Navigating Economic Tides: 5 Countercyclical Categories

In the volatile seas of the global economy, storms are inevitable. Economic downturns can arise from various factors, be it geopolitical tensions, financial crises, or unforeseen events like a global pandemic. In such turbulent times, businesses face the challenge of staying afloat, let alone thriving. However, amid the chaos, certain products and companies emerge as beacons of resilience. Today, we explore five countercyclical categories—those that defy economic downturns by thriving even when the broader economy faces headwinds.

Source: Inside FMCG

Discount Retailers
Discount retailers are adept at weathering economic storms through strategic operational practices. By leveraging economies of scale, streamlined operations, and strategic partnerships, these retailers maintain competitive pricing while ensuring profitability. Moreover, they excel in cultivating customer loyalty through value-driven offerings and personalised shopping experiences. Loyalty programs, exclusive discounts, and efficient customer service further enhance their appeal, fostering long-term relationships with cost-conscious consumers.

The Reject Shop’s performance in 2023 reflects this resilience, with revenue increasing by 3.9% on the prior corresponding period to $819m and NPAT increasing 30.4% to $10.3m.  These impressive figures demonstrate The Reject Shop’s ability to weather economic storms while maintaining profitability. With over 300 locations nationwide, The Reject Shop continues to serve as a trusted destination for affordable essentials, even in the toughest of economic times.

Essential Goods
Essential goods stand as unwavering pillars even amidst economic downturns. These are the items we simply cannot do without—groceries, toiletries, and healthcare products. The Australian supermarket giant Woolworths exemplifies this, with its robust sales of groceries, fresh produce, and pharmaceuticals making it a countercyclical stronghold.

Woolworths’ performance in 2023 tells a compelling story. Revenue surged by 6%, reaching $64.3 billion and EBIT grew 16%, totalling $3.1 billion.   These consistent gains underscore Woolworths’ resilience in the face of economic challenges. By meeting the essential needs of consumers, Woolworths maintains a steady revenue stream, demonstrating its ability to weather economic storms while sustaining profitability.

However, recent headlines have cast a shadow over Woolworths’ otherwise stellar performance. In a Melbourne court, the company admitted to underpaying over 1,200 staff between 2018 and 2023 by $1.24m.  This breach of trust has put Woolworths in the spotlight, and it now faces the possibility of hefty fines and convictions. Additionally, the outgoing CEO, Brad Banducci, found himself threatened with jail time during a recent Senate inquiry examining supermarket price gouging.  The scandal has tarnished the company’s reputation, but its core countercyclical strength remains intact. As consumers continue to rely on these necessities, Woolworths must navigate both financial success and ethical responsibility to maintain its countercyclical resilience.

Source: Spencer & Servi

Cheaper Pleasures: A Sweet Respite
Amidst the austerity of economic downturns, there's an unexpected phenomenon observed—a penchant for indulgence. While it may seem counterintuitive, certain products thrive precisely because they offer moments of joy and escapism amidst challenging times. 

When times are tough, people still crave small indulgences. Enter gelato—a delightful escape that won’t break the bank. Gelato Messina, an Australian success story, crafts artisanal gelato with inventive flavours. With now 31 stores across Australia and Hong Kong, Messina has become a beloved destination for gelato enthusiasts.  Despite economic headwinds, their queues remain long. In fact, 2023-24 is the best summer they’ve ever had across all stores.  Why? Because indulging in a scoop of gelato represents a small, affordable luxury—a momentary escape from financial worries. 

In times of stress, people seek comfort, and for many, food serves as a source of solace. Gelato, with its association with sunny afternoons by the seaside, taps into nostalgic sentiments and offers a brief respite from the realities of economic uncertainty. Furthermore, gelato's relatively lower price point compared to other forms of dining out makes it an attractive option for budget-conscious consumers looking to treat themselves without breaking the bank. A single scoop of gelato can provide a moment of pleasure without the guilt of overspending—a sentiment that resonates strongly during lean times.

Source: Rare Beauty

Cosmetics
In times of stress and uncertainty, people often seek ways to boost their mood and enhance their well-being. For many individuals, cosmetics represent more than just products for physical appearance; they serve as tools for self-care and self-expression. Investing in cosmetics can provide a sense of normalcy and confidence, helping individuals navigate challenging times with a positive mindset.

Similarly to gelato, affordability plays a significant role in driving increased spending on cosmetics during downturns. While consumers may cut back on larger purchases, they are willing to indulge in smaller luxuries that offer immediate gratification. As a result, consumer spending on cosmetics has increased by 9% and fragrances by 8%.  Despite financial constraints, consumers prioritise investing in products that contribute to their well-being and confidence, seeking moments of comfort and self-expression without significant financial strain.

Second-hand Market
In Australia, the second-hand market thrives, with over 12 million Australians (57%) purchasing pre-loved items, and a similar number engaging in selling second-hand (44%).  This robust participation reflects a growing trend towards embracing the circular economy—a system focused on sustainability and the reuse of resources.

Driven by a desire for affordability and sustainability, consumers flock to second-hand markets in search of quality items at discounted prices. Two-thirds of second-hand shoppers cite purchasing good quality items at significantly lower prices as a primary motivation, while nearly a third (29%) prioritise sustainability in their purchasing decisions.  This dual focus on value and eco-consciousness fuels the growth of the circular economy, transforming unwanted items into valuable resources.

Moreover, the rising cost of living further bolsters the appeal of second-hand shopping, with 10% of consumers turning to pre-loved items to address affordability concerns.  By offering budget-friendly alternatives to new products, the second-hand market plays a vital role in alleviating financial pressures on consumers while promoting sustainability.

As more Australians embrace the circular economy, the second-hand market continues to expand, offering opportunities for both buyers and sellers to participate in a more sustainable and affordable consumption model.


In the turbulent seas of the global economy, resilience is paramount. Despite turbulent economic waters, these countercyclical categories stand firm, demonstrating adaptability and innovation in the face of adversity. From offering affordable essentials to indulging in small pleasures, they provide avenues for growth and prosperity even in the toughest of times. As we continue to navigate the uncertain seas of the global economy, these categories serve as beacons of hope, reminding us that resilience and innovation can prevail, no matter the economic climate.

As we sail against the wind, let’s remember that the sun eventually rises after every storm.

Contact us if you want to chat about the headwinds you are facing.