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Other “Lipstick Effects” in Beauty and Personal CareĪlthough we may no longer be able to validly refer to the lipstick sales as an economic indicator, a number of new categories which fit the concept of “affordable luxury” have emerged since 2009. Sales are taken from the retailing system. Note: Note: 2000-2012, RSP value sales, % growth, fixed exchange rates. Figure 3: Nail Polish Compared to Non-Grocery Retail Sales Even in recession-hit Spain, demand for nail polish increased slightly, in contrast to the otherwise depressed performance of the colour cosmetics category, as well as the overall retail environment. 09 were recession years in most countries, while 2001-2007 represents the period of strong economic growth.īetween 20, nail polish achieved double-digit retail sales growth in the US, Germany, the UK and Italy. Note: Average growth among 38 developed markets across selected periods. Figure 2: Lipstick and Nail Polish – Same Effect, Different Categories In 2008/2009, nail polish was the fastest growing category in the global beauty and personal care industry, and it was austerity-hit Western markets driving growth as cash-strapped women rediscovered nail polish as an affordable fashion accessory and a morale booster. Nail polish, for example, could be considered the new "lipstick" of the last recession. In 2000, it was lipstick, in 2008 - other categories. This trend manifests itself in different categories over time and place. However, if we consider lipstick as a metaphor, the effect is still present and in good shape. When faced with less favourable economic conditions, consumers tend to save on big-ticket items, such as holidays abroad, but spend more on small "feelgood" products. Nail Polish - The New LipstickĪt face value at least, the lipstick theory suffered a setback since sales of lipstick were not strong during the recent slowdown. Market sizes, retail value RSP, US$million, fixed 2012 exchange rates, year-on-year growth (%). Note: Lipstick and Beauty and Personal Care Growth in 2009. Lipstick Effect no Longer Holds True - Lags Behind Beauty and Personal Care Only consumers in the UK maintained their spending on lipstick that year, while sales in Italy, France and Spain declined. In 2009, lipstick sales in the US dropped by almost 7%. In contrast to a strong performance in the early 2000s, lipstick was outperformed by many other cosmetic items and was one of the weakest categories in the entire beauty and personal care industry during the recent recession. The only problem with the lipstick effect was that it looked convincing only until the last recession. The trend wherebyĬertain categories do well during recessions became known as the ‘lipstick effect’. The speculation was that women substitute more expensive purchases like dresses and shoes for lipstick during times of economic distress.
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Over the last decade, for example, sales of lipstick lagged behind the overall beauty and personal care industry every year, except during the 2000 slowdown, when sales of lipstick boomed. Whether by accidental correlation or strong underlying psychological/economic motives, lipstick sales have historically performed well during slowdowns and equally poorly when an economy was strong. Did the Lipstick Effect Fail the Test of Time? The larger the bubble, the further away the category growth rate is from the start of each sector growth bands. Note: Industry dynamics during the 2008/2009 downturn. Total category growth among 38 developed markets during 2008/2009. The size of the bubble represents the intensity of the effect within each sector. Source: Euromonitor International (Passport Industries) Figure 1: Response to Recession in Developed World Nail polish, for instance, could be considered the new “lipstick”, but the “lipstick of choice” varies with time and geography. While lipstick sales did not withstand the recent recession, there is some evidence that the “affordable luxury” effect is still present, but manifesting itself inĭifferent categories over time. This trend became known as the “lipstick effect”, a term coined by Leonard Lauder, Chairman of Estée Lauder, at the beginning of 2001 when he observed that lipstick sales tend to be inversely correlated to economic health. “Affordable luxury”, for example, tends to perform well in a recessionary environment. When an economy enters troubled waters, this does not spell bad news for all categories.