Perfume Sales Are the Next Economic Bellwether

Fragrance Forecasts

When gauging the state of the economy, the nose knows.

The way Americans spend their money can shed light on the state of the US economy. But one surprising product has the pungent power to clue economists into consumer sentiment: perfume.

During times of economic strength, consumers have little issue dishing out for fancy fragrances. But during periods of economic uncertainty, spending on perfume typically takes a predictable shift.

Cheap Perfume Surges

During tough economic times, consumers often adjust their budget and buy more affordable brands or smaller quantities of certain goods.

This dynamic is currently playing out in the perfume market. This year, demand for cheaper roll-on rollerball perfume is up 207% annually and up 183% for perfume samplers. Plus, smaller bottles of perfume are selling at nearly three-times the rate of the total fragrance market.

The Perfume Effect

The consumer tendency to spend on small luxuries during a downturn is known as the Lipstick Effect: if you can’t afford to buy a new car, you might at least be able to treat yourself to new lipstick. More so than economic forecasts, the Lipstick Effect can show how consumers are really feeling about their budget.

Currently, a ‘perfume effect’ suggests consumers find the state of the economy a little fishy. If they felt confident, it’s safe to assume they’d be buying full-size bottles of perfume, not rollerballs or mini-bottles. So, despite a strong job market and rallying stock market, personal budgets seemingly remain under pressure.

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