Americans are turning to cosmetics and fragrances to beat the inflation blues, in a trend called the “lipstick effect” that could sustain the post-pandemic rebound in the beauty market and help Estée Lauder and Coty’s quarterly sales.
The “lipstick effect” is a phenomenon whereby consumers buy more beauty products instead of expensive items during economic downturns and is expected to cushion the blow of closures in China‘s major beauty markets, analysts say.
“The general idea is that consumers will invest in small luxuries that increase their confidence and perceived attractiveness during times of uncertainty,” said Jennie Liu, senior lecturer and executive director of the Yale Center for Customer Insights.
“Lipstick effect” keeps Estée Lauder and Coty selling
Cosmetics maker Coty, meanwhile, is expected to report fourth-quarter sales of $1.14bn, up 7.4% from 2021, according to analysts surveyed by Refinitiv. While Estée Lauder just announced sales of $3.56 billion in the fourth quarter, down 10% from $3.94 billion in the previous period.
Featured photo : © Coty