Lipsticks and the economy
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Leonard Lauder, the chairman of Estée Lauder Companies was once heard making this observation. He explained that lipstick purchases are a way to gauge the economy. When it’s shaky, he said, sales increase as women boost their mood with inexpensive lipstick purchases instead of $500 slingbacks. Mr. Lauder came to this conclusion when he saw the economy going down post the terrorist attacks in 2001. He saw that his company was selling more lipstick than usual. Beauty brands remain true believers in the theory, even though in the last few years the lipstick market has fallen on hard times as its glistening cousin, lip gloss, has had robust sales.
And of course brands like Clinique and DuWop Cosmetics are preparing for a big year in lip color, for two reasons. First, they would like to see a return to lipstick, which usually costs slightly more than gloss. Second, the companies believe that in down times women will continue to splurge on lip lacquer even as they make do with last season’s dress. And economists agree with this theory as well! Not only is the lipstick theory plausible, “it’s perfectly consistent with all kinds of economic theory,” said Richard DeKaser, the chief economist with National City Corporation, a financial holding company and bank in Cleveland.
