The Resilience of "Treatonomics": How Nostalgia-Driven Collectibles Like Labubu Are Defying Economic Downturns

In an era of inflation, geopolitical uncertainty, and economic volatility, consumers are increasingly turning to small indulgences to offset the weight of daily stress. This phenomenon, known as the “lipstick effect,” has evolved into a broader cultural and economic force: treatonomics. By blending nostalgia, emotional retail, and Gen Z's digital-first behavior, treatonomics is reshaping how we define value—and it's creating a goldmine for investors in the collectibles and emotional retail sectors.

The Lipstick Effect 2.0: From Makeup to Micro-Indulgences

The lipstick effect, first observed during the Great Depression, describes how consumers prioritize affordable luxuries like cosmetics during downturns. Today, this concept has expanded to include experiential and collectible purchases that offer emotional uplift. For example, while households may cut back on groceries or household goods, they're willing to spend on a $1,000 LEGO set, a Taylor Swift concert ticket, or a limited-edition Labubu plush.

The key driver? Psychological resilience. In a world where traditional milestones (homeownership, stable careers) feel out of reach, consumers are redefining success through “inch-stones”—micro-celebrations like dog birthdays, “resignation parties,” or unboxing viral collectibles. This shift is particularly pronounced among Gen Z, who grew up in a post-pandemic, hyper-digital world where social media amplifies the emotional value of experiences and objects.

Gen Z: The New Gatekeepers of Emotional Retail

Gen Z (born 1997–2012) is a demographic force to be reckoned with. With 98% owning smartphones and 25% of their leisure time spent gaming, they're shaping markets through digital engagement. In 2025, Gen Z accounted for 34% of new digital auction platform users and 54% of first-time collectible buyers. Their spending habits are defined by three pillars:
1. Nostalgia with a twist: They crave retro aesthetics but demand modern relevance (e.g., Labubu's “ugly-cute” design).
2. Social proof: 43% of Gen Z collectors are influenced by TikTok and Instagram trends.
3. Investment mindset: 22% view collectibles as long-term assets, tracking valuations in real time.

Take Labubu, the mischievous plush toy from Pop Mart. Its blind-box model taps into the thrill of unboxing, while TikTok's viral #Labubu hashtag (1.1 billion views in 2025) turned it into a cultural phenomenon. Pop Mart's revenue surged 165%-170% in Q1 2025, with rare Labubu variants selling for over $149 on eBay. This isn't just a toy—it's a status symbol, a social media asset, and a hedge against economic anxiety.

Treatonomics in Action: Why Collectibles Are Recession-Resistant

The collectibles market is a prime example of treatonomics in action. Unlike traditional retail, which relies on utility or necessity, collectibles thrive on emotional and social value. Here's why this sector is uniquely resilient:
- Low price points, high emotional ROI: A $10 rubber duck or $20 blind box offers disproportionate joy, making it a “treat” even during tight budgets.
- Scarcity and FOMO: Limited editions and blind-box mechanics create urgency, driving repeat purchases.
- Social media amplification: Platforms like TikTok turn niche products into global trends, bypassing traditional marketing.

The rubber duck craze, led by UK's Duck World, and the Labubu phenomenon both exemplify this. Duck World's 70–85% gross margins highlight the profitability of affordable, emotionally resonant products. Meanwhile, Labubu's resale market—where rare variants sell for 7x retail price—demonstrates how collectibles can appreciate in value, blending hobby and investment.

Investment Opportunities in the Emotional Retail Market

For investors, treatonomics points to undervalued sectors within emotional retail:
1. Nostalgia-driven collectibles: Companies like Pop Mart (LABU:HK) and Funko (FNKO) are leveraging Gen Z's love for retro and pop culture.
2. Experiential retail: Event-driven spending (e.g., Taylor Swift concerts generating £1B in economic activity) shows how experiences outperform goods in downturns.
3. Digital collectibles: NFTs and virtual goods are gaining traction, with 28% of global digital collectibles traded in 2025.

However, risks exist. The market is prone to fads, and geopolitical supply chain issues (e.g., China-manufactured collectibles) could disrupt trends. Yet, the emotional and psychological drivers of treatonomics—particularly Gen Z's digital fluency—suggest this trend is here to stay.

Conclusion: Investing in the New “Lipstick”

Treatonomics is more than a trend—it's a cultural and economic shift. By understanding how Gen Z redefines value through nostalgia, social media, and emotional retail, investors can identify undervalued sectors poised to outperform in uncertain times.

For those seeking recession-resistant opportunities, the message is clear: emotional value trumps material utility. Whether it's a Labubu plush, a Taylor Swift ticket, or a digital NFT, the future of retail lies in the intangible. As the lipstick effect evolves, so too must our investment strategies.

Final Thought: In a world of uncertainty, the most resilient businesses are those that sell joy. Treatonomics isn't just about rubber ducks—it's about understanding what people truly value when everything else feels out of control.