Inflation buying not just cosmetic

QUEENSLAND retailers are hoping a surge in spending at cafes and on cosmetics in 2021 is repeated to ward off inflation fears in the coming 12 months.

According to data compiled by the Australian Bureau of Statistics, cosmetics within the toiletries and pharmaceutical category topped $4.5bn last year, while cafes, restaurants and takeaway food services made $9.6bn.

QUT consumer behaviour expert Gary Mortimer said there were two behavioural trends keeping the cafe and cosmetic industry elevated and strong.

The first was the lipstick effect.

“When times are tough, we’re concerned about the cost of living, we’re concerned about fuel prices and energy prices going up, we tend to want to reward ourselves,” Mr Mortimer said.

“So a lipstick, nail polish, and possibly even going out and getting a manicure or a pedicure, just a small cost helps us feel better about ourselves in life.”

Mr Mortimer said the second behavioural trend was habitual purchasing.

“We tend to seek normality and routine when things appear to be out of our control like when you can’t control your energy bill, or the increases in energy costs, fuel price increases, but you can make that decision to have a cup of coffee,” Mr Mortimer said. “It’s just that routine and regularity that tends to make us feel good.”

Adept economics director Gene Tunny said there had been a general trend of people spending more on cosmetic products for their appearance.

“The rise of social media, Tiktok and also people doing their Zoom meetings could be a factor in this,” Mr Tunny said. “I think the drivers of demand for coffee and for cosmetics are different, but they both may be resilient to the downturn.

“What you tend to see is that it’s expenditure on those larger items, what economists call ‘consumer durables’, fluctuate a lot within the business cycle.”

Mr Tunny said more expensive purchases such as a fridge or a TV might be put off, whereas affordable luxuries or more affordable pleasures like coffee and lipstick did not change.

National Retail Association chief executive Dominique Lamb said although the cafe and retail industry remained elevated and strong due to the lipstick effect, she did expect people to tighten their belts.

“Advice to shoppers out there is to make sure that you are budgeting and that you are living within your means, but also remember to shop with those small businesses,” Ms Lamb said.

“We’ve got to keep the industry going.”