Lipstick Effect


DEFINITION of 'Lipstick Effect'

A theory that states that during periods of recession or economic downturn, consumers will eschew purchases of big-ticket luxury items and seek material solace in smaller indulgences, such as premium lipstick.

Also known as the "leading lipstick indicator".

BREAKING DOWN 'Lipstick Effect'

The lipstick effect is one of the reasons that the restaurant and entertainment industries typically do well amid recessions. Cash-strapped consumers want to treat themselves to something that will allow them to forget their financial problems, but they cannot afford to escape to Bermuda. Therefore, they often settle for dining out and going to a movie.

  1. Consumer Goods

    Products that are purchased for consumption by the average consumer. ...
  2. Consumer Discretionary

    A sector of the economy that consists of businesses that sell ...
  3. Consumer Spending

    The amount of money spent by households in an economy. The spending ...
  4. Leading Lipstick Indicator

    An indicator based on the theory that a consumer turns to less ...
  5. Monopoly

    A situation in which a single company or group owns all or nearly ...
  6. Consumer Staples

    Essential products such as food, beverages, tobacco and household ...
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