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Buy something and forget the crisis

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Staff writer ▼ | January 29, 2009
LipstickLipstick and takeout food are not a cure for global economic crisis, but they can serve as mood enhancers for consumers.

This is has been the case during other periods of economic strain, including the Great Depression, as well, said assistant marketing professor Nancy Upton, an expert in the effects of mood on consumer behaviour from the Northeastern University. Upton says consumers under pressure still want to feel good, so they buoy their spirits in little ways.

They eschew the major purchases, like automobiles, homes, and luxury items. Instead, they buy quick pick-me-ups, like lipstick or takeout food, or spend their money on practical items that can be justified, she says.

"During the Depression, we saw something referred to as the ‘Lipstick Effect,’ which showed an increase in the consumer purchase of cosmetics, especially lipstick. What we saw was a consumer trying to make themselves feel better through small, indulgent, hedonic consumption. Today, some similar patterns can be observed," she says. L’Oreal cosmetics continues to report strong sales, as do fast-food restaurants like McDonalds, she says.

"Recession makes people more risk averse," she says. "We’re seeing the purchase of snow blowers is off the charts right now. People are buying so many snow blowers for 2000 dollars - I understand Home Depot is running out of stock." Unlike a luxury good, a snow blower is a justified expense, one that plays into increased nesting trends that also occur during recessions, she adds.

"If you’ve lost your job, there’s a tendency to spend more time at home. We tend to see an increase in home-related purchases, which could include kitchen goods, and in-home craft items," she notes.

Also entering the consumer mix is a wealthy segment of the population that has been unaffected by the economic downturn. Upton notes that Ferrari is having a good year. And locally, one high-end retail store reported to her that same-store sales figures have stayed the same. Although there are fewer shoppers, they’re buying more.

The lion’s share of shoppers is striking a compromise with their purchases, she says. Rather than go to a high-end restaurant, they may grab takeout on their way home from work. “They know it’s cheaper to eat at home, but they’re driving home at 7 o’clock at night because they had to work late, and they’re looking for a way to pick up their mood,” Upton says.

With the Lipstick Effect of the Great Depression, a woman would attempt to mood regulate by stopping off at a drug store and picking up a red lipstick, she says.

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