Reference News Network August 14 report: The U.S. Consumer News and Business Channel website published an article on August 8, titled "From Lipsticks, Plush Toys to Concerts, the 'Reward Economy' is Flourishing in Times of Uncertainty." The translation is as follows:
The "reward economy" is a consumer trend that encompasses consumption from "daily luxuries" to broader positive life experiences. As people seek to boost their moods during this unsettling economic period, the reward economy is thriving.
Purchasing small items to "cheer up" is a long-standing trend to cope with economic recessions. In times of economic hardship or uncertainty, consumers often turn to buying affordable personal items such as cosmetics, perfumes, candles, even rubber ducks or plush toys to lift their spirits.
Therefore, it's no surprise that this consumption trend has long been regarded as a barometer of consumer confidence in the broader economy. The current macroeconomic environment is characterized by persistent inflationary pressures, sustained high interest rates, and concerns about economic growth and employment.
This phenomenon is not new. For example, the "lipstick effect" (the theory that lipstick sales increase during economic downturns) has existed for nearly a century. John Stevenson, a retail analyst at Britain's Piers Hunter Company, said, "In general, the 'lipstick effect' means treating yourself to small rewards when facing financial pressure."
Stevenson said, "People may not be able to afford a new dress, but they can always buy a new lipstick. They may not be able to afford a new sofa, but they can buy a sofa cushion or some cushions. They may not be able to redecorate their house, but they can buy a new tablecloth." He pointed out that this is why the home goods retail industry is "more resilient than people think."
The pandemic and a re-evaluation of the components of personal happiness and a rich, memorable life have driven the "reward economy": consumers are willing to make daily sacrifices to gain "experiences," especially rare events, such as spending $200 or more to attend a concert by American pop star Taylor Swift.
Stevenson said, "The 'reward economy' can be seen as a step further than the 'lipstick effect.' Under the 'reward economy,' people cut back on daily living expenses... but at the same time, they spend between 500 to 1,000 pounds (1 pound is approximately 1.36 dollars) to attend a concert."
Economists agree that the 'reward economy' will continue to thrive in times of economic uncertainty and unstable consumer confidence.
Meredith Smith, a senior executive at Britain's Kantar Group, which specializes in retail analysis, said, "This is like an enhanced version of the 'lipstick effect.' Because consumers have a strong sense of uncertainty and have more choices and channels than ever before, they can turn daily decisions into opportunities to reward themselves. Thus, people begin to add a romantic touch to their diet, clothing, and home decor, purchasing gifts they like to promote 'mental health,' and so on. All of these are aimed at injecting joy when troubled."
Smith said that for almost every generation alive today, traditional life milestones such as marriage, buying a house, career achievements, and retirement seem different, and they are being redefined or gradually disappearing, "either because of people's desires or because they can no longer be achieved."
This has led people to shift from celebrating "milestones" to celebrating more "mini-milestones," which has driven the rapid rise of the "reward economy."
Smith pointed out, "For those without a partner or children, they don't hold weddings or baby showers, but instead invest their energy in breakup parties, pet dog birthday parties, and daily acts of self-rewarding behavior in pursuit of happiness. People reward themselves with cake or even diamonds when they break up or fail to get promoted."
Smith said, "(Kantar's Global Economic Policy Uncertainty Index indicates that) compared to the past 40 years, we are currently in an era of 'huge uncertainty.'"
Kantar predicts that the volatility and uncertainty we are experiencing will likely not subside for another 5 to 8 years.
Kantar noted, "This gives us a strong signal that the 'reward economy' will at least last for another 3 to 5 years. For brands, this is a challenge, as they need to be flexible and adapt to the development of these subtle trends." (Translated by Hu Wei)
Original: https://www.toutiao.com/article/7538384139066638884/
Statement: This article represents the views of its author. Please express your opinion by clicking on the [Like/Dislike] button below.