Costco Says This Major Change in Shoppers’ Buying Habits Indicates a Recession Is Looming

published Jul 11, 2023
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Indianapolis - Circa April 2023: Costco Wholesale Location. Costco Wholesale is a multi-billion dollar membership retailer.
Credit: Jonathan Weiss/Shutterstock

As fears of a recession loom across America, shoppers are going to great lengths to align their budgets with their spending habits. It’s no coincidence that we here at The Kitchn began sharing more pocketbook-saving methods such as the best cheap Costco groceries and the $11 Costco cookout staple, and Costco executives have noticed a change in how their members have been shopping, noting that customers are favoring their smaller, cheaper goods over their larger, higher ticket items. This sort of change in behavior — also known as the “lipstick effect” — refers to a shopper’s tendency to splurge on smaller, affordable luxuries, such as cosmetics while delaying more significant purchases.

According to Benzinga, Costco’s Chief Financial Officer, Richard Galanti, shared a few observations on a recent investor call that may point to signs that a recession is indeed looming. Galanti noted that certain customers have been opting for more economical alternatives by switching from beef to pork and chicken. He also noted an increase in the purchase of cost-saving canned meat and fish products, which offer lower prices and longer shelf life, along with a rise in sales of Costco’s private label Kirkland brand that offers lower prices compared to national brands. And while these shifts may not seem like much of a big deal, they mimic historical behaviors observed during recessions of the past.

So with all of the uncertainty cast over our economic future, dare not fret if you’re realizing that you too are falling into the phenomenon that is the “lipstick effect,” because so long as Costco has little luxuries and deals to offer, we will be here to encourage you to reap the benefits. And if you now need a pick-me-up after reading all of this recession news, you might want to check out this summer cookie that just hit the Costco bakery.