Did you find yourself on beauty products buying frenzy lately despite of the recession that is currently happening? Several lipsticks on different shade? Or maybe luxury perfume? We might have an explanation about that.
Former Wall Street trader turns financial literacy content creator, Vivian Tu or popularly known as @yourrichbff, posted an interesting video a while back about the lipstick index or lipstick effect.
She briefly explained that the lipstick sales could indicate a recession. Our common sense would make us think that when the times get tough, let alone recession, we’ll do the best we can to save money and cut spend on non essential items. But that’s not always the case.
Leonard Lauder, one of the heirs to the Estée Lauder cosmetics company, first saw ‘the lipstick effect’ in 2001. When the economy got worse, their beauty products sales get better.
The economist saw similar ‘trend’ again in 2008 when nail polish sales soared. Then in the beginning of pandemic (2020), the fragrance sales saw an uptick.
What about this year? Similar to those previous years, a tube of lipstick feels like an affordable luxury that people can buy nowadays, despite the upcoming (or ongoing?) global recession.
Many people in Vivian’s video comment section would disagree with her and argue that the recent spike in lipstick sales wasn’t an indicator for recession, but could be caused by several possibilities.
First one—and also become the most mentioned possibility—is because of the mask policy has been lifted in most countries. People can wear and show off their makeup again. In the beginning of pandemic, they can’t do it freely, hence fragrance or perfume is a tool to enhance their ‘appearance’ and feel good about themselves.
The other reason is just a domino effect caused by recession. When the economy crashes and many people lost their job, lipstick can help them to look decent or professional for a job interview.
But is the Lipstick Effect real and that the beauty industry recession-proof?
I found a 2012 article (Lipstick, the Recession and Evolutionary Psychology) by Sarah Hill, an assistant professor of psychology at Texas Christian University in Fort Worth, in Scientific American. She mentioned that the “lipstick effect” is not only real, but deeply rooted in women’s mating psychology, according to studies results that were published on the Journal of Personality and Social Psychology.
Their findings from four separate experiments consistently supported the lipstick effect. Cited from the article, Sarah Hill stated that:
“As college-age women, when primed with news of economic instability, reported increased desire to buy attractiveness-enhancing goods, along with a decreased desire to purchase goods that do not enhance one’s physical appearance.”
Hill, Sarah. “Lipstick, the Recession and Evolutionary Psychology”, 27 June 2022.
Regardless of the objective, since it sounds very old fashioned and straight-up sexist to assume that women only wear make up to attract men, we all can agree that buying beauty product serves as the emotional uplift for the women in times of a recession.
When splurging money for a lavish vacation or designer bags could break the budget, lipstick doesn’t. It fits the bill.
The recent Google Search Trends actually showed similar result with what Vivian Tu tried to claim with the lipstick effect.
As people are struggling with the current economic downturn, many turn to Google to search for a myriad of finance-related topics. Millions of high-growth search terms from across APAC were analyzed and came down into three insights.
People are asking a lot of finance questions.
Phrases like “what is inflation” has seen a significant increase this year, along with questions like “why” in relation to “expensive”. So for example “Why is lettuce so expensive” in Australia, or “kapan harga turun” (“when are prices going down”) in Indonesia.
Inflation and sustainability are going hand in hand.
Consumers prefer to buy “second hand” or “used” which is considerably more affordable compared to new products. Coincidentally, it’s actually good for the environment! Some of the “second hand” searches that have seen an increase in APAC according to them are for wedding dresses, electric cars, watches, mobile phone, and furniture.
I know personally that second hand cars and mobile phone are quite a thing for a long time in Indonesia. So I’m really curious to see if other products are becoming trends as well.
The third insight could be the closest one to the Lipstick Effect.
Despite everything, people still want little luxuries.
An affordable luxury that brings joy to them. It is indeed a consistent behavior that recurrence when a global recession happening.
An increase search for “cheap” and “luxury” in across APAC. For instance “cheapest car” in Australia, “cheap buffet” in Singapore, “luxury perfume” in India, and “glamping” in Indonesia and Taiwan.
As marketer, all I can say is that we need to understand our consumers mindset. Although I have mentioned there’s a consistent behavior where people seek for joy during the economic uncertainty, it is also important to look at both short-term and long term trends data. Then you can identify the changes and keep up with the trends.
And as a consumer, I do indeed turn to an affordable luxury too! I prefer taking staycation in the city with my family instead of going on a vacation abroad, wide range of beauty products (yes, including lipstick!), and—what seems like comeback to live since the pandemic—going to a concert! I’ve bagged a ticket for the upcoming show of my favorite K-Pop group.
How about you? What affordable luxury did yourself turn towards instead of splurging money on a bigger purchase?
