Lipstick theory and the UK recession
The lipstick effect is a theory that states that when facing an economic crisis consumers will be more willing to buy less luxury goods or smaller luxury goods.
The theory got its name from the increased lipstick sales during economic downturns such as recessions – it also extends to other beauty products.
During economic troubles, consumers psychologically require normalcy which leads to spending money on small luxury products such as beauty products. It has also been suggested that the purchases are due to people wanting to focus on their appearance in uncertain situations.
The substitution effect is the decrease in sales for a product leading to consumers switching to cheaper alternatives when the price increases. Concerning Lipstick Theory, it means that instead of being able to buy larger expensive items they will downsize their lives and buy smaller expensive items such as lipsticks.