains. While high-end goods priced at Rs 50,000 or more may be out of reach, consumers might fulfill this need by purchasing “practical luxury” items, like the latest smart phone on easy payment schemes.

The “lipstick effect” of spending on small treats during challenging economic times is real, and it’s been evident this year. It’s not just about beauty - it extends to categories like treat foods. This trend could potentially drive significant growth in the beauty category this year. So, here’s to treating ourselves a little better in 2024!