Leveraging The Lipstick Effect in Your Small Business During Times of Recession

I've lived through a number of recessions in my life, mostly blissfully unaware. The recession I remember most is 2008. I was 20 didn't fully understand what was happening but all the parents and adults around me seemed stressed out so I just nodded my head along and would say things like "I blame it on the economy," during conversations.

Now, almost 15 years later I'm the adult in the situation, and a business owner, which means not only do I have a better grasp on what a recession means, but I feel it's effects in my business.

I'm betting you're feeling it too. Maybe you're fretting a bit, or feeling scrappy, or maybe you're digging your heels in and staring down the storm like, "COME AT ME BRO!"

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This one is for those who are feeling a little uncertain in these uncertain times.

I'm here to tell you that a recession doesn't mean disaster for your business. In fact, I want to tell you about something that you can use to actually increase your sales during tough times.

The Lipstick Effect.

The Lipstick Effect claims that in times of economic or financial stress women will spend more money on small indulgences such as premium lipstick.

According to Forbes, the Lipstick Effect is a theory first presented by Professor Juliet Schor in her 1998 book, The Overspent American. She found that when money is tight, women will still spend money on small luxury items they can show off in public, like reapplying a designer lipstick in a restaurant. And they're more likely to cut costs on items that are used in the privacy of their own homes, such as facial cleanser or eye makeup.

As a not-yet-fully-cooked-adult in 2008, I didn't really notice the recession. I lived in the Silicon Valley making $8 an hour and working part time — Money was always tight. But that didn't stop me from buying nail polish. And lots of it.

In fact, most of my money went towards cosmetic items, and high end ones at that. I wasn't much of a lipstick girl, but instead found myself buying professional nail polish, salon quality hair care, designer perfume, and luxury brand makeup. A bottle of OPI here, a little bit of MAC there.

Estée Lauder validated the Lipstick Effect during the 2001 recession when they noticed lipstick sales increasing. And even the pandemic of 2020 illustrates the effect when masks became mandatory and lipstick sales dropped but eye makeup sales increased.

Just like my 20-year-old self couldn't afford a $400 Marc Jacobs purse but could swing $25 for a roller bottle of Daisy perfume, small, luxurious purchases make it easier to cope with the stress of uncertain times. You can live within a budget but still feel like you can keep on grasp on the side of you that enjoys the finer things in life.

In a time when I couldn't keep up with the fixes on my car, or could only afford to live in questionable apartments spending $8 on a bottle of really nice nail polish was a small, easy way for me to buy something luxurious that made me feel good. And not only that, but a fresh, glossy, long-lasting manicure was a signal to the world that I'm doing ok. The same is true for applying a designer lipstick in public where people can see the brand. It projects something about you to the world that makes you feel more confident in times that confidence can be hard to come by.

So how can you take advantage of The Lipstick Effect to increase your small business' sales during these tough times?

1. Lead with empathy. We're all in this together. The economy doesn't just effect one person or one type of business. When nation-wide things happen, it effects us all. So rather than trying to turn up the volume on the sales pitches, change the pitch altogether. Recognizing that your customer is pulling back from spending will signal to them that you understand them. They're probably disappointed about not being able to spend the way they're used to, so getting creative and finding ways to make it easier for them to purchase from you without cutting into your profit margin will make them comfortable to shop at your business. Maybe you can toss in a few samples or a bonus freebie in their order, or cut them a little slack on shipping. Letting them know that you understand their struggles will position your business to feel more like a trusted friend than a retailer that's reaching into their wallets.
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2. Offer smaller sizes. Travel sizes aren't just for traveling. They're a great way to sample a new product you've never tried before or indulge in a luxury you may not have otherwise for a lower price. Think about the way Ulta keeps towers of small items near the register. Or the way grocery stores offer magazines and candy bars at the register. Small items are easy to add on to an order. (Take it from me, the girl who once spent $70 in small travel and sample sizes at Ulta.)
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3. Don't skimp on experience. Costs are more likely to get cut on things that the world doesn't see. But things that can be used in public is where the luxury counts. Create a share-worthy unboxing experience. Make your packaging absolutely irresistible. If you make you products and luxurious experience that your customers can't wait to show off, it will be easier for them to say yes to purchasing.

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Is your customer experience where you want it to be? When you're ready to level up your branding, packaging, unboxing experience we're here for you. I've got nearly 15 years of design experience under my belt and a lifetime of retail therapy that I'm ready to put to work for you. The Happyland Creative™ team will take the stress of having to create a delightful customer experience off your plate so that you can focus on the other things you need to do and still know that your business and brand experience is being taken care of. If you're ready to get started feel free to book a free, no-pressure intro call with us so we can get to know each other more and hear more about your business goals and dreams.

If you're not quite sure where to start, check out The Ultimate Guide To Vision-Casting Your Grown Up Brand so you can get a feel for everything that goes into a delightful, memorable brand experience.