Back in the 2008 recession, luxury lingerie sales soared. During the Great Depression and the 2001 recession, people were buying lipsticks in droves. You’d expect consumers to cut down on these “luxuries” during a downturn - so what’s going on here?

Well, consumers’ behaviors and attitudes aren’t that straightforward. Sometimes they do the opposite of what you’d rationally expect. But even though every crisis brings its own unique challenges, there are lessons we can learn from past downturns to understand how consumers might behave in the future.

No other recession has ever followed a time of such severe restrictions before, so pent-up demand is high

There’s lots of talk about potential recessions in several major global economies heading our way again. While nothing is clear-cut yet, if it does come to pass, it’ll likely be very different to past slowdowns. No other recession has ever followed a time of such severe restrictions before, so pent-up demand is high.

We’d be lying if we said we had concrete answers. Nobody does. But what we can do is use our global data to try to piece together the puzzle, and offer up some predictions of where consumers’ discretionary spending might be headed in 2023.

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Vibe check on financial confidence

Globally, financial and economic confidence is starting to waver. This is a natural, expected reaction during times of uncertainty, similar to what we saw during the onset of the pandemic.

With the exception of APAC, consumers generally feel more confident about their financial situation than the economy as a whole. North America and Europe have seen the biggest decreases in financial and economic confidence since mid 2021, regions where confidence is significantly lower generally compared to others. Confidence in the economy has dropped by 40% in North America and 24% in Europe during this time.

Financial and economic confidence is starting to dip



However, outside of China, two-thirds of consumers say their current financial situation is secure

Pent-up savings off the back of the pandemic or a favorable job market could be contributing to feelings of greater financial comfort.

It’s important to remember that not everyone will feel the brunt in the same way, and while many consumers will no doubt make cutbacks and re-prioritize spending, many others - particularly higher earners - will continue to spend, and spend big.

Obviously, financial security during times like these is incredibly uncertain, and likely to fluctuate further. But, for now, many aren’t battening down the spending hatches just yet.

It’s called fashion, darling

We know from previous recessions that products and services can quickly shift from essentials to treats, or even expendables, in consumers’ minds.

So, which categories look set to make it into consumers' "treat" list in 2023?

Clothing ranks top for budget treats

Ranking based on the % of consumers who would buy the following as a treat for themselves on a budget


When it comes to treating on a budget, clothing is the only category to appear in the top 3 choices across all generations and genders.

With weddings and parties back on, many consumers aren’t so quick to say goodbye to their clothing wishlists. Some retailers are seeing sales slow, but others, like Zara owner Inditex, are seeing sales soar. The retailer's first-half sales and profits hit historic highs in 2022, suggesting some retailers are managing to weather the storm better than others.

Globally, purchases of clothing haven’t fluctuated significantly. For Gen Z in particular, they’re in line with pre-pandemic levels.

Using GWI USA, we can see “luxury for less” retailers are among the fastest-growing ones, with purchases from retailers like Marshalls and T.J.Maxx up 13% and 12% since mid 2021. This chimes in with Google’s own research where searches for “cheap holidays” and “designer outlet” surged in July 2022.


Off-price retailers ticking upward in the US

% of Americans who say they've shopped at the following retailers in the last 3 months


Consumers aren’t only focused on getting the cheapest product when it comes to clothing, they’ve got their eyes set on quality – something that’ll stand the test of time.

Quality ranks ahead of cost when deciding which brands to buy from

While price is important, it’s not always the wisest move to lower it – particularly for luxury brands. Decreasing prices could potentially reduce the aspirational power of a purchase, and even reduce trust.

Our research shows that quality is the top purchase driver overall, so brands should hone their messaging around the quality and durability of their items, as consumers look to make their money count.

Look good, feel good

During the 2001 recession, the phenomenon known as the “lipstick index” was born, when Estée Lauder observed increases in lipstick sales. In 2023, we can expect to see a similar story.

Ulta Beauty smashed its Q2 earnings expectations across all major categories. Coty’s cosmetics sales are up, with “prestige” sales rising by 20% during the beauty brand’s financial year. Meanwhile, Target and Walmart are both refreshing their beauty departments, with Walmart offering a more affordable display called “Beauty Finds”, where shoppers can nab deals for as low as $3.

In our own research, younger women are more inclined to prioritize buying skincare and beauty/​cosmetics as treats when on a budget.

Skincare/​beauty is high on the agenda

Ranking based on the % of consumers who would buy the following as a treat for themselves on a budget by age/​gender


For female millennials, beauty/​cosmetics and skincare nabs second and third place in their list of treats, just behind clothing

Beauty’s resilience is likely down to a combination of factors: more socializing, affordability, and emotional connection. The last one is important. Consumers are often reluctant to give up on little treats or indulgences that ultimately make them feel good, which is arguably even more important during hard times. It’s really the emotional connection that keeps consumers hooked, and something brands need to emphasize more in their campaigns.

Revenge travel is back with a bang

Many consumers aren’t paring back on big-ticket items either (literally). The number purchasing vacations or travel tickets has increased by 19% since mid 2021 outside of China. People have been cooped up for so long, so many aren’t willing to scrap getaways again anytime soon.

When we asked consumers what would bring them joy in the future, 55% said travel/​taking vacations – ranking second behind spending time with their family. Gen X and baby boomers also ranked travel within their top 3 priority purchases when on a budget, suggesting there’s other cutbacks they’d rather make instead.

Travel has started to pick up



Millennial vacationers in particular, are inclined to splurge on trips away to make up for lost time. Not only does this generation lead the way for saying vacations are important to them, they’re also willing to treat themselves at various stages of the vacation journey.

In fact,
millennials are

more likely than everyone else to say they’d spend extra on flights/​travel

The takeaway for brands? Expect millennials to be a key market for premium upgrades.

This really reinforces just how much consumers prioritize time off and travel after being tied down for so long. According to GWI Travel, just over 90% of consumers say they’re intending to take a vacation in the next 12 months, with many seeking some well-needed R&R. For many, breaks away are key to maintaining their wellbeing, so these are qualities that travel brands should lean into to catch consumers’ attention.


How can brands navigate a new era of travel?

FeatureWho's traveling where? And how? New questions are emerging about what’s next. And we've got answers.

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Price isn’t the only lever to pull

During downturns, most brands will increasingly compete on price.
In the UK, Boots has leaned into low-cost alternatives, launching a new “everyday” brand of toiletries for under £1.

Driving purchases through trust

% of internet users who say the following is important to them when deciding which brands to buy


But not all brands can compete on price, especially as their own costs increase. Consumers are increasingly aware that prices are rising - outside of China, two-thirds say the cost of living has increased compared to 3 months ago. So, as prices inevitably increase, how can brands keep consumers engaged?

Trust for the brand ranks third out of a list of 14 purchase drivers, coming ahead of discounts, good customer service, and purpose-driven factors. As we’ve seen in previous recessions, the trust gap can widen during times of uncertainty.

As consumers lose confidence, brands that build trust with customers become a much safer bet

As consumers lose confidence, brands that build trust with customers become a much safer bet

Businesses can build trust by being open and transparent about how price changes are impacting their business, and focus on building direct relationships with their customers to keep their loyalty even as they raise prices. At the same time, reassuring messages and actions that demonstrate empathy can also have a similar effect.

As businesses increasingly compete on price, the retailers that look set to stand out are those that prioritize building trust, keep innovating, and drive empathetic, value-add messaging – focusing on the person behind the product.

While the road ahead looks bumpy, it’s important for brands to remember that not everyone will be paring back spending completely. There’s still so much pent-up demand, and many consumers will be carving out space for their must-have treats.

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