Labubu effect: A trendy doll sign of a recession indicator?

Have you guys noticed the furry little creatures hanging on the handbags of your favourite celebrities or the Instagram influencers? Yes, we are talking about the Labubus!

The toys are part of Chinese toymaker Pop Mart's "The Monsters" collection, designed by Hong Kong-Belgian designer Kasing Lung. Charming consumers in Los Angeles, Bangkok, Manila, Singapore, India, and even in Bangladesh.

It is part of a surprise box collectable series, which has created long lines outside toy stores, selling out online within minutes, and listing for double or triple its original price on resale markets. These dolls generated approximately $ 423 million in revenue in 2024, representing a 729% increase from the previous year.

But why did these fierce-looking, fluffy rabbit-eared gremlin with a grin of spikey teeth, Labubus, become so popular around the world? To answer that question, we need to understand what had happened in previous times.

Amid this economic uncertainty and war, the West is catching up to the commercialisation of collective relief provided by cuteness. Due to the temporary economic downturn of the past few days, trade and industrial activities have been significantly low, resulting in a decline in Gross Domestic Product (GDP).

It is not the first time that this has happened in these two centuries. In the Great Depression of the 1930s, people opted for simple silhouettes, repurposed fabrics, and homemade clothing.

In the 1970s, during the oil crisis, the economic turmoil, inflation, and unemployment led to a radical change in fashion. The torn fishnets, slashed shirts, and safety-pinned jackets reflected the economic decay and rejection of mainstream consumerism, and the combat boots, bomber jackets, and factory uniforms became symbols of working-class resistance.

The 2008 Financial Crisis reshaped fashion, and people turned to clothing that reflected both economic pragmatism and a cultural shift toward a minimalist aesthetic.

People shifted to normal, casual clothing and chose budget-driven necessities, rejecting the fast fashion trends. Different brands used this tactic to launch and sustain their products in the market.

Levi's 501 Jeans replaced designer jeans, while Nike, Target, Zara, and H&M replaced luxury brands. Netflix took over the movie theatre market, introducing frugal luxury and hyper-affordable indulgence to consumers.

All these incidents connect us to the "Lipstick effect" theory, which suggests that cash-strapped consumers are more likely to purchase affordable luxury brand lipsticks, makeup products, and other similar goods during an economic downturn.

During tough times, consumers have a psychological need for normalcy, which is why they tend to cut back on large purchases and instead splurge on smaller, more affordable luxury items that can increase their happiness. Purchasing items like lipstick, coffee, eye makeup products, and movie theatre tickets boosts their moods and morale.

At the same time, they continue to cut back on more expensive purchases to save money, and it is less costly but still provides them the same sense of indulgence.

The exact details are unfolding amid the hype surrounding Labubus. People are unable to buy houses or Birkin bags to maintain their social status during this uncertain time, creating a sense of FOMO. So, they are opting to buy the surprise boxes, meaning the figure inside is a mystery until it is opened.

It gives them a dopamine rush and a sense of rationality when buying an accessory for their handbags rather than overpriced brand products like Hermes or Chanel bags. Zakia Sultana Bithee has a collection of labubus. She says, "It gives me satisfaction of replacement of what I cannot afford. Also provide me emotional comfort during stressful times."

During a sudden job loss, Tasnuva Tarana is unable to maintain the lifestyle she had two months ago. She has a different insight on that. "I had to reduce my expenses, but have not compromised on purchasing nature. Now, I buy what I like but at cheaper rates. I also sell these things for the need of running cash."

People who dealt in luxury handbags by arbitrage price differences across regions have pivoted to Labubu collectables, hunting down collection boxes and hard-to-get Labubus.

To justify the price and keep recession-friendly items in high demand, Pop Mart introduced Mini Labubu plushies, which are cheaper than the full-sized figures. These are affordable enough to indulge in, but rare enough to retain value.

However, this hype can collapse quickly if the market floods, as seen in the 1990s Beanie Babies crash. Between 1997 and 1999, the market was flooded with rare Beanies, which had no real value and became merely stuffed animals with no artistic prestige.

Moreover, the casual collectors may bail if the economy takes a downturn. However, Kasing Lung has exhibited his designs in galleries, and the rare Labubus can instantly sell worldwide due to the rise of global resale infrastructure.

For now, Labubu is a successful venture for the brand because it's both considered as art and collectable. Still, this bubble can pop at any time, depending on how the economy affects the consumers.

Labubu is not just a toy or fashion accessory, but rather a recession artefact that symbolises how we cope, express ourselves, and show resilience in a shaky economy.

It serves as a touchstone that reflects our collective resilience in times of uncertainty. In a world where economic instability, geopolitical tensions, and social upheaval dominate headlines, we are turning to small, whimsical comforts to reclaim a sense of control.

This tiny, spiky-toothed guardian offers an affordable escape for many, unlike the traditional statue symbols. The surprise box phenomenon taps into something more profound than consumerism, a ritual of hope.

Each unboxing is a momentary thrill, a tiny rebellion against the gloom of financial restraint. Its true legacy lies in what it represents: our ability to find light in darkness, to embrace playfulness in pragmatism, and to redefine value on our terms.

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