![\"\"](\"https://content.ibisworld.com/media/j0gequ2p/shutterstock_2650324683.jpg?rmode=max&width=720\")
The lipstick effect, more recently known as “treatonomics,” was developed in the 1930s to explain trends during the Great Depression. The idea is that consumers seek out small luxuries and rewards during times of economic uncertainty or fear. Shopping for desired or beloved items gives many consumers a morale boost, which they seek most during difficult times. The trend has reappeared in recent years, as consumers have navigated a global pandemic, rising geopolitical tensions that have resulted in wars and trade disputes, higher consumer product prices and surging wealth disparity.
\n\n
The lipstick effect illustrates that a share of recent economic gains is the result of rising fear and uncertainty about the economy, rather than strong confidence and rising wealth. The lipstick effect has mixed results when looking at the wider economy, fueling sales of affordable treats and luxuries like fragrances, makeups, concerts, golf clubs, artisan coffee and watches, while lowering spending on new home construction, expensive cars and other major purchases.
\n\n
Spending on goods and services, particularly those that provide the user with significant utility or pleasure, gives consumers an emotional reward. The emotional reward, or “feel-good effect,” that consumers obtain feeds into the perceived value of an item. For example, purchasing a designer perfume that is a considerable upgrade in quality can give the purchaser added confidence and joy. Consumers are more likely to splurge on products that they believe will imbue them with positive feelings when the larger economic outlook is bleak. For this reason, economic analysis has shifted away from strictly rational analysis to incorporate consumer emotions and how they influence purchasing decisions. This has led businesses to increasingly implement rewards programs and targeted marketing efforts to sway purchasing decisions.
\n\n
In general, waning economic confidence pushes consumers to be more diligent about their spending. In particular, consumers have dealt with declining purchasing power amid inflationary pressure and higher interest rates. As a result, the US dollar doesn’t go as far as it did prior to the pandemic, forcing consumers to allocate their spending more effectively and strengthening their focus on maximizing perceived value. As consumers have become more risk-averse, they have turned away from luxury spending to focus on the essentials. Any money that is left over may be parlayed into purchasing more affordable treats and rewards.
\n\n
Since 2020, the Consumer Confidence Index (CCI) has exhibited significant volatility. The value of the index sat above 100.0 to begin 2020, before falling considerably over the first half of the year. While confidence has improved since mid-2020, it remains below pre-pandemic figures. Consumer confidence climbed in 2024 as the economy showed signs of lower inflation and dipping unemployment rates. In 2025, tariff rate hikes have exacerbated lingering concerns about higher product prices, threatening to raise prices even higher by ballooning prices on imported goods. However, signs of easing inflation for retail goods like consumer durables and groceries provide a bit of hope. Still, costs for housing and services remain the primary drivers of inflation and still directly impact disposable income levels for consumers.
\n\n
With spending on new home construction and services expected to remain subdued, this will reallocate spending for many consumers toward retail goods, groceries and other essentials. This trend benefits spending on businesses in the beauty and cosmetics, fashion, food, renovation and alcohol industries, at the expense of spending on high-end luxury goods, travel and construction. Overall, consumer spending levels remain resilient, with consumers largely shifting spending away from certain product categories toward others. These trends illustrate upcoming difficulties for businesses focused on large-scale purchases of luxury goods, potentially harming business formation in the coming years. Meanwhile, retailers will remain well-positioned to benefit from favorable consumer trends and higher product prices, fueling further gains in revenue and profit. The three largest retailers in the US (Walmart, Amazon and Costco), exhibited revenue gains of 7.0%, 9.0% and 4.0% in 2024, respectively.
\n\n
Businesses focusing on fashion, beauty and cosmetics, artisanal food and drinks and home goods benefit from retailing small luxuries that are viewed as affordable indulgences by many consumers. These industries typically perform well when confidence falls, as consumers will reward themselves with a nice box of chocolates or a new scarf, rather than purchasing a new sports car. While these products are more affordable than many other luxury goods, they are still highly profitable and can generate significant revenue. Tobacco and alcohol products can also be included in this category, as many consumers view them as “little treats” that won’t break the bank.
\n\n
These small luxuries remain desirable amid economic uncertainty because many consumers can purchase them without significantly impacting their overall budgets. At the same time, they provide a much greater emotional boost than purchasing more common items, like a new broom or tires for a car. Many consumers can talk themselves into these smaller purchases, with some substituting large luxury purchases, like a new property, for a smaller luxury instead. As consumer spending power is eroded, many look for rational ways to reallocate their budgets to remain within their budgets while maximizing utility.
\n\n
![\"\"](\"https://content.ibisworld.com/media/q2shraja/treatonomicsarticlechart1.png?rmode=max&width=720\")
As a result, businesses manufacturing and retailing these affordable luxuries are well-positioned to bolster performance, with economic uncertainty expected to linger into the coming years. These businesses can focus on retailing goods that are highly profitable and benefit from having greater perceived value among customers. For many of these businesses, what is lost in the lower average transaction sizes is surpassed by the number of units they can sell, compared with larger luxury purchases like automobiles. These business models provide much greater revenue stability than other luxury industries; revenue also remains high when consumer confidence rises and consumers have more disposable income again to allocate to treats and small luxuries.
\n\n
Construction, automotive and travel businesses have been especially hard hit by significant uncertainty in the US and global economies. Purchasing products from these industries represents a massive financial commitment for households, resulting in lower spending on these items when economic uncertainty climbs. 24.0% of US consumers are delaying or canceling major purchases because of the recent government shutdown and general uncertainty. Since purchasing a new home, automobile or vacation can eat up a large share of a household’s budget, individuals reallocate the spending toward household essentials, small luxuries and less-costly recreation.
\n\n
![\"\"](\"https://content.ibisworld.com/media/k3dayngm/shutterstock_2604217535.jpg?rmode=max&width=720\")
Higher interest rates have contributed to the downturn in the construction, automotive and travel/accommodation industries. Many customers borrow when making a large purchase, particularly for automobiles and homes. Recent gains in interest rates have made the cost of borrowing higher, essentially raising the costs of making a large purchase. As these products are made less financially feasible by higher rates, customers delay making these purchases. While consumers may eventually splurge on homes, automobiles and vacations, they will simply defer these purchases until they have more funds, relying less on borrowing and credit markets.
\n\n
This conservation mentality acts as an indicator for the broader economy. When consumers begin delaying large purchases, it signals caution in response to economic uncertainty, higher prices and rising interest rates. US households currently have more than $70.0 billion in debt. This highlights the current strain that many consumers are under, with recent rate hikes and higher prices putting more stress on them. However, spending on many other consumer product categories remains strong, with some economists believing this may signal easing inflation, which could ultimately influence the US Federal Reserve to lower interest rates in 2026.
\n\n
Looking ahead, there are various conflicting trends that paint a murky picture for retailers and other businesses either growing or suffering because of the lipstick effect. Consumers appear poised for further struggles in 2026, with inflationary pressure, slow wage growth and higher living costs continuing to squeeze wallets. The low levels of consumer and business confidence have dimmed the labor market outlook, potentially leading to further hardships for households. These trends would make consumers more cautious and price-sensitive, leading to greater competition and tighter profit margins for businesses. Households will continue to prioritize essentials like groceries, clothing and utilities, while focusing disposable income spending on small treats.
\n\n
![\"\"](\"https://content.ibisworld.com/media/gatmipjg/treatonomicsarticlechart2.png?rmode=max&width=720\")
At this time, retailers focused on small luxuries are expected to perform well in 2026. The economic outlook should not prevent customers from continuing their spending patterns from 2025, with overall household wealth remaining high. This should prevent a shift toward total value-oriented spending, where consumers shutter nearly all unnecessary spending and focus on discounts, secondhand goods and private labels. Instead, retailers are expected to perform well, continuing to focus on improving value and quality for their products to attract and retain business.
\n\n
For 2026, consumer spending patterns are expected to remain robust, with US retail exhibiting strong overall growth since the pandemic despite consumer difficulties. Still, many retailers will adjust their expectations to account for recessionary fears and a dim consumer landscape. For fragrance retailers, for example, this may involve new variations and promotions for less-expensive Eau de Cologne products, while de-emphasizing expensive Eau de Parfum items.
","TimeToRead":7,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-11T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 11, 2025","UrlSlug":"/treatonomics-retail-consumer-goods/","SeoTitle":"Treatonomics: How Economic Uncertainty Is Rebalancing Industry Growth","SeoDescription":"Economic uncertainty drives consumers toward small luxuries, reshaping growth across retail and consumer goods.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Economic Growth","recession","Retail","Consumer Behaviour","Consumer goods","Consumer sentiment","Inflation"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item2": {"Id":7885,"Key":"6a518a9d-1ff3-481f-b88c-7fe9ecbba2b7","Title":"Treatonomics: How Economic Uncertainty Is Rebalancing Industry Growth","Country":"United States","CountryId":1,"AuthorId":7882,"AuthorName":"Matthew Buchko","AuthorTitle":"Sr. Industry Analyst","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"The lipstick effect, more recently known as “treatonomics,” was developed in the 1930s to explain trends during the Great Depression. The idea is that consumers seek out small luxuries and rewards during times of economic uncertainty or fear. Shopping for desired or beloved items gives many consumers a morale boost, which they seek most during difficult times. The trend has reappeared in recent years, as consumers have navigated a global pandemic, rising geopolitical tensions that have resulted in wars and trade disputes, higher consumer product prices and surging wealth disparity.
\n\n
The lipstick effect illustrates that a share of recent economic gains is the result of rising fear and uncertainty about the economy, rather than strong confidence and rising wealth. The lipstick effect has mixed results when looking at the wider economy, fueling sales of affordable treats and luxuries like fragrances, makeups, concerts, golf clubs, artisan coffee and watches, while lowering spending on new home construction, expensive cars and other major purchases.
\n\n
Spending on goods and services, particularly those that provide the user with significant utility or pleasure, gives consumers an emotional reward. The emotional reward, or “feel-good effect,” that consumers obtain feeds into the perceived value of an item. For example, purchasing a designer perfume that is a considerable upgrade in quality can give the purchaser added confidence and joy. Consumers are more likely to splurge on products that they believe will imbue them with positive feelings when the larger economic outlook is bleak. For this reason, economic analysis has shifted away from strictly rational analysis to incorporate consumer emotions and how they influence purchasing decisions. This has led businesses to increasingly implement rewards programs and targeted marketing efforts to sway purchasing decisions.
\n\n
In general, waning economic confidence pushes consumers to be more diligent about their spending. In particular, consumers have dealt with declining purchasing power amid inflationary pressure and higher interest rates. As a result, the US dollar doesn’t go as far as it did prior to the pandemic, forcing consumers to allocate their spending more effectively and strengthening their focus on maximizing perceived value. As consumers have become more risk-averse, they have turned away from luxury spending to focus on the essentials. Any money that is left over may be parlayed into purchasing more affordable treats and rewards.
\n\n
Since 2020, the Consumer Confidence Index (CCI) has exhibited significant volatility. The value of the index sat above 100.0 to begin 2020, before falling considerably over the first half of the year. While confidence has improved since mid-2020, it remains below pre-pandemic figures. Consumer confidence climbed in 2024 as the economy showed signs of lower inflation and dipping unemployment rates. In 2025, tariff rate hikes have exacerbated lingering concerns about higher product prices, threatening to raise prices even higher by ballooning prices on imported goods. However, signs of easing inflation for retail goods like consumer durables and groceries provide a bit of hope. Still, costs for housing and services remain the primary drivers of inflation and still directly impact disposable income levels for consumers.
\n\n
With spending on new home construction and services expected to remain subdued, this will reallocate spending for many consumers toward retail goods, groceries and other essentials. This trend benefits spending on businesses in the beauty and cosmetics, fashion, food, renovation and alcohol industries, at the expense of spending on high-end luxury goods, travel and construction. Overall, consumer spending levels remain resilient, with consumers largely shifting spending away from certain product categories toward others. These trends illustrate upcoming difficulties for businesses focused on large-scale purchases of luxury goods, potentially harming business formation in the coming years. Meanwhile, retailers will remain well-positioned to benefit from favorable consumer trends and higher product prices, fueling further gains in revenue and profit. The three largest retailers in the US (Walmart, Amazon and Costco), exhibited revenue gains of 7.0%, 9.0% and 4.0% in 2024, respectively.
\n\n
Businesses focusing on fashion, beauty and cosmetics, artisanal food and drinks and home goods benefit from retailing small luxuries that are viewed as affordable indulgences by many consumers. These industries typically perform well when confidence falls, as consumers will reward themselves with a nice box of chocolates or a new scarf, rather than purchasing a new sports car. While these products are more affordable than many other luxury goods, they are still highly profitable and can generate significant revenue. Tobacco and alcohol products can also be included in this category, as many consumers view them as “little treats” that won’t break the bank.
\n\n
These small luxuries remain desirable amid economic uncertainty because many consumers can purchase them without significantly impacting their overall budgets. At the same time, they provide a much greater emotional boost than purchasing more common items, like a new broom or tires for a car. Many consumers can talk themselves into these smaller purchases, with some substituting large luxury purchases, like a new property, for a smaller luxury instead. As consumer spending power is eroded, many look for rational ways to reallocate their budgets to remain within their budgets while maximizing utility.
\n\n
As a result, businesses manufacturing and retailing these affordable luxuries are well-positioned to bolster performance, with economic uncertainty expected to linger into the coming years. These businesses can focus on retailing goods that are highly profitable and benefit from having greater perceived value among customers. For many of these businesses, what is lost in the lower average transaction sizes is surpassed by the number of units they can sell, compared with larger luxury purchases like automobiles. These business models provide much greater revenue stability than other luxury industries; revenue also remains high when consumer confidence rises and consumers have more disposable income again to allocate to treats and small luxuries.
\n\n
Construction, automotive and travel businesses have been especially hard hit by significant uncertainty in the US and global economies. Purchasing products from these industries represents a massive financial commitment for households, resulting in lower spending on these items when economic uncertainty climbs. 24.0% of US consumers are delaying or canceling major purchases because of the recent government shutdown and general uncertainty. Since purchasing a new home, automobile or vacation can eat up a large share of a household’s budget, individuals reallocate the spending toward household essentials, small luxuries and less-costly recreation.
\n\n
Higher interest rates have contributed to the downturn in the construction, automotive and travel/accommodation industries. Many customers borrow when making a large purchase, particularly for automobiles and homes. Recent gains in interest rates have made the cost of borrowing higher, essentially raising the costs of making a large purchase. As these products are made less financially feasible by higher rates, customers delay making these purchases. While consumers may eventually splurge on homes, automobiles and vacations, they will simply defer these purchases until they have more funds, relying less on borrowing and credit markets.
\n\n
This conservation mentality acts as an indicator for the broader economy. When consumers begin delaying large purchases, it signals caution in response to economic uncertainty, higher prices and rising interest rates. US households currently have more than $70.0 billion in debt. This highlights the current strain that many consumers are under, with recent rate hikes and higher prices putting more stress on them. However, spending on many other consumer product categories remains strong, with some economists believing this may signal easing inflation, which could ultimately influence the US Federal Reserve to lower interest rates in 2026.
\n\n
Looking ahead, there are various conflicting trends that paint a murky picture for retailers and other businesses either growing or suffering because of the lipstick effect. Consumers appear poised for further struggles in 2026, with inflationary pressure, slow wage growth and higher living costs continuing to squeeze wallets. The low levels of consumer and business confidence have dimmed the labor market outlook, potentially leading to further hardships for households. These trends would make consumers more cautious and price-sensitive, leading to greater competition and tighter profit margins for businesses. Households will continue to prioritize essentials like groceries, clothing and utilities, while focusing disposable income spending on small treats.
\n\n
At this time, retailers focused on small luxuries are expected to perform well in 2026. The economic outlook should not prevent customers from continuing their spending patterns from 2025, with overall household wealth remaining high. This should prevent a shift toward total value-oriented spending, where consumers shutter nearly all unnecessary spending and focus on discounts, secondhand goods and private labels. Instead, retailers are expected to perform well, continuing to focus on improving value and quality for their products to attract and retain business.
\n\n
For 2026, consumer spending patterns are expected to remain robust, with US retail exhibiting strong overall growth since the pandemic despite consumer difficulties. Still, many retailers will adjust their expectations to account for recessionary fears and a dim consumer landscape. For fragrance retailers, for example, this may involve new variations and promotions for less-expensive Eau de Cologne products, while de-emphasizing expensive Eau de Parfum items.
","TimeToRead":7,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-11T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 11, 2025","UrlSlug":"/treatonomics-retail-consumer-goods/","SeoTitle":"Treatonomics: How Economic Uncertainty Is Rebalancing Industry Growth","SeoDescription":"Economic uncertainty drives consumers toward small luxuries, reshaping growth across retail and consumer goods.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Economic Growth","recession","Retail","Consumer Behaviour","Consumer goods","Consumer sentiment","Inflation"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item3": {"Id":7885,"Key":"6a518a9d-1ff3-481f-b88c-7fe9ecbba2b7","Title":"Treatonomics: How Economic Uncertainty Is Rebalancing Industry Growth","Country":"United States","CountryId":1,"AuthorId":7882,"AuthorName":"Matthew Buchko","AuthorTitle":"Sr. Industry Analyst","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"The lipstick effect, more recently known as “treatonomics,” was developed in the 1930s to explain trends during the Great Depression. The idea is that consumers seek out small luxuries and rewards during times of economic uncertainty or fear. Shopping for desired or beloved items gives many consumers a morale boost, which they seek most during difficult times. The trend has reappeared in recent years, as consumers have navigated a global pandemic, rising geopolitical tensions that have resulted in wars and trade disputes, higher consumer product prices and surging wealth disparity.
\n\n
The lipstick effect illustrates that a share of recent economic gains is the result of rising fear and uncertainty about the economy, rather than strong confidence and rising wealth. The lipstick effect has mixed results when looking at the wider economy, fueling sales of affordable treats and luxuries like fragrances, makeups, concerts, golf clubs, artisan coffee and watches, while lowering spending on new home construction, expensive cars and other major purchases.
\n\n
Spending on goods and services, particularly those that provide the user with significant utility or pleasure, gives consumers an emotional reward. The emotional reward, or “feel-good effect,” that consumers obtain feeds into the perceived value of an item. For example, purchasing a designer perfume that is a considerable upgrade in quality can give the purchaser added confidence and joy. Consumers are more likely to splurge on products that they believe will imbue them with positive feelings when the larger economic outlook is bleak. For this reason, economic analysis has shifted away from strictly rational analysis to incorporate consumer emotions and how they influence purchasing decisions. This has led businesses to increasingly implement rewards programs and targeted marketing efforts to sway purchasing decisions.
\n\n
In general, waning economic confidence pushes consumers to be more diligent about their spending. In particular, consumers have dealt with declining purchasing power amid inflationary pressure and higher interest rates. As a result, the US dollar doesn’t go as far as it did prior to the pandemic, forcing consumers to allocate their spending more effectively and strengthening their focus on maximizing perceived value. As consumers have become more risk-averse, they have turned away from luxury spending to focus on the essentials. Any money that is left over may be parlayed into purchasing more affordable treats and rewards.
\n\n
Since 2020, the Consumer Confidence Index (CCI) has exhibited significant volatility. The value of the index sat above 100.0 to begin 2020, before falling considerably over the first half of the year. While confidence has improved since mid-2020, it remains below pre-pandemic figures. Consumer confidence climbed in 2024 as the economy showed signs of lower inflation and dipping unemployment rates. In 2025, tariff rate hikes have exacerbated lingering concerns about higher product prices, threatening to raise prices even higher by ballooning prices on imported goods. However, signs of easing inflation for retail goods like consumer durables and groceries provide a bit of hope. Still, costs for housing and services remain the primary drivers of inflation and still directly impact disposable income levels for consumers.
\n\n
With spending on new home construction and services expected to remain subdued, this will reallocate spending for many consumers toward retail goods, groceries and other essentials. This trend benefits spending on businesses in the beauty and cosmetics, fashion, food, renovation and alcohol industries, at the expense of spending on high-end luxury goods, travel and construction. Overall, consumer spending levels remain resilient, with consumers largely shifting spending away from certain product categories toward others. These trends illustrate upcoming difficulties for businesses focused on large-scale purchases of luxury goods, potentially harming business formation in the coming years. Meanwhile, retailers will remain well-positioned to benefit from favorable consumer trends and higher product prices, fueling further gains in revenue and profit. The three largest retailers in the US (Walmart, Amazon and Costco), exhibited revenue gains of 7.0%, 9.0% and 4.0% in 2024, respectively.
\n\n
Businesses focusing on fashion, beauty and cosmetics, artisanal food and drinks and home goods benefit from retailing small luxuries that are viewed as affordable indulgences by many consumers. These industries typically perform well when confidence falls, as consumers will reward themselves with a nice box of chocolates or a new scarf, rather than purchasing a new sports car. While these products are more affordable than many other luxury goods, they are still highly profitable and can generate significant revenue. Tobacco and alcohol products can also be included in this category, as many consumers view them as “little treats” that won’t break the bank.
\n\n
These small luxuries remain desirable amid economic uncertainty because many consumers can purchase them without significantly impacting their overall budgets. At the same time, they provide a much greater emotional boost than purchasing more common items, like a new broom or tires for a car. Many consumers can talk themselves into these smaller purchases, with some substituting large luxury purchases, like a new property, for a smaller luxury instead. As consumer spending power is eroded, many look for rational ways to reallocate their budgets to remain within their budgets while maximizing utility.
\n\n
As a result, businesses manufacturing and retailing these affordable luxuries are well-positioned to bolster performance, with economic uncertainty expected to linger into the coming years. These businesses can focus on retailing goods that are highly profitable and benefit from having greater perceived value among customers. For many of these businesses, what is lost in the lower average transaction sizes is surpassed by the number of units they can sell, compared with larger luxury purchases like automobiles. These business models provide much greater revenue stability than other luxury industries; revenue also remains high when consumer confidence rises and consumers have more disposable income again to allocate to treats and small luxuries.
\n\n
Construction, automotive and travel businesses have been especially hard hit by significant uncertainty in the US and global economies. Purchasing products from these industries represents a massive financial commitment for households, resulting in lower spending on these items when economic uncertainty climbs. 24.0% of US consumers are delaying or canceling major purchases because of the recent government shutdown and general uncertainty. Since purchasing a new home, automobile or vacation can eat up a large share of a household’s budget, individuals reallocate the spending toward household essentials, small luxuries and less-costly recreation.
\n\n
Higher interest rates have contributed to the downturn in the construction, automotive and travel/accommodation industries. Many customers borrow when making a large purchase, particularly for automobiles and homes. Recent gains in interest rates have made the cost of borrowing higher, essentially raising the costs of making a large purchase. As these products are made less financially feasible by higher rates, customers delay making these purchases. While consumers may eventually splurge on homes, automobiles and vacations, they will simply defer these purchases until they have more funds, relying less on borrowing and credit markets.
\n\n
This conservation mentality acts as an indicator for the broader economy. When consumers begin delaying large purchases, it signals caution in response to economic uncertainty, higher prices and rising interest rates. US households currently have more than $70.0 billion in debt. This highlights the current strain that many consumers are under, with recent rate hikes and higher prices putting more stress on them. However, spending on many other consumer product categories remains strong, with some economists believing this may signal easing inflation, which could ultimately influence the US Federal Reserve to lower interest rates in 2026.
\n\n
Looking ahead, there are various conflicting trends that paint a murky picture for retailers and other businesses either growing or suffering because of the lipstick effect. Consumers appear poised for further struggles in 2026, with inflationary pressure, slow wage growth and higher living costs continuing to squeeze wallets. The low levels of consumer and business confidence have dimmed the labor market outlook, potentially leading to further hardships for households. These trends would make consumers more cautious and price-sensitive, leading to greater competition and tighter profit margins for businesses. Households will continue to prioritize essentials like groceries, clothing and utilities, while focusing disposable income spending on small treats.
\n\n
At this time, retailers focused on small luxuries are expected to perform well in 2026. The economic outlook should not prevent customers from continuing their spending patterns from 2025, with overall household wealth remaining high. This should prevent a shift toward total value-oriented spending, where consumers shutter nearly all unnecessary spending and focus on discounts, secondhand goods and private labels. Instead, retailers are expected to perform well, continuing to focus on improving value and quality for their products to attract and retain business.
\n\n
For 2026, consumer spending patterns are expected to remain robust, with US retail exhibiting strong overall growth since the pandemic despite consumer difficulties. Still, many retailers will adjust their expectations to account for recessionary fears and a dim consumer landscape. For fragrance retailers, for example, this may involve new variations and promotions for less-expensive Eau de Cologne products, while de-emphasizing expensive Eau de Parfum items.
","TimeToRead":7,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-11T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 11, 2025","UrlSlug":"/treatonomics-retail-consumer-goods/","SeoTitle":"Treatonomics: How Economic Uncertainty Is Rebalancing Industry Growth","SeoDescription":"Economic uncertainty drives consumers toward small luxuries, reshaping growth across retail and consumer goods.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Economic Growth","recession","Retail","Consumer Behaviour","Consumer goods","Consumer sentiment","Inflation"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false}}}