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Everything You Need to Know About the “Lipstick Effect”
EducationCanceled Netflix subscriptions. Less Doordash orders. Fewer vacations. These are some of the first things to go when personal budgets start to tighten. One might also think that, during an economic recession, beauty products wouldn’t be in high demand either. But in fact, the opposite is so true that there’s even a name for it: The Lipstick Effect. The trend was first identified in 1998 by economist Juliet Schor, but it was Leonard Lauder who coined it following Estée Lauder’s announcement that its lipstick sales had skyrocketed in 2001, despite economic recession.
This spending habit, during difficult times, is likely the case because beauty products, such as lipsticks, “make us feel good and happy,” Tufts University associate economics professor, Edward Kutsoati tells Rose Inc. “There are clearly strong emotional ties to the makeup category that stretch beyond physical appearance,” says Natalia Bambiza, director and beauty category analyst at NPD Market Research Group. In comparison to people who use makeup to just enhance their appearance, “64% of consumers ages 13 to 25 say they wear makeup for a confidence boost,” she says. Meanwhile, “30% of all makeup wearers say that makeup brings them joy.”
To better understand these spending habits, the meaning of the Lipstick Effect and its significance — and why you might feel compelled to give your own makeup kit a few upgrades when the economy takes a nosedive — we break down everything you need to know.
What is The Lipstick Effect?
The phenomenon was first identified in 1998 by economics and sociology professor Juliet Schor, author of The Overspent American. “She found when money is tight, women would splurge on luxury brand lipsticks that are used in public and forego higher-priced beauty products that are applied in the privacy of home, like facial cleansers and eye makeup,” wrote Forbes.com senior contributor Pamela N. Danziger. Why? “The thrill of buying in an expensive department store” creates “an escape from an otherwise drab everyday existence,” Schor wrote in her book.
Following the 9/11 attacks in New York City, retail demand for lipsticks jumped 11%, and during the 2008 financial crisis, Estee Lauder saw a similar uptick in sales. Kutsoati also points out that the term doesn’t just apply to makeup purchases in economic downturns; it encompasses the overarching tendency for individual consumers to buy less costly luxury goods when incomes fall,” he explains.
The Significance of The Terminology
“Suppose an individual enjoys ‘conspicuous consumption,’” in other words; flashy cars, nice clothes or jewelry, “but can no longer afford these in economic hard times, then they may decide to buy more low-cost luxury goods, that are easily displayable, to ‘keep up’ with their standards, if you will,” says Kutsoati. Cosmetics, for example, are affordable even in bad economic times. Plus, as we all know, there’s nothing like a swipe of red lipstick to lift our spirits and boost our confidence.
“There are clearly strong emotional ties to the makeup category that stretch beyond physical appearance.”
Lipstick And Makeup Sales During The Pandemic
For more proof of the Lipstick Effect, look no further than spending patterns in the early days of the COVID lockdown (remember all the at-home skincare gadgets and mask acne-fighting products we all splurged on?). Kutsoati notes that the Department of Commerce reported that the GDP shrunk in the first quarter of 2020; Amazon, however, “saw an increase in sales in beauty and personal-care categories compared with pre–COVID19,” he says. What’s more, Sephora reported close to 35% increase in US online sales in 2020 — stats that likely received a boost from those of us working remotely who needed to be camera- ready for all those video calls during lockdown. And according to Euromonitor, 2021 global beauty sales grew by 7% year-over-year and are now up to $530 billion. That rate is expected to continue through 2026. So, as world headlines continue to spell out doom and gloom for the foreseeable future, clearly our skincare and makeup splurges aren’t going anywhere anytime soon.
