Lipstick Theory Fails to Hold True
November 2009
According to Datamonitor, the ‘lipstick theory’ that states that consumers spend on small luxuries such as lippy during the recession was proved wrong in 2009. Nevertheless, other cosmetics fared better.
Siddika Jaffer, Datamonitor director of consulting for EMEA consumer markets, stated that falling sales of lipstick was not the only surprise in its latest research, published today.
“Along with the lipstick theory being debunked during this recession, it seems that consumer purchasing and usage of personal care products are also showing surprising shifts,” she added.
Leonard Lauder, the chairman of Estée Lauder formulated the lipstick index at the time of the 2001 recession. Reports show an 11% rise in the sales of lipstick in the US in 2001 and a 25% hike in the sales of other cosmetics during the recession of 1930s.
UK sales of lipstick in contrast have fallen around 5% on last year, while foundation sales are up significantly. A similar pattern appears in the US.
Nonetheless, Jaffer added, “The underlying principle behind the lipstick index is the notion that consumers treat themselves to little luxuries during a recession as they cannot afford to spend on the bigger luxuries such as holidays and cars, or indeed on going out.”
The belief that buyers spend on affordable luxury during recession is uncontested, as spending only seems to have shifted from lipstick to foundation.
According to the research conducted by Datamonitor Recession and Recovery May 2009, cheap and less premium brands are being preferred by 81% of respondents, 32% are buying cheaper brands most of the time whereas 18% are buying cheaper brands all the time.
82% are reducing spending on treats, with 18% having cut them out completely and 34% cutting back most of the time;
49% UK respondents mentioned that they buy private label all or most of the time to save money and a further 37% said that they bought private label occasionally. US and Canada data showed a similar scenario.
Only 2% said they had intentions for increased spending on premium fragrances and cosmetics while 19% preferred to stay on previous levels and 55% said they would reduce or just not buy.
Premium fragrance and cosmetic market doesn’t seem to figure as an affordable luxury.
12.5% of respondents who used the mass market brand L’Oreal brand have switched to private label offers, a further 8.7% were changing to other branded offers, while 14% said that they were still loyal to the brand but only bought it on offer.
Private label penetration in personal care was 17.1% in the UK in 2007, compared to a 40% average for grocery overall, which means that the personal care category was unaffected by the growing share of private label sales in the UK. Recent consumer survey results suggest an increase in the shift to private label in personal care.
The survey also revealed that while 61% of all consumers used supermarkets and hypermarkets as their main shopping channel for personal care products, 8% of used discounters, which was the second highest category penetration, score for this channel.
With 25.5% of customers are showing an intention to migrate to discounters and wanting to make their main channel, channel switching intentions for personal care amounted to 14%.
“The looming fear is that this recession will change the face of the personal care category for a long time to come.” reasoned out Jaffer.
Michelle Williams from Artemis Solutions Group who specialise in recruiting for Food and Beverage sector states,” The consumers ‘ response to recession is the significant shift from branded products to private labels and a tilt towards discounters. The theory that people focus on smaller luxuries like branded cosmetics as they are unable to buy cars and more expensive ones seems to be undermined by this information.”
