"Lipstick Effect" on steroids: how to capitalize on people's desire to please themselves

Treatonomics, or the "gig economy," is a consumer trend gaining momentum around the world, CNBC reported. People are looking for ways to cheer themselves up in times of economic instability through "emotional" purchases. Which companies will benefit?

There are many indicators of consumer behavior to judge the health of the economy. One of them was invented by former Fed Chairman Alan Greenspan, recalls The Fortune magazine, the "men's underwear index". Although underwear is considered a basic necessity, men don't buy it as often during periods of economic instability, and as a result, its sales drop.

The term treatonomics or "small joy economy" is more appropriate to describe current consumer behavior. It's "like the 'lipstick effect' on steroids," Meredith Smith, senior director at analytics firm Kantar, told CNBC.

The essence of the "lipstick effect" is that in periods of crisis, sellers record an increase in their sales. This was the case, for example, during the economic crisis in the early 1990s. It also happened after the terrorist attacks in the United States on September 11, 2001, Estee Lauder chairman Leonard Lauder told The Wall Street Journal in the fall of 2001.

Right now, Smith says, consumers have a "heightened sense of uncertainty" and a huge number of opportunities to please themselves. "As a result, people are buying themselves nice little things for the sake of mental health and doing many other things - all to add joy to stressful times," she says.

"The 'small pleasures economy' is essentially a step up from the 'lipstick effect', agrees retail analyst at Peel Hunt John Stevenson in an interview with CNBC: "You cut back on day-to-day spending, you save on the basics, maybe buy more own-brand goods in the supermarket, but go to an Oasis concert at the weekend and spend £500-£1,000."

Economists agree that treatonomics will now be able to flourish.

Kantar's Global Economic Policy Uncertainty Index has characterized the current time as an era of "great uncertainty" - the most turbulent in 40 years. Kantar predicts that the current volatility will continue for at least another five to eight years. This suggests that the "economy of small pleasures" will continue for the next three to five years, Smith says.

U.S. sales rose 0.5% in July from the previous month and 3.9% on a year-over-year basis, revised June data showed a 0.9% increase over June. Sales rose in nine of 13 categories. But a deteriorating labor market and rising prices could hold back consumer spending growth in the third quarter, Reuters wrote.

Preliminary data from the University of Michigan showed that consumer sentiment in the US in August declined for the first time since April. In general, consumers are no longer preparing for the worst-case scenario for the economy, which they feared in April, when US President Donald Trump announced the introduction of mirror duties. But they are taking a worse view of conditions for buying durable goods and continue to expect inflation and unemployment figures to worsen going forward. And consumer expectations (according to Conference Board data for July) remained below the 80 threshold for the sixth consecutive month - anything below that mark usually signals an impending recession. In the UK, for example, the GfK Consumer Confidence Index for July 2025 fell to minus 19, down 1 point from June.

According to a July 9 McKinsey report, 79% of surveyed consumers worldwide are forced to look for bargains every time they make a purchase, more than half constantly monitor discounts, and nearly 49% of Americans plan to postpone purchases in the next three months. At the same time, in the first half of 2025, a third of respondents admitted to sacrificing some expenses for others, and 19% intend to reduce spending on basic goods, but spend more in the category of optional purchases.

According to Deloitte 's June 2025 data, in the U.S., the most popular product categories in "emotional" shopping were food and beverages (40%), clothing and accessories (28%) and personal care (10%). Deloitte analysts note that the median value of such purchases was $50.

Marketers and retailers are already taking into account changes in consumer sentiment and introducing "small pleasures" at democratic prices.

- Collectible toys

Players in the collectible toy segment - from rubber duckie seller Duck World to Pop Mart with Labubu toys - can win, CNBC mentions.

In addition to them, we can add to the list the American company Funko, a seller of toys with characteristically large heads and minimalist facial features. The company produces thousands of figures based on movies, TV series, games, comic books and even sporting events. Standard figurines cost $14.99, but the limited edition ones are resold on the secondary market for thousands of dollars. So here we can already talk about an investment niche. For example, Golden Ticket Willy Wonka & Oompa Loompa, released in only a few copies, sold for $100,000.

Analysts at D.A. Davidson reiterated a "buy" rating on shares of Funko in a report on August 7, but lowered their target price from $7 to $5. Even the new target implies an upside of about 74% from the closing price on Aug. 18. Analysts at D.A. Davidson recognize that the company is in a tough spot, with its stock price down 70% for the year. But as of Sept. 1, it will have a new CEO - Josh Simon, former vice president of consumer products at Netflix. In addition, the company has to deal with refinancing $109 million of debt (due September 2026). To reduce its debt load, it may sell its Loungefly accessories brand and $40 million worth of stock. According to D.A. Davidson, all of this could have a significant impact on the company's valuation and stock performance. Earlier in its report, D.A. Davidson wrote that at the San Diego Comic Con event, Funko's booth attracted huge lines and the exclusive "Batman" figures sold out in three hours. Analysts believe that such audience loyalty creates a platform for the constant launch of new limited edition series and will stimulate revenue growth.

Goldman Sachs also cut their target price on Funko shares from $5.50 to $2.50 on August 14, maintaining a "neutral" rating.

- Cinemas

But it will not be limited to toys. IMAX CEO Richard Gelfond noted that viewers are increasingly choosing premium entertainment formats, viewing a trip to IMAX theaters as an "affordable luxury," writes MarketWatch. On July 24, Wedbush analysts raised their target price on IMAX shares from $34 to $35 and maintained an "outperform" rating on the stock. The upside potential is nearly 36% to the closing price on Aug. 18. The investment bank emphasizes that IMAX is on its list of best investments due to a unique combination of factors: a surge in IMAX movies, content expansion, and a strong expansion in the number of theaters. All of this, they argue, is not just a one-time boost to box office receipts, but also increases IMAX's market share.

The company's Q2 2025 revenue grew 3% year-over-year to $91.7 million, beating market expectations, and EBITDA margin increased 7.8 percentage points to 42.6%.

- Glasses

Analysts at BNP Paribas on July 29 maintained an "outperform" recommendation and raised their target price on EssilorLuxottica shares from €288 to €302, which implies an upside of about 12.8% from the closing price on August 18. The company owns the Ray-Ban, Persol, Oliver Peoples and Oakley brands, and does licensed production for Chanel, Prada, Giorgio Armani and other fashion houses. In the first half of the year, the company's revenues rose 5.5% to €14 billion, while profits rose 1.4% to €1.45 billion. The key driver of revenue growth was the category of smart glasses, their sales tripled. The company's management believes it will be able to offset the impact of US duties in the second half of the year through marketing promotions. In addition, EssilorLuxottica announced the imminent release of "something very interesting", which may imply either a significant product update or the launch of a new brand, according to BNP Paribas. Among the factors of growth of EssilorLuxottica shares, the bank's analysts name further growth of sales of Ray-Ban Meta smart glasses and favorable pricing policy for consumers.

- Clock

Another company is Swatch Group. Its brand portfolio covers all price segments: premium (Breguet, Omega, Longines and Rado), medium (Tissot, Mido and Hamilton) and affordable - Swatch. The company has already offered consumers products in the "affordable pleasure" sector. In March 2022, it introduced the Omega x Swatch collection. This was the first time that a premium brand released a budget version of its watches for a general audience. The MoonSwatch was priced at around $260 at the time of its release - about $6k cheaper than the standard version of the Omega Moonwatch, GQ wrote. Demand for the budget version was so great that Swatch introduced a purchase limit - only one watch per hand. In the fall of 2023, the company released a similar Blancpain X Swatch collection, introducing a Blancpain version for $400.

Santander believes that new collaborations between the company's premium brands and Swatch could boost sales of the entire group. In its July 22 report, the bank raised its recommendation for Swatch Group shares from "neutral" to "above market" and its target price from 158 to 165 Swiss francs - that's 22.7% above the closing level on August 18. The bank notes that the key driver of the company's earnings growth will be the recovery of the Chinese economy. In this market, the company earned 27.2% of revenue in 2024.

- Cosmetics

Evercore Investment Bank added U.S. chain Ulta Beauty to its top 5 growing companies in a July 24 report and raised its target price from $490 to $595 with an "above market" recommendation. The upside potential is 15% to the closing price on Aug. 18. It is the largest retailer in the beauty segment in the U.S., with approximately 1,445 stores nationwide as of early 2025 and an assortment of about 29,000 products from more than 600 budget and premium brands. After two years of stagnation, the company has returned to positive revenue momentum. In its fiscal first quarter (ended May 3, 2025), its revenue rose 4.5% to $2.8 billion and earnings per share rose 3.6% to $6.7. Net income fell 2.6% to $305.1 million.

Evercore analysts believe that one of the key drivers of the company's growth will be the launch of the marketplace in September 2025. Ulta Beauty will select about 100 brands for it. This approach, according to the bank's analysts, increases the chances of quickly building a loyal customer base, it can turn Ulta into a search engine in the world of beauty, as Amazon is in online sales.

This article was AI-translated and verified by a human editor