The Lipstick Index

Following the crisis in the world today, people are cutting back on spending a lot! People have lost their jobs and are struggling to survive. They have cut down on eating outside, they have stayed away from shopping, tearing themselves away most dramatically, from sales too. Companies too have cut down on advertising and other avoidable expenditure. But somewhere in this bleak picture of the world, there is a colourful trend.

While times are bad, investments are falling and the trend is the market is largely “cost cutting”, lipstick sales soar! The term ‘lipstick index’ was coined by Leonard Lauder, chairman of makeup company Estee Lauder when he noticed that lipstick sales rose during tough times. Let’s take a look back – during the Great Depression, lipstick sales increased by 25%; After the September 11 attacks, lipsticks trends followed a similar pattern and doubled; and since history always repeats itself, the New York Times recently reported that lipstick sales have shot up 40%!

Why? Well, the theory states that people turn to less expensive indulgences (such as lipstick) when they are uncertain about the future. When ladies cannot afford to buy that very comfortable and smart new coat, or that cute and preppy new cocktail dress, they turn to something less expensive, which makes them feel and look just as good.

Of course, it could also be a way to make this bleak, dull world, look much brighter! Either way, wouldn’t this have been an interesting lecture in our otherwise boring Economics classes?

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