For consumers, splurges aren’t just lipstick

Younger and wealthier consumers are somewhat more likely to treat themselves, but high levels of splurging happen across age and income groups. Given this mass participation, these purchases can add up to significant consumer spending.

Opening the aperture

Suppose the lipstick index is the poster child of splurge purchases during tough economic times. In that case, we picture a female consumer buying cosmetics as an affordable luxury and temporary escape from financial woes. But consider the following:

1. Men splurge too: This is not just a female trend; men are statistically as likely to splurge as women. And when they do, men shell out the most money—almost 40% more globally and in the United States on various items.⁵ Gender spending differences are particularly strong among millennial males, who spend US$20 more than their female counterparts (figure 2).
2. We eat and drink our treats: The most popular category for splurging is not cosmetics but food and beverage (figure 3). Globally, consumers are almost three times more likely—and four times more likely in the United States—to say their recent splurge purchase was food and beverage compared to personal care. Men, in particular, make up 57% of the global splurges in food and beverage, while spending 60% more than women. And while it’s easy to imagine consumers treating themselves to small snacks or specialty coffees, it’s notable that premium spirits volumes were up 13% in 2022.⁶
3. Splurges are sizable: Although there is a wide range of prices, the prevailing price for leading lipstick brands in the United States is about US$10.⁷ Compare that to the US$32 global median price of a splurge purchase in our data, which jumps to US$50 when excluding food and beverage. In particular, consumers splurge in the electronics category, with a median spend of US$182. It seems most splurges aren’t just lipstick and encompass higher price points.

Consider a new picture of splurging: A millennial male treating themselves to a nice dinner out to relax—which also solves a practical problem like hunger—or stocking up on premium spirits to purchase an accessible luxury. Perhaps along with the lipstick index, we should all be talking about the bourbon barometer.

US data drilldown

Splurges are often described as providing an escape or a simple luxury. However, across all our categories, more consumers tell us they seek comfort and relaxation (i.e., stress relief). Surprisingly though, these purchases aren’t entirely about hedonic drivers. Consumers seem to need to justify splurge purchases as practical and long-lasting (i.e., of utilitarian value).

But discussing drivers becomes more valuable within a particular category and a given price point. Two examples from the United States illustrate valuable patterns that can emerge.

Changing clothes

The reasons why consumers report that they splurge on apparel seem to shift around the US$100 price point (figure 4). Below US$100, clothing purchases are justified as practical additions to a wardrobe that will last a long time and provide comfort. After US$100, a new dynamic starts to kick in. The need for the purchase to be practical starts to plummet, and self-expression becomes much more important. Escapism, long associated with splurges, isn’t a driving factor.

More care in personal care

Even within lipstick's category, personal care, consumers indicate they are generally more interested in wellness than glamour when treating themselves. Our data indicates purchases in this category are usually about comfort and relaxation. Consumers may be treating themselves with health and wellness-oriented products to help alleviate current economic stresses. Like with apparel, at higher price points, the drivers change somewhat. Practical drivers start to drop off, and a chance to try something new generally ramps up steadily with higher prices, as does self-expression. Again, escapism does not seem to play much of a role.

Putting it to use

Many companies orient their marketing efforts around “occasions” and “life events.”⁸ The “splurge occasion” could open up the opportunity for retailers to capture new sales from consumers buying to treat themselves. If they have a deeper understanding of what consumers seek during these occasions, retailers may be able to monetize the demand by creating personalized messaging content geared to consumers’ drivers. For example, focusing marketing efforts on a scarf’s fashionable attributes may be tempting. Still, under US$100, it may be more effective to lure customers by also tying in the practicality of the purchase. And in the personal care space, splurging is generally happening around wellness, but emphasizing newness and novelty could motivate higher-priced purchases.

Our data has painted a new picture of a splurge purchase. Whether it’s called the lipstick index or the bourbon barometer, one constant is that consumers generally relieve the pressures of frugality by occasionally treating themselves. For retailers, avoiding stereotypes and broadening their understanding of the drivers of these occasions can prompt splurge sales of all kinds.