Sociology professor Juliet Schor first coined the term "The Lipstick Effect" in 1998 to describe how – in times of financial hardship – sales of lipsticks rocket as women look for ways to treat themselves with an "affordable luxury".
Inversely linking the health of the economy to the sales figures of lipsticks in her book, The Overspent American, Schor explains how women will cut back on pricey purchases when money is tight, and instead focus on small indulgences.
Small, relatively cheap, and with a big feel-good factor, lipsticks are the perfect pick-me-up.
Also known as the "Lipstick Index", her findings were reinforced in 2001 by Leonard Lauder, former chief executive officer of the Estee Lauder Companies. The brand reported a spike in lipstick sales directly following the 9/11 attacks in 2001 and the 2008 global financial crisis.
To celebrate National Lipstick Day on Saturday – a day incidentally invented by the Dubai beauty blogger and entrepreneur Huda Kattan in 2016 – it seems apt to delve into the industry and see if Schor's much-quoted effect still holds true today.
The recent global pandemic had an immediate affect on the sale of lipsticks, as wearing masks rendered a slick of colour on the lips all but redundant. In the four weeks leading to April 2020, for example, McKinsey & Company reported a 15 per cent drop in lipstick sales across America, while in Japan, Intage Holdings noticed a fall of about 70 per cent in sales of the cosmetic in a similar period.
However, while sales figures tanked, the sale of perfumes soared, with the NPD Group reporting a 45 per cent rise in fragrance sales in the first quarter of 2021. Presumably, consumers sought out a different, but relatively small-priced purchase as a comfort against the woes of the financial crisis unfolding around the globe.
Last year, sales of lipstick rebounded by 48 per cent against a backdrop of Russia's invasion of Ukraine, rising fears over climate change and the threat of recession, according to to Natalia Bambiza, analyst at NBD Group.
In addition, the colours sold suggested the opposite of being forced to stay indoors, as brilliant reds replaced discreet nudes.
The beauty industry is taking notice of of the Lipstick Index, with Media Radar reporting that last year, the amount of money spent on advertising for cosmetics products rose by 100 per cent year-on-year from 2021, to $376 million in the US alone.
Even this year, despite significant price increases in beauty products due to material shortages, shipping problems and a need to claw back money lost during the pandemic, lipstick sales are still booming.
Online sales in particular are driving this surge, with beauty e-commerce sales nearly quadrupling between 2015 and 2022, as consumers find themselves at ease shopping digitally, and companies have enhanced online offerings.
In June, the French brand L'Oreal declared the lipstick colours of 2023 to be bright pink (think Barbie), dark mauve and an orange-based red. In other words, bold, bright colours that make a statement.
While fashion insiders rather than economists may draw a direct link between the economy and lipstick sales, one thing seems to hold true – there is always a good reason for buying a new lipstick, and if that helps prop up a flailing economy, even better.
