‘Lipstick effect’ – make-up sales soaring in recession

By Suzannah Ramsdale  on Monday 22 December 2008

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As the economy grinds to a halt and spending hits an all-time low, sales of lipstick are soaring.

It is well known in financial circles that when times get tough people stop splurging on the large extravagant purchases such as cars and, instead, treat themselves to small luxuries like lipstick.

So, when our lips are red, inevitably so is the economy, and the recent figures from L'Oréal, Beiersdorf and Shiseido confirm this.

In the first half of the year, L'Oréal showed like-for-like sales growth of 5.3% and Dhaval Joshi, analyst with RAB Capital, says this indicates the ‘lipstick effect’ has returned once again.

‘The evidence shows that when budgets are squeezed, people simply substitute large extravagances for small luxuries,’ he said.


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Monday 22 December 2008

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