The risk of not selling the product always hangs over the manufacturer and the intermediary with the sword of Damocles. If there is no demand, there will be no profit. Some goods fly like hot cakes, others have to be promoted by hook or crook. However, there is one product category that is not afraid of any crises and falling demand. We are talking about lipstick and some other types of cosmetics. They are sold even when the unemployment rate doubles and the population simply disappears money for various excesses. Economists call this paradox the "lipstick effect."
We don't care about the crisis
The Great Depression was the real collapse of the "American Dream" for the United States. The streets are flooded with millions of unemployed protesters demanding at least some jobs. Adult, healthy men stood in lines at the free canteens. And against the background of this catastrophic impoverishment, sales of cosmetics across the country have doubled! After analyzing the situation, the owners of large companies and economists came to the conclusion that in this way during the crisis, psychological tension manifests itself, and, as you know, ladies are most susceptible to it. When there is no money for a new dress, coat or boots, you want to buy at least some little thing that will make you feel like a woman. Leonard Lauder, the head of the Estee Lauder corporation, also noticed the feedback: if lipstick sales began to grow, then a crisis began. Dresses will not be bought in the near future. There is simply no money for them. So cosmetics manufacturers only benefit from crises.
What products are bought
The "lipstick effect" does not work with all makeup. Marina Krestinina, a consultant at CB Richard Ellis, identified several types of cosmetic products for which demand is not growing during the crisis. These are perfumes and expensive leather products. Such products belong to the luxury segment, and the effect of their use is not immediately visible (or not noticeable at all). Women, on the other hand, during an acute shortage of funds for personal care, want to spend a little, enjoy the purchase and immediately see a spectacular face transformation. All three ingredients are included in the purchase of lipstick, mascara and similar products. The "lipstick effect" has been steadily observed in recent years in Russia. Since the beginning of 2015, L’oreal has been selling 10% more of its color cosmetics here than before. Lines "Natura Siberica" and "Planeta Organica" - by 25%. Domestic manufacturers have noted a significant increase in demand for their products. However, foreign ones are not lagging behind. For example, a couple of years ago a boutique of the popular American brand "Urban Decay" was opened in TSUM, which is actively increasing its trade in Eastern Europe. In the first place are sales of the very lipstick that soothes women in bad times.
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