Have you heard about the lipstick effect? This is not about beauty insider knowledge, but about an economic phenomenon first coined by sociology professor, Juliet Schor in 1998 and then later confirmed by Leonard Lauder, former CEO of the Estée Lauder Companies, during the economic recession that followed the September 11 terrorist attacks.
Behavior shift
Consumer behavior changed radically in the fall of 2001. Consumers drastically reduced major investments and purchases of ‘big ticket’ luxury items, instead investing more in small luxury items with which they could treat and pamper themselves. For example, sales figures for lipsticks soared to unprecedented heights in the fall of 2001, while sales revenues for high-priced luxury items fell significantly. Apparently, lipstick sales were inversely related to economic health.
The basic effect has since been repeated in economic crises—even if lipstick is more of a synonym for the effect than the product on which it manifests itself. After all, in the crisis years of 2008/2009, it was mascara and nail polish that helped the beauty industry achieve record sales.
The Lipstick Effect strikes again
The crisis that accompanied the Covid-19 pandemic also proved the phenomenon—but this time in the form of rising sales for fragrances. In this case, it was mandatory face masks that made lipstick invisible, but instead made fragrances best sellers.
It was not until 2022 that the lipstick effect lived up to its name again. According to NPD figures, sales of lipsticks in the U.S. grew by a whopping 48% in the first quarter of 2022! And Tina Müller, then CEO of Douglas, Europe’s largest perfumery retailer, also proudly reported the lipstick effect and over 1 million lipsticks sold during the first nine months of 2022.
Whether lipstick, mascara, nail polish, or fragrances, retailers and brands have faced challenges. On one hand, they’ve had a sudden and drastic increase in demand. Meanwhile, on the other hand, there have been ongoing global supply chain issues and long production lead times. The two seem to be irreconcilable.
Ready for the demand?
It is particularly annoying when you know that a part of the demand could be served in principle—because you have the stock—but visibility across your different inventory locations is missing. For example, it may be that the warehouse that fulfills digital demand has no more lipsticks in stock, while there is still sufficient inventory in the stores.
But due to a lack of visibility across these different systems, this important information remains a well-kept secret. And all too often, there is not only a lack of inventory visibility but also a lack of ability to source products from various locations.
Summary
If you don’t want to continue missing out on this revenue, that’s where a distributed order management system (OMS), like Fluent Order Management, comes in. You need an OMS that is designed to provide near real-time, accurate inventory visibility across all your channels and stock locations, so you can better adapt to changes. And one that optimizes fulfillment from different sourcing locations, so you can satisfy digital demand from anywhere—and make the most of the lipstick effect! To learn more, schedule a demo today.
