The lipstick effect
How we spend when markets lose their gloss

Pucker up, peoples. It seems when the economy stalls and sales fall, sales of small luxury items, like lipstick, rise. It’s called the ‘lipstick effect’ and it was first seen during the Great Depression when sales of cosmetics rose while production halved.

It also happened after September 11 when lipstick sales rose 11%1, and again after the Global Financial Crisis, when Estee Lauder reported a spike in luxury lipstick sales.

It’s been happening recently, but in a different way. In the UK, sales of cosmetics jumped by 24% in the week of 24 March with the biggest movers being nail products2 and eye liner, as it’s pretty hard to apply lipstick under a face mask.

How our shopping has changed

Online shopping has had a big boost during isolation, with 47% of people around the globe saying they’re spending more time shopping online. In Australia only 30% are admitting to shopping more online and only 6% were for personal treats and 5% for cosmetics3.

Australians seem to have been more practical, spending 20% more at hardware stores4 according to one bank’s analysis of their cards. But, we’ve seen less practical spending as well with people stocking up on alcohol and online gambling also grew by 67%5.

Australians have also reportedly been spending more on hospitality6, which is surprising given cafes and restaurants had to stop inhouse dining.  It seems we’ve been happy to support these small businesses by ordering take away.

The other major increase has been the massive rise in research being conducted into how people have been spending during lockdown. It seems like every business wants to know what you’re spending on now, and where you’ll be spending in the future.

Be happy

We all have a complex relationship with money. And there’s no doubt that when we spoil ourselves with a little gift, we get a bit of happiness as well.

Whether you’re saving for a big goal like buying a house or just getting through a downturn, it’s ok to reward yourself along the way as you reach milestones.  We need some encouragement to keep us motivated.

And when it’s something as positive as spending on your favourite local restaurant – which will help it survive – then you’re also helping others. If you’re repainting, then you’re helping the presentation of your house, adding value and improving your surroundings. (As for online gambling, you’re improving your bookmaker’s house, so maybe think twice about that habit.)

Be loyal

People’s spending patterns will likely change permanently after restrictions are totally lifted, but the search for savings and value won’t.

Members of EISS Super have access to our great Loyalty Rewards program which will help you uncover lots of savings.

You’re entitled to discounts for restaurants all over Australia, so check out if your local favourite is on the list. You can also save on gift cards from major retailers like Woolworths, Coles, Rebel, BCF, Supercheap Auto, and JB Hi-Fi among others. And, when we’re able to travel again, check out the discounts on flights, accommodation, car hire and tickets to local and interstate attractions. 

You might not be able to take advantage of all these offers straight away, but at least you’ll know where you can save in the future.


1lifestyle.inquirer.net/361057/in-coronavirus-pandemic-lipstick-effect-gives-way-to-eyeliner-effect/
2essentialretail.com/news/nail-sales-lipstick-effect/
3GWI Coronavirus Research, April 2020, Multi-market research wave 2, Pg 53 and 56
4savings.com.au/credit-cards/aussies-spending-more-on-diy-during-isolation
5smh.com.au/national/alarming-rise-in-online-gambling-has-experts-worried-20200408-p54ics.html
6thenewdaily.com.au/finance/consumer/2019/05/03/lipstick-effect-spending/