How Small Luxuries and 2025 Trends Like Labubu Signal a Recession

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As economies slow down globally in 2025, consumer behavior is quietly sounding the alarm. A rising trend in spending on small luxuries, from high-end lipsticks to quirky collectibles like Labubu figures could be an early signal of a looming recession. People are changing their buying habits, which is based on how we study decision-making. This change provides valuable insights, particularly from the Indian market.

The Lipstick Effect: Luxury in Lean Times

The Lipstick Effect refers to a pattern where, during economic stress, consumers avoid big-ticket items (like cars or luxury holidays) and instead splurge on small, feel-good products. These include, Lipsticks and skincare products, designer coffee or artisan chocolates, and affordable fragrances or niche gadgets provide a sense of indulgence without breaking the bank. This shift in spending reflects broader economic insecurity.

Labubu & Niche Trends: Comfort in Quirky

Labubu

‘In 2025, collectibles like Labubu toys, Sonny Angels, and limited-edition anime figurines have surged in popularity among urban youth. What appears to be a playful trend is actually a form of affordable escapism:

  • Collectibles offer emotional comfort and nostalgia
  • They’re status symbols within niche communities
  • Costing between ₹500–₹6000, they feel indulgent yet “justified”

These trends mirror earlier recessions, where items like Beanie Babies or Funko Pops also saw a spike.

The Indian Perspective: Shifting Priorities

Matcha Lattes, India, Luxury, Global, Labubu

In India, small luxury spending is increasingly visible:

  • Nykaa, Sugar Cosmetics, and Forest Essentials report steady growth even as other retail sectors slow.
  • Young consumers in metros are choosing “little joys” like matcha lattes, journaling kits, or quirky collectibles over long-term financial planning.
  • Rising inflation, job uncertainty, and delayed career milestones are fueling this behavior shift.

Moreover, Tier-II cities are mirroring this pattern, with increased purchases in small electronics, beauty boxes, and fandom-based merchandise.

Are Small Luxuries a Red Flag?

Recession

While not a direct cause, rising sales of small luxuries are economic indicators of underlying caution:

  • Consumers are hedging emotionally in uncertain times
  • Spending is reactive, not aspirational
  • Market data from 2025 shows declining real estate and automobile demand, alongside rising lipstick and plush toy sales

Mini Indulgences, Major Signals

The 2025 small luxury trend shows that people are changing what they want to buy. Instead of focusing on big dreams, they are choosing affordable comforts, like luxury lip balms. This trend matters to investors, economists, and startups because it signals a bigger economic shift.

Also Read: How Labubu Dolls Became the World’s Most Adorable (and Addictive) Collectible

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