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In a time of conscious consumerism and cost of living pressures we are now seeing what is called the ‘lipstick effect’. 

This economic and retail theory proposes that cash-strapped consumers are more likely to purchase affordable brand lipsticks, beauty goods and luxury items during an economic downturn. In this environment Consumers still want their small indulgences and to treat themselves even when faced with financial challenges and their money is tight.  

This phenomenon was reportedly suggested by beauty giant Estee Lauders former chairman, Leonard Lauder, who noticed an increase in sales of lipstick during the US recession in the late 1990’s.

More recently, this 'theory' gained attention with the headline ‘cosmetics at face value’ ‘cost of living pressures make big retailers unlikely beneficiaries of the lipstick effect’.  The article included comments from various sources including leading supermarkets, experts and everyday consumers.

Comments reported as, ‘consumers are starting to explore alternatives that represent better value for them’ ‘beauty retailers have to grab people's attention, you’ve got to entertain them, you’ve got to excite them’. ‘it was important how beauty retailers brand themselves as a necessity for consumers’! ‘I've just started looking at what I was paying for if it was marketing or pretty packaging’! 

Another example. The lipstick effect is proposed as one of the reasons movie complexes and fast-food casual restaurants do well during hard times. Cash-strapped consumers want to treat themselves to something to help them forget their financial worries. Not an overseas holiday but a treat, a cheap night out!

This pattern is also a manifestation of something economists call the income effect. And there is more, much more,. Search this subject with the click of a mouse on the web.

So, what does the lipstick effect mean? What does it mean to you, your Business!

Thoughts to ponder! 

• Cash-strapped consumers still want to treat themselves to something to help them forget their financial problems
• Consumers are savvier, questioning the value for money of goods. Price, packaging and marketing, what is it I’m buying?
• The lipstick effect suggests that consumers will still buy small luxury items even in tough economic times
• Sales of small luxury items can be used as an indicator of economic downturn, or recession based on the lipstick effect

 Tip: Make sure your Business is prepared and ready to respond to the 'lipstick effect!'