In past few days I have read several intriguing blogs revolving around luxury consumption and how it will get affected by the recent downturn. Some of these posts include (Luxury consumption). The authors have mentioned the effect of recession on luxury consumption. In few of these blogs, building on an qualitative research, they discuss that the overall luxury consumption will not decline in comparison to this financial meltdown due to diverse variables including, mass consumption trends, tourism trends and the riseof rising economies from the developing world.

The general consumption trends indicate a fascinating consumption trend overall which has been branded 'the lipstick effect'. This effect relates to harder economic climate when consumers who are used to buying luxury brands incline to use less costly luxury products but the consumption style remains. It was initially discovered by analysts at Estee Lauder who realized a significant leap in Lipstick gross sales in the aftermath of Sep 11 attacks and Leonard Lauder, Chairman of Estee Lauder advertised it. Afterward when analysed, this effect was noticed through various recessionary cycles globe has experienced across nations.

There is affirmative trend emerging to support this effect. Rather than shifting their general expenditure and becoming frugal, consumers are merely trading down (another term quite known in fashion world) to cheaper luxury products to inspire themselves up. The drift is clearly found from the early gross revenue numbers from the world's big cosmetic firms including Shiseido, L'Oreal and others. The European personal products index is an excellent quality proxy for the world-wide cosmetics industry because it is dominated by L'Oral and Beiersdorf. So far in the downturn, this index has already surpassed the broader market by fortyfive percent.

The accessories (or what is termed accessible luxury) is a very interesting product category. They include product categories such as perfumes, belts, glasses, inexpensive jewellary, and so on. The inexpensive luxury brands, even if they are relatively affordable in monetary value (comparing to its high end and intermediary counterparts), still work as luxury goods as these goods are creative, sophisticated and also sold through luxury channels. Many of these brands are used for self-gift giving and also general gift-giving.

The low-priced luxury brands offer an intriguing comparative research environment to look into. There are distinct research gaps in our understanding as to: how do other accessible luxury products (else than Lipstick) perform relatively in comparison? how do cheap luxury brands perform in comparison to exclusive luxury (the real and very high end luxury); how do customers engage with these affordable luxury products?

These questions pose some intriguing gaps for further research...

Source: Forbes website; Paurav Shukla's marketing website and luxury consumption blog;  and luxury consumption really.