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During the Great Depression the cosmetic industry’s bucking of the economic doom and gloom led to commentators coining the term The Lipstick Effect.
Sales of cosmetics rose during the late 1920s and early 1930s as women said “no” to expensive luxury items and “yes” to new lippie as a relatively inexpensive feel-good spend.
In 2001 the chair of Estee Lauder, Leonard Lauder, opined that lipstick sales were a good way to gauge the economy. Mr Lauder had noticed the company sold more lipsticks after the September 11 terrorist attacks in the US.
In other words, in tough economic times, lipstick sales boom as women seek to boost their mood.
Although it’s hard to find specific data on lipstick sales in New Zealand, or more broadly on cosmetics, there’s plenty of anecdotal evidence and economic theory to back the contention that cosmetics are recession-proof.
It’s the basic theory that in tough times we still want to spend so we substitute the expensive for cheaper alternatives – in economic parlance, inferior goods.
Can’t afford your favourite bottle of French perfume? You hunt out a cheaper alternative you still like.
These inferior goods can be anything from cheap cars to cheap food (witness the burgeoning sales of takeaways and Restaurant Brands’ rising KFC figures) through to lipsticks.
Statistics New Zealand figures show chemists’ retail sales increased through 2008 after New Zealand entered the recession.
Chemists are big sellers of cosmetics, along with department stores. In 2008 department stores recorded steady growth in sales in July and August right after the recession started, before dropping off marginally near the end of the year.
Statistics for chemists’ retail sales are now classified a little differently by the government statistician but the results are still strong through into 2009 and 2010. There was a 13.7 per cent lift in those figures from June 2009 to June last year.
Even Google is in on the action.
Searches for the word “lipstick” increased harmoniously with searches for “recession” from late 2007 through 2008, according to market research blog Trendspotting’s Lipstick Indicator.
New Zealand Institute of Economic Research economist Shamubeel Eaqub says this inferior- goods transfer is happening as the tougher economic times roll on.
“Generally speaking, little luxuries are replacing larger luxuries. Some things are considered frivolous, but others are considered just a small treat.”
For example, Mrs Eaqub loves to buy new nail polish, he says.
“It’s a small treat. It’s colourful, and it’s a very small outlay.”
Nail polish does seem to be the new lipstick on the block.
If asked to recommend any cosmetics purchase this winter it would be nail polish, says Lynda Grant, cosmetics buyer for department store Smith and Caughey.
The top fashion houses such as Chanel and Dior have released limited-edition polishes for several years. Ms Grant says nail colours are as much of a trend as lipstick colours previously were, and still are.
“We are seeing that women will go on a waiting list for the new polishes, and when they are released they sell out immediately.”
Overall, sales in the Auckland store’s cosmetics department have been flat but within the department there are winners and losers.
Fragrance sales are in decline – a fact attributed in no small part to their price, Ms Grant believes. A 100-millilitre bottle of Miss Dior fragrance costs about $220, for example.
Contrast this with a limited edition nail polish at $40 and you can quickly see the appeal.
As Ms Grant says, with the polish you can still own a slice of the luxury and style of the top brands like Chanel but at a run-of-the-mill price. Cosmetic basics are still selling but even the appeal of gifts- with-purchases are waning, she says, as women buy what they need or simply pick a new slick of lip gloss to get that shopper’s high.
But what of other sections of the cosmetic industry?
Caci founder Jackie Smith says Botox use has boomed at her clinics nationwide in the recession and the business continues to grow.
“People know they can get a result – it comes with a two-year guarantee – and the price is competitive.”
Botox is the process of injecting a toxin into facial muscles which basically paralyses them – no muscle movement, fewer wrinkles created, the theory loosely goes.
It’s this treatment that Hollywood glamazons like Nicole Kidman seem to have used to great, and occasionally comical, effect as the actresses are left virtually with frozen faces.
Plastic surgeon John Masters agrees the trend is away from invasive procedures using the knife and towards Botox and fillers using the needle.
He, too, has noticed an increase in this kind of work and has gone so far as to ditch breast surgery from his services in favour of the face.
While about 2500 cosmetic procedures were performed by New Zealand plastic surgeons in 2009, Mr Masters reckons you could put an extra zero on that number if you looked at Botox and non-invasive treatments.
So what’s the cost? It’s not in the realm of a nail polish, but it’s also nowhere near facelift status which ranges from $20,000 to $35,000.
Mr Masters says the charge is per unit of Botox used. Depending on the specific product, that’s $17 to $23 a unit and could cost about $480 for one treatment.
The effect should last for about six months if you top up regularly, he says.
So do trends in the beauty industry mean the Lipstick Effect’s days are numbered – long live the nail polish and needle index?
Nothing is likely to knock lipstick off its pedestal, Ms Grant says. “Dior has a new range, Chanel has a new range. People still want lipsticks, they just want new lipsticks.”