The Lipstick Effect: Why Tough Times Still Bring 'Beauty-ful’ Opportunities

We all know that projections and budgets are built on "reality hopeful", but can (& often do) change once company budgets are put into effect and "reality happens". If one researches, knows their customers, and understands their business, their plans should be close.

However, when the economy takes an unexpected dip, it's easy to assume consumers will cut back on all non-essentials such as beauty. But history tells a different story. Enter the Lipstick Effect... a term Estée Lauder's Leonard Lauder coined during the early 2000s recession. He noticed that while people were spending less overall, sales of lipstick actually went up. Also, his mother, Estee, created her beauty company during the Great Recession. So, the "lipstick effect" shows that even in tough times, people crave small indulgences that make them feel good. While it's coined for lipstick, it refers to the beauty industry for small items you can take home and use to feel better, such as lovely, scented body wash, creams, lotion, etc. 

What Is the Lipstick Effect?

A psychological and economic phenomenon where consumers continue to spend money on small luxury items during a recession or financial downturn, especially on beauty products. It's about affordable escapism, a feel-good pick-me-up that doesn't break the bank.

From the Great Depression to the 2008 recession, beauty sales were consistently proven resilient. Consumers might not have splurged on designer bags, but they could have bought a $20 lipstick. That’s still doable and said to be emotionally satisfying.

So why is Essential Labs writing about this? Well, if you're in the business of selling beauty, this should give you hope. Even when wallets tighten, your products still offer value, not just functional but also emotional. Lip balm, eye cream, or a fresh shampoo bottle can feel like a little reset for your customers.

How to Lean into the Lipstick Effect

• Position your products as affordable luxuries.

• Highlight the feel-good factor. Aromatherapy benefits are just as significant as results.

• Use storytelling. Remind customers of the confidence and joy beauty can bring.

• Focus on self-care and small wins.

Even a swipe of lip balm or a calming cleanser can be part of a powerful daily ritual.

The beauty industry isn't just about appearance; it's also about empowerment. And that empowerment doesn't disappear in hard times; it becomes even more essential. So, keep showing up, keep creating, and keep spreading beauty. Your customers still want it - maybe now more than ever.

Beauty is resilient because people are resilient. The Lipstick Effect isn't just an economic theory; it's a reminder that hope, confidence, and joy can be found in even the most minor things. So to all the beauty entrepreneurs out there: don't give up. Your products and brand matter; your customers still reach for that feel-good moment. Let them find it with you.