Lipstick effect

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The lipstick effect is the hypothesis that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods. The concept was publicized in 2008 when Leonard Lauder said that he noted his company's sales of lipstick rose after the 2001 terrorist attacks. The lipstick index is an indicator derived from this hypothetical effect and first was used to describe increased sales of cosmetics during the early 2000s recession. Analysis and subsequent recessions have provided evidence controverting Lauder's claims, though related indices have been proposed for other cosmetics, including nail polish and mascara.

Description

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The lipstick effect theory contends that consumers will be more willing to buy less costly luxury goods when they are facing an economic crisis.[1] Instead of buying expensive purses and fur coats, for example, people will buy expensive cosmetics, such as high-end brands of lipstick.[2] The underlying assumption is that a certain portion of consumers will still buy luxury goods even during a bad economy.[citation needed] When consumer trust in the economy is dwindling, consumers will buy goods that have less impact on their available funds.[citation needed] Outside the cosmetics market, consumers might be tempted to purchase other high-end goods such as expensive beers, or smaller, less costly electronic gadgets.[citation needed]

History

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Juliet Shor in her book The Overspent American talks to consumers' purchase of higher-priced, more prestigious lipsticks—specifically Chanel—that are used in public compared to lower-priced, less prestigious brands that are used in the privacy of the bathroom.[3] In a New York Times article published May 1, 2008, Leonard Lauder (chairman of the board of Estée Lauder) is quoted as saying that he noted his company's sales of lipstick rose after the 2001 terrorist attacks.[4] In the article, Lauder coined the term lipstick index to describe increased sales of cosmetics during the early 2000s recession.[5] Lauder made the claim that lipstick sales could be an economic indicator, in that purchases of cosmetics—lipstick in particular—tend to be inversely correlated to economic health.[6][7]

Testing

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The Economist tested the lipstick effect in 2009 with statistical analysis, stating that

reliable historical figures on lipstick sales are hard to find, and most lipstick believers can only point to isolated, anecdotal examples as evidence of the larger phenomenon. Data collected by Kline & Company, a market-research group, show that lipstick sales sometimes increase during times of economic distress, but have also been known to grow during periods of prosperity. In other words, there is no clear correlation.

— "Lip reading"[8]

Subsequent recessions, including the late-2000s recession, provided controverting evidence to Lauder's claims, as sales fell with reduced economic activity in that recession.[9] Conversely, lipstick sales have experienced growth during periods of increased economic activity.[citation needed] As a result, the lipstick index has been discredited as an economic indicator.[citation needed] The increased sales of cosmetics in 2001 has since been attributed to increased interest in celebrity-designed cosmetics brands.[9]

Legacy

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In the 2010s, many media outlets reported that with the rise of nail art as fad in English-speaking countries and as far afield as Japan and the Philippines, nail polish had replaced lipstick as the main affordable indulgence for women in place of bags and shoes during recession, leading to talk of a nail polish index.[10][11][12] Similar sentiment was noted during the coronavirus pandemic, when the mandated use of face masks to prevent the spread of the disease resulted in an increase of eye makeup purchases, suggesting a mascara index.[13]

References

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  1. ^ Kushick, Maia (June 24, 2009). "Area Mary Kay employee earns 18th new car". news-journal.com. Archived from the original on June 28, 2009.
  2. ^ Cuthbertson, Dawn (April 3, 2009). "Lipstick effect grips consumers". Archived from the original on 2009-04-08. Retrieved 2009-04-05.
  3. ^ Shor, Juliet (1999). The Overspent American. ISBN 0060977582.
  4. ^ Schaefer, Kayleen (May 1, 2008). "Hard Times, but Your Lips Look Great". The New York Times. Retrieved Apr 10, 2013.
  5. ^ "Lip service: What lipstick sales tell you about the economy". The Economist. 23 January 2009. ISSN 0013-0613. Retrieved 2024-06-10.
  6. ^ Dowd, Maureen (December 2, 2001). "Oedipal Loop de Loop". New York Times.
  7. ^ "The lipstick as an economic indicator". economictimes.indiatimes.com. May 2, 2008. Retrieved 16 December 2016.
  8. ^ "Lip reading". The Economist. January 22, 2009. Retrieved 2018-04-30.
  9. ^ a b Cheryl Lu-Lien Tan (October 17, 2008). "Lunchtime Snap: The Shaky Lipstick Index–Sales go Down, not Up, as Economy Falters". The Wall Street Journal.
  10. ^ "Economy "Lipstick Index" Is Now A Nail Polish Index". Jezebel.com. September 14, 2011. Retrieved April 8, 2013.
  11. ^ "Is There Really A Nail Polish Index?". Metapolish.com. April 27, 2012. Archived from the original on July 29, 2014. Retrieved April 8, 2013.
  12. ^ "Nail polish is the new lipstick | Inquirer Lifestyle". Lifestyle.inquirer.net. April 27, 2012. Retrieved April 8, 2013.
  13. ^ Scott, Fiona Sinclair (6 May 2020). "Our grooming habits are changing". CNN. Retrieved 2020-05-11.