The L'Oreal Effect

I stumbled upon an interesting article about the L'Oreal effect or the Lipstick effect.

Just what is this L'Oreal or Lipstick Effect?

L'Oreal, over the years has seen that their sales during economic downtun, recession stays consistent or increases. This trend has been observed since 1929, great depression in the US and in the 1937 recession.

In fact, in 2002, Lindsay Owen Jones, Chairman and CEO of L'Oreal said, "We are fortunate to be operating in markets that are less sensitive than others to economic cycles. When the outlook is gloomy, a customer who delays the purchase of a consumer durable will continue to buy cosmetics products as they provide a sense of well-being at a reasonable price."

This phenomenon of L'Oreal doing well in sales during the economic downturns is called "L'Oreal effect."

It's also known as lipstick effect i.e., during a recession, the tendency of consumers to purchase small, comforting items such as lipstick rather than large luxury items. The reason is that women traditionally turn to lipstick when they cut back on life's other luxuries. They see lipstick, which sells for as little as $1.99 at a supermarket to $20-plus at a department store, as a reasonable indulgence and pick-me-up when they feel they can't afford a whole new outfit.

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