3 market sectors that can (usually) be recession proof

Everywhere you look online, you’re bound to see articles about the looming recession and its economic ripple effects. These effects including job losses and expected increased default rates, would logically imply that consumers everywhere were cutting back. But logic and recessions don’t necessarily go hand in hand.

Despite dire warnings and stiff markets, people are not evenly tightening their belts. Instead, they tighten here and loosen there. In fact, they’re willing to be surprisingly generous with their money if they feel like they’re getting some serious value in return. This is good news for aspiring entrepreneurs who are open to identifying and filling niches.

Currently, three major sectors are performing well despite inflation. Founders willing to enter these industries could be in a surprisingly good place. Below are the sectors, what happens in them and how dreamers can fill gaps.

1. Travel, tourism and food

According to a recent Bloomberg report, consumers don’t skimp on life’s simple pleasures just because Wall Street is confused. Even as the cost of groceries rises, travelers and diners are prioritizing adventures and meals. As economist Tim Quinlan of Wells Fargo explains, the phenomenon persists, even if it seems counterintuitive. He notes, “While consumers aren’t happy with the prices, they’re willing to pay to have those experiences for a while.”

Why are consumers burying their heels in the sand when it comes to fleeing and not giving up fast cooking? One answer is that this is due to the pandemic lockdowns, which have forced many people to reassess what is most important to them. Travel and food represent freedom and fun. Those are the last things anyone is willing to give up.

Remember: when the world opened up, people didn’t hesitate to explore again. Whether they went to familiar or exotic locations, they made travel a must-do activity. Now restrictions have been lifted in most parts of the world. This creates even more jet-setting among those craving something exciting and new after nearly three years incarcerated.

Entrepreneurs entering this vast space, of course, can’t just jump in and expect miracles. Finding success is not impossible; it only takes a desire to disrupt. Airbnb launched in 2008 — not a great year for most people or businesses — and rose to the top of the lodging industry pretty quickly.

2. Cosmetics, skin care and beauty

Americans want to look good no matter what their 401ks do. As a coping mechanism spend on beauty and cosmetics sounds logical. When you look better, you feel more confident. And confidence is what most consumers want, especially as long-term economic uncertainty seems far too certain.

Warren Becker, CEO of leading private-label skincare company Cosmetic Solutions, explains that self-care rituals normally rise when the dollar falls. “In difficult times and consumers being forced to tighten their belts, affordable luxuries like beauty are generally not the first areas to cut back on,” he says. “We saw a similar situation in 2008, and although growth slowed, the overall market did not decline and normalized very quickly compared to other industries.”

Again, the secret to penetrating the cosmetics and skincare market is finding the white space and how to get into it. More eco-friendly skincare lines are gaining momentum, as are those promising anti-aging capabilities. While beauty is a bit of a “red ocean” in terms of entry points, there are also openings for savvy makers.

Some of the biggest shakeups in the cosmetics world by CBInsights include hyper-personalization, male-focused (or gender-neutral) products, and items packaged in a sustainable manner. The good news is that one look at history shows that the definition of beauty is always changing. Imaginative entrepreneurs who gain a foothold with followers can literally change how society feels about a particular look.

3. Second hand marketplaces

Second-hand shopping and recycling were already there getting a boost from the Gen Z crowd for departures in 2021 and 2022. A recent one OfferUp report shows that about 82% of US shoppers are now excited about buying or selling second-hand.

How can entrepreneurs get to grips with the upcycling and recycling of clothing, furniture and more? If you look at companies that sell second-hand products, you’ll find that they all essentially do the same thing, but each company serves a niche market.

For example, Nuuly is a clothing site that allows users to rent or buy thrift clothing, which may seem like many other sites you know, but Nuuly has focused on listening to customers and offering offers to coincide with changing seasons and trends. If you plan to tap into the second-hand market, take the time to approach your target market in detail and incorporate your value proposition into all of your branding.

In other words, nothing is out of reach for founders willing to help consumers think outside the box when it comes to what to buy (and how to buy it). The trick is to find ways to repurpose and make a profit at the same time.

Many companies will survive the coming recession. A chosen few will even thrive. By looking closely at the market, entrepreneurs can organize their company in such a way that they end up in the latter group.