Anomaly In Indonesia, The Economy Says To Be Sluggish But Tickets For Music Concerts For Millions Of Rupiah Are Selling Well

JAKARTA The Indonesian economy is said to be not doing well following deflation for five consecutive months. But on the other hand, music concerts worth hundreds of thousands to millions of rupiah are still in demand by the public.

In September 2024, Indonesia experienced deflation of 0.12 percent. That means it has been five months in a row since May (0.03 percent), June (0.08 percent), July (0.18 percent), and August (0.03 percent).

A simple deflation is the decline in the prices of goods and services in an area. According to the website of the Directorate General of Treasury (DJPB) of the Ministry of Finance, this phenomenon occurs due to a decrease in the amount of money in circulation, which results in a decrease in people's purchasing power.

The continued price decline could be a sign that the economy is weakening. As has been widely reported recently, the strength of middle class consumption continues to decline and has the potential to fall to the lower economic class.

But in the midst of various alarming economic data, there is an interesting phenomenon in Indonesia. Tickets for music concerts, both domestic and foreign artists, are sold for up to millions of rupiah, almost always selling well.

Bruno Mars' concert for three days at the Jakarta International Stadium (JIS) some time ago was packed with tens of thousands of spectators. The sale of Maroon 5 tickets, whose concerts will only be held next year, is also in demand by fans. In the local arena, there was a band from Yogyakarta, Sheila on 7, which successfully held a single concert in five cities from August to September.

This still doesn't include the phenomenon of Labubu fever, dolls whose prices are priced at up to millions of rupiah, as well as the latest iPhone queues that are almost always snaking.

This seems to be an anomaly in the midst of many people complaining about the high number of layoffs (PHK) and the confession of MSME business actors who complain that their merchandise is quiet.

The anomaly that is happening in Indonesia today may be explained in the term Lipstick Effect, a theory that explains that when the economy is difficult, people tend to buy affordable luxury goods just to seek temporary satisfaction, including cosmetics. This concept was first introduced by Juliet Schor in the book The Overspend American (1998).

Meanwhile, Mailchimp defines Lipstick Effect as a retail theory where consumers with minimal finance tend to buy luxury goods at a more affordable price when conditions decline in the economy.

Schor in his book observed that when the situation of money circulation tends to be limited, a person will spend more money to buy goods that are not really important, but give a kind of satisfaction in the midst of dissatisfaction.

"They are looking for affordable luxury, the sensation of buying at expensive department stores, enjoying beauty and sexiness fantasy, buying 'hope in bottles'. Cosmetics is the escape from boring everyday life," Schor wrote.

Lipstick Effect theory is also a guide for Leonard Lauder, the owner of a well-known cosmetic company from the United States, Estee Lauder. He designed a budget business and marketing during a terrorist attack on September 11 made the economic situation uncertain. At that time, sales of the Estee Lauder lipstick were actually steady.

Then when the recession hit the global economy due to the COVID-19 pandemic, French beauty company Sephora posted a 30 percent increase in sales in the American market in 2020 alone.

This tertiary item is not always in the form of lipstick or other cosmetics, but also like coffee, cinema tickets, music concert tickets, gadgets, and even dolls like Labubu.

From a psychological perspective, Lipstick Effect explains that when individual finances are not enough or are decreasing, instead of stopping consumptively, individuals still want to buy tertiary goods that are not really important. This is done as a form of a morale boost, because it is considered to give feelings such as comfort in the midst of a difficult economy.

To that end, the queues of hit food and beverage restaurants, concert tickets wars that cost millions, or queuing for the latest gadgets cannot be used to claim that the economy is doing well.

Investopedia said that Lipstick Effect is one of the reasons that makes fast food restaurant sales and cinema tickets not affected by the decline in purchasing power and economic recession.

Consumers with money who want to buy something a little bit that can distract them from their financial condition. They can't take a vacation to their place, but they will adjust the budget and be complacent with cheap hangouts.

Meanwhile, the Head of Bank Mandiri economist, Andry Asmoro, explained that the cause of concerts in Indonesia was still crowded despite the issue of weakening people's purchasing power. According to Andry, the purchasing power pressure was not experienced by all levels of society.

Based on the customer's funds, Andry said that the phenomenon of eating savings or known as good news was only experienced by the middle and lower class. Over and over (middle-upper) actually records the soaring value of savings.

"The middle-upper saving index jumped," Andry said last September.

Referring to Bank Mandiri customer data, the middle-up and upper class savings index is still at level 100 in early 2024. The savings index continued to climb until July 2024, the savings index of this class reached 106.2.

This increase in the savings level of the two classes, said Andry, causes them to still have strong purchasing power, even though concert tickets are priced at a price that is not cheap.

"This explains why the purchasing power has weakened, but the war ticket is crazy. Bruno Mars concerts continue to run out, I'm sure there will be a Maroon 5 and it will be another ticket war. Iphone 16 when it is launched, there will be Indonesians who buy it," he said.