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Can lipstick help UK beauty industry ride out the recession?

12 February 2009

Professional Beauty 2009 is the UK’s largest event for the industry and is traditionally known as the Barometer for the market.

As 2009 gets into full swing, it is predicted that the famous ‘Lipstick Effect’ will have a significant impact on the survival of the professional beauty market in general, throwing a lifeline to those who are ready and willing to adapt.

Unlike its retail sisters, the professional beauty market also engenders consumer loyalty to its workforce as well as its brands.  The 15,000 salons and 500 spas in the UK employ some 40,000 staff, which includes beauty therapists, nail technicians, tanning and massage therapists.  Like hair stylists, beauty professionals are viewed as confidantes and foregoing regular monthly appointments is something that clients loathe to do, choosing to cut food bills before beauty.

What Is the Lipstick Effect?

First identified during the Great Depression, The Lipstick Effect is based on the proven fact that, as an economic downturn kicks in, consumers move away from big ticket purchases towards less expensive items such as lipstick as a morale booster.  While industrial production in the US halved between 1929 and 1933, sales of cosmetics increased.  In addition, during the long period of stagnation in Japan since 1997, spending on accessories has risen 10 per cent.

In addition, it is not just at times of economic pressure that women seek to accentuate the smile on their face.  After the 9/11 attacks on the US, sales of lipstick doubled.  The theory works on the principal that, in a crisis or when consumer trust in the economy is low, people will buy goods that have less impact on their available funds.  Market analyst, Dhaval Joshi of RAB Capital explains: “The evidence shows that when budgets are squeezed people simply substitute large extravagances for small luxuries.”  Women buy lipstick and men buy gadgets.

How Do We Know It is Working?

Recent sales figures from some of the world’s biggest retail cosmetic companies – L’Oreal, Beiersdorf and Shiseido - bear out the theory.  In the first half of 2008, L’Oreal sales were up 5.3 per cent.

Similarly, in the UK professional market, results are equally promising as Professional Beauty 2009’s exhibitors attest.  “Quite simply, pretty things make people happy,” explains Paul Gerrard, Head of Marketing of top nail brand Jessica.  “This has been reflected by a healthy 10% rise in 2008 Jessica polish sales over the previous year, with the bolder colours proving to be the most popular Jessica’s longer lasting nail polish formulations have made it an affordable luxury in the eyes of the consumer.”

Michelle Feeney, CEO of self-tan brand St. Tropez comments; “Self tanning continues to be the fastest growing beauty treatment in the UK generating revenues of close to £100m – and despite the recession, sales of St. Tropez products and services were up by 20%in the last quarter of 2008.  Our customers tell us that they feel better with a radiant glow from one of our self-tanning products, which continue to sell in high volumes as they offer an accessible and affordable everyday beauty boost, whatever the weather and economic climate.”

In addition, this trend is not just confined to nails and tanning.  Cosmetics and skincare have both seen double-digit growth during 2008.  “Despite the challenging economic climate of the last 12 months, our figures for Jane Iredale are encouraging and we have experienced double digits in 2008,” comments David Alpert, MD of Wholeview which counts South African skincare brand Environ as well as US mineral make-up supremo, Jane Iredale, amongst the brands which they distribute in the UK.

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