The Lipstick Effect:

how it applies to your store and your customers

Economic uncertainty generally leads to consumers cutting back on purchasing goods and services. The effect takes place when customers cut back on major purchases, but still buy small indulgences, like premium lipstick. Retailers that understand (and leverage) the lipstick effect, may be more resilient during economic downturns.

The Estée Lauder company reported an increase lipstick purchases in the weeks following the September 2001 terrorist attacks. Consumers find gratification in such purchases during stressful economic times such as a recession, a war or conflict, a pandemic, stock market dips and most recently concerns about price increases due to tariffs. The theory is that small luxury purchases serve as a welcome distraction to events that feel out of consumers’ control.

Continue reading for category and product examples suited to various types of retail operations. If you don’t see anything for your type of store, mention it in the comments, so I can offer suggestions and others can weigh in.

• Stores that sell personal care products are obvious winners when conditions favor the Lipstick Effect. For instance, if consumers feel like they cannot afford to indulge in a spa day, perhaps they are more likely to purchase an $14 bath bomb or face mask.