Deloitte Reveals How Consumers Are Splurging

In Deloitte’s latest update to its ongoing Global State of the Consumer Index, researchers found that lipstick isn’t the only splurge consumers are making — in fact, while sales of lipstick, perfume and other cosmetics are up, despite economies being in recession, the full story behind splurging is a much richer one.

To help retailers and brands better position themselves to capture these sales, Deloitte’s research aims to understand splurges’ who, what and why. The company’s research asked consumers in 23 countries if they were making purchases to treat themselves, then created a database with nearly 150,000 consumer descriptions of their splurge purchases.

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Deloitte’s experts say linking marketing to “splurge occasions” could open up the opportunity to capture new sales.  Consumers use treating themselves with splurges as a way to relieve the pressures of frugality, making it important for retailers to understand splurge drivers to create personalized messaging.

Importantly, Deloitte points out that the idea of the lipstick index imagery may be misleading. This term, explained researchers, “lends itself to an image of a female consumer buying cosmetics; [however], Deloitte found that when men splurge, they spend 40 percent more than women globally and in the U.S. on various items.”

Many consumers are making tradeoffs to navigate the current economic downturn, but data shows they are still treating themselves and they know when they are doing it. Key findings within the report include that “most of us are splurging.” Globally 77 percent of consumers say they have made a splurge purchase in the last month alone. In the U.S. this group rises to 81 percent.

Those most likely to treat themselves are younger and wealthier consumers, but high levels of splurge spending are seen across all age and income groups.

In addition to lipstick, many consumers are splurging on what they are eating and drinking making the food and beverage category the most popular category for splurging. U.S. consumers are four times more likely to report their latest splurge purchase was food and beverage (42 percent) compared to personal care (11 percent).

While still considered a luxury, these splurge purchases are still largely practical and consumers say they prefer them to be long-lasting, particularly when spending on apparel or personal care.

Notably, when it comes to apparel purchases, the shift in perspective happens around the $100 range, where below this price point clothing purchases are considered to be “justified as practical additions to a wardrobe that will last a long time and provide comfort.” When an apparel purchase is over $100, consumers’ need for practicality starts to drop and self-expression becomes more important.

Similarly, in the personal care category, drivers have changed where practicality drops off. Consumers indicate they are generally more interested in wellness over glamour when treating themselves but are also likely to pay higher prices when the purchase is associated with trying something new and includes a type of self-expression.

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