Industry News

Cosmetics and Recession: The Lipstick Effect

Jhanvi Patel

April 5, 2020 

A recession is a business cycle contraction whereby there is a general decline in economic activity in a country or in the global economic system as a whole. Recessions are trying, difficult to navigate, and typically have far-reaching implications for the functioning of the world economy as a whole, affecting individuals in their homes, jobs, and portfolios. However, a few industries consistently thrive amongst these disastrous conditions. Some common sense stores and industry giants persist, such as grocery chains and drugstores, because they are necessities people rely on for their survival and basic goods. Surprisingly, the cosmetic industry tends to boost during times of economic distress. 

During the 2008 recession, the cosmetic industry not only got a boost but actually made significant profits. It has been a proven fact that throughout times of tension and struggle, people cancel their major costly expenditures (e.g. vacations or cars), but to accommodate a healthy lifestyle, they tend to spend more on cosmetics and movies that gives them small life pleasures and happiness despite the external circumstances. 

Despite a bear market economy rocking the boat, women and men still like to look and feel good when out socially or at work. The largest cosmetics companies, including Estée Lauder Companies Inc. and Coty Inc., have been structured in such a way that they thrive during times of weak economic prospect as well as prosperity. The numbers indicate that skincare, makeup, and fragrance sales increased 11 percent in the United States in 2011, compared with the previous years. This phenomenon is called the “lipstick effect.” 



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