Seventeen months into the recession, it’s becoming clear that some things — besides guns and ammunition — will still be selling on the eve of the apocalypse.
Such as a McDonald’s Quarter Pounder. Absolutely recession proof.
Same for French wine.
Chocolate. Cell phones.
And movie tickets.
Although Americans may be putting off big-ticket purchases like cars and appliances, they are still treating themselves, making some surprising categories not only recession proof, but recession fueled.
During the Great Depression, cosmetic sales surged, a phenomenon that became known as the “lipstick effect.”
“What we saw was a consumer trying to make themselves feel better through small, indulgent, hedonic consumption,” said Nancy Upton, of Northeastern University College of Business Administration in Boston. “They can serve as mood enhancers in today’s economy. Women get a boost from red lipstick.”
Consumer spending accounts for two-thirds of U.S. economic activity, making it critical to recovery. Consumers are crunching their budgets, deciding what’s expendable and what’s not. Luxury items, such as jewelry or fine watches, are getting their wrists slapped. Kids are learning they can do with fewer Barbies.
A USA Today headline: “Girl Scout cookie sales crumble.”
Take away our cookies at the office, but, Pilgrim, don’t touch our coffee.
The National Coffee Association wants you to know that sipping is steady at 54 percent of adults and that perking at home is up 5 percentage points. While fewer buy a cup at cafes, those drinking coffee to stay awake at work are still at it at the same rate (19 percent).
Retail sales were up 6 percent last year, the association said, adding that gourmet bean sales were back up to past levels and that 2008 was “exceptionally strong.”
Although it’s true that Starbucks and other latte slingers have been closing some locations, business at the Grand View Topless Coffee Shop in Vassalboro, Maine, was reported as “fantastic” by the owner.
Perhaps it’s time to note that condom sales are up, as are female contraceptives, as people try to avoid unexpected spending on diapers and baby food.
Cigar sales are holding up, said Rick Carson, manager of Tobacco Road Smoke Shop in Kansas City, Kan.
“When you try to switch to something cheaper, it’s not always for the good,” he said.
The forbidden Cubans, however, reportedly are down 3 percent globally.
Golf is getting killed, but as in every downturn, fishing equipment sales take a leap — 10 percent in 2008. Purchases of camping supplies indicate that more families will go off-road this summer to avoid hotel costs.
Movie theater revenues were up by 10.9 percent.
Nearly two out of three Americans (70 percent of women) say cell phone services are untouchable in the recession. Four out of five say their Internet connection is off-limits in cost-cutting.
“These are products that are allowing them to stay connected, and that’s a mechanism for coping,” Upton said.
Some things you just assume must survive any economic bottom. Take toilet paper sales.
Down!?! How is this possible? Or do we want to even know?
Is it because those Costco customers who bought those huge bales of the stuff years ago are still trying to use up the basement inventory?
And will men go without underwear? Mintel International, a global research company, predicts a 2.3 percent drop in sales in 2009.
While McDonald’s is a bright spot in the fast-food universe, pizza joints have been having trouble. How can you tell? Mozzarella cheese consumption is down 4 percent.
Milk consumption is stable, in part because dairymen are in the doldrums and the price of a gallon in January was 18 percent below a year ago.
For more adult beverages, it surprises some that beer sales, especially the imports, are worse than flat. But many types of wine are bubbling along quite nicely.
French wines are still sought after. But so are less expensive California bottles. Americans drank 467 million gallons of California wine the past year, up slightly from 2007. Much of this consumption was at home, experts say.
It might surprise you to know some car companies have fared well in a world full of full dealership lots.
Although two of Detroit’s Big Three are flirting with bankruptcy, and Toyota lost money for the first time since World War II, Subaru made a profit last year and is doing well this year.
“Year to date, Subaru is up 5 percent nationally,” said John Heshion, general sales manager at Jack Miller Subaru in North Kansas City.
Surprisingly, it’s largely on the back of a SUV, the Forester. Sales jumped 36 percent in 2008.
Hyundai’s success didn’t come from a product but a promise: It was the first to let owners bail out of their new cars without penalty if they lost their jobs.
Meanwhile, retailers of car parts and salvage yards always do well in a downturn, as owners try to ignore the odometer.
Another cheap thrill can be a bite of candy, especially the goodies that hearken back to one’s childhood — Necco Wafers, Bit-O-Honey, Hershey’s and Nestle candy bars, Upton said.
Hershey’s sales were up 30 percent last quarter.
Cost-cutting consumers have brought back brown-bag lunches. Naturally, bread sales got a 7 percent bump last year and are expected to keep rising. So are the products you put on a slice, certainly peanut butter. But folks aren’t eating as much of the high-end seven-grain types, shifting back toward white pan bread and less expensive loaves, said Charles Sosland of Milling & Baking News.
Dry pasta is up, too.
Pre-med student Samantha McDonnell of Kansas City isn’t about to hack her healthy lifestyle. She still opts for higher-priced items like nuts, olive oil and avocados, along with organic frozen dinners.
“I’ll get the low-sugar Russell Stover, which are more pricey but better for you,” McDonnell said. “Even if you are poor, you have to keep your spirits up and take care of yourself, or you will be more depressed.”
Fitness apparel is down — fewer pairs of athletic shoes were sold. Clothing stores have taken the brunt of consumer cutbacks, but even the economy can’t come between consumers and their denim.
Jeans sales rose 2.3 percent for the three months ending in February, while total apparel sales fell 6.3 percent. Even premium jean sales were up December through February, one of the most challenging times in consumer spending.
Women’s tights also have given the industry a leg up, with sales up 11 percent for the three months ending in February. Joan Holleran, director of research for Mintel International, said many women had deep emotional ties to their appearance, making cosmetics non-negotiable. She predicts that cosmetics sales will continue to rise, especially anti-aging beauty and sun-care products.
While some might be tightening their belts, Kansas City area Realtor Judy Klemm is more likely to buy a new one, or a pair of shoes. It’s part of her philosophy of “feeding the universe and it will feed back.”
“I can’t cut out shoes — maybe three or four new pairs a year,” she said. “There are certainly worse vices in the world.
“I get regular massages, pedicures, facials. It’s all there. I get my hair done every five weeks.”