Little luxuries: all about the lipstick effect

Despite the increased cost of living and a global recession looming, people across the world are paying a little extra to treat themselves. Here's why.
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The following was first published in Thrive, a new limited email series by Courier, designed to help small businesses make some sense of the current economic climate. Read more here.

So, you're saving to buy a house while inflation's running at a 40-year high, but you still haven't canceled your monthly subscription for that non-alcoholic adaptogenic seltzer with the nice label that you love so much. We get it. Everyone does it (in one way or another). 

Despite gloomy economic news and fresh concerns of a recession – like people looking for extra work just to pay the bills – there are times when we still indulge. Whether we can justify the expense or are just blindly spending to make ourselves feel better at times of stress, there's a theory that might explain it.

Otherwise known as the lipstick effect (we won't bore you with a detailed explanation), it refers to a specific change in consumer buying habits during economic crises, when sales of affordable luxuries (like lipstick) tend to rise as other product sales typically struggle. In fact, in the first half of this year, beauty was the only discretionary retail sector that showed a year-on-year increase in unit sales (with makeup sales up 20%, fragrance up 15% and haircare up 28%, according to market research firm NPD). 

Now, you might be thinking: ‘That's interesting, sure – but I don't sell lipstick, so why should I care?’ But understanding how consumer behavior changes during crises could offer some insights into buying patterns and habits in other sectors, too.

• COMFORT SEEKERS. Dr Francesca Sobande, an expert on consumer culture at Cardiff University, says the ‘careful pursuit of moments of indulgence and memorable experiences’ are common in tough times. ‘Whether it be the purchase of personalized stationery, a spa trip, handcrafted chocolates, artisanal coffee, fan memorabilia or a new tattoo, people are looking for ways to feel a sense of luxury and fun despite a bleak economic backdrop.’

• BE ASPIRATIONAL BUT HONEST. Francesca continues: ‘Brands and other industries can learn much from the lipstick effect, including by examining the cost and marketing of lipsticks that sell well and become strong symbols of an affordable yet aspirational luxury image. However, not all brands can benefit from establishing an image of themselves that's associated with indulgence. There may be much to be gained by grounding a brand's image in frank acknowledgment of the uncertain economic times that people are facing.’

A version of this article was published in Courier's Thrive newsletter.

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