Trading up in hard times — the lipstick effect in action.

As inflation has enveloped the economy since 2021, we’ve seen a persistent trend of consumers trading down — that is, buying more lower-end goods and fewer higher-end goods within in the same category. And that trend continued in 2024. In April to May 2024, the share of units sold of high-end goods — the two most expensive quartiles of goods — decreased compared to January 2024 in a range of ecommerce categories including:

• Electronics: -8.5%
• Apparel: -9.5%
• Home/Garden: -20.8%
• Furniture/Bedding: -11%

There are, however, notable exceptions to the trend. In economics, there is a concept known as the lipstick effect that in times of hardship, consumers will still buy high-end goods, but will do so in more inexpensive product categories — like lipstick, for example —rather than in more expensive categories.

In the first half of 2024 we saw this come to fruition. In the cosmetics category, high-end lipstick and fragrances have seen huge share increases from January 2024 to April-May 2024:

• High-end lipstick is up 37.1%
• High-end fragrance is up 19.4%

Buoyed by this trading up, lipstick and fragrance sales in April-May 2024 were both up 27% from the same period in 2023. And the entire cosmetics category is surging, up 7.7% year-to-date. Other products driving category growth are:

• Lip gloss up 31.4% year-over-year (YoY)
• Mascara up 8.6% YoY
• Concealer and foundation up 8.3% YoY
• Nail polish up 5.1% YoY

Vivek Pandya is a director of the Adobe Digital Insights Team. Adobe Digital Insights has been a leader in tracking the digital economy since 2013. Adobe Digital Insights offers the most comprehensive analysis of its kind based on trillions of visits and billions of transactions across the web. With the breadth and depth of our data, we are uniquely positioned to understand the economy, customer journeys, and use of creative AI.