Ever wondered why lipstick sales don’t drop when the economy does? Let’s uncover the truth behind this phenomenon.

During economic downturns, many industries feel the pinch as consumers tighten their belts. Yet, one product seems to buck this trend: lipstick. Even when times are tough, lipstick sales rise. This phenomenon, known as the “lipstick effect,” has puzzled economists and psychologists for years. So, what’s driving this trend?

During World War II, there was a battle over lipstick. In Germany, Hitler's government said women shouldn't wear lipstick because they thought it was wasteful. But in the United States and Britain, lipstick became a symbol of strength and femininity. American women, who started working in factories in large numbers, wore bright colours like Victory Red to boost morale, even creating makeup kits for women in the military.

Lipstick during tough times can be seen as a little rebellion against hardship, a way to assert control and maintain hope for better days. Historically, during tough economic periods, cosmetic sales, especially lipstick, have risen. Psychologists and economists analysed this trend, suggesting that purchasing a small luxury item provided a psychological lift, offering a sense of control and confidence during times of uncertainty.

One reason lipstick sales stay steady or even climb during tough times is that it’s an affordable luxury. When you can’t splurge on big-ticket items like cars or holidays, you can still treat yourself to smaller, less expensive items that make you feel good. Lipstick, often cheaper than a meal out, lets you indulge without breaking the bank.

Luxury beauty brands like Chanel, Dior, and Estée Lauder have long understood the appeal of the “lipstick effect.” These brands invest heavily in research and development to create high-quality products that appeal to consumers seeking small indulgences.

During economic downturns, these brands often see steady sales as consumers turn to trusted names for their affordable luxury fix. For instance, Estée Lauder reported a 13% increase in organic net sales in its makeup segment during the 2023 economic slowdown.

Furthermore, according to Fortune, this trend has benefited Sephora, owned by LVMH, which saw stellar performance in 2023. Sephora became LVMH’s fastest-growing segment, contributing to a 76% profit rise in selective retailing and hitting €17.9 billion (£15.5 billion) in sales. CEO Guillaume Motte is optimistic about reaching €20 billion in sales soon, attributing success to the “lipstick effect” and increased in-store sales.

Sephora’s growth contrasts with the pandemic years when low foot traffic hit revenues hard. As lockdowns eased in 2022 and people ventured out, Sephora’s sales rebounded, showing the “lipstick effect” in action even amid high inflation.

Sephora isn’t alone; Ulta Beauty also saw sales soar in 2023. This effect shows how small luxury purchases can boost morale during tough times.

Social media has played a huge role in keeping lipstick sales high. Platforms like Instagram, YouTube, and TikTok are packed with beauty influencers and makeup tutorials, keeping lipstick trends alive and well. Influencers and everyday users share their favourite products and looks, driving interest and sales.

Cosmetic companies keep things fresh by constantly innovating with new formulations, colours, and packaging. These innovations keep consumers excited about trying new products. Plus, savvy marketing strategies, including collaborations with celebrities and influencers, create buzz and drive sales. Limited edition releases and special promotions also attract attention and encourage purchases, even when budgets are tight.

In a nutshell, lipstick sales thrive because they provide a sense of normalcy, self-expression, and hope, all of which are especially valuable during tough economic times.