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The Dow, Nasdaq, and S&P 500 are all down, and the cost of living is soaring. When finances are tight, spending habits shift, but one surprising trend remains: people still indulge in small luxuries. This phenomenon, known as the Lipstick Effect, suggests that in uncertain times, consumers may cut back on big purchases but will still find comfort in affordable indulgences like beauty products.

What Is the Lipstick Effect?

Coined during the Great Depression, the Lipstick Effect describes how consumers prioritize little luxuries—especially lipstick—when they can’t justify splurging on high-ticket items. It’s a psychological comfort: buying a small, feel-good product provides a sense of control, normalcy, and self-care.

However, beauty trends have evolved, and the Lipstick Effect is no longer just about lipstick. Today, consumers are expanding their small indulgences beyond makeup to include:

Perfume – A Mood Booster, An Escape, and A Confidence Enhancer

Fragrance has become one of the most recession-resistant beauty categories because it creates an emotional experience. Consumers may not splurge on designer handbags, but they will still treat themselves to a signature scent that makes them feel luxurious and put-together.

• Affordable Fragrances on the Rise – More shoppers are opting for celebrity perfumes (like Ariana Grande's Cloud or Billie Eilish's Eilish), which offer luxury-like appeal at $50-$70 price points instead of high-end designer perfumes that can cost upwards of $150+.
• Body Splashes & Mists Making a Comeback – Affordable options like Sol de Janeiro’s Brazilian Crush mists ($24-$38) and Bath & Body Works Fine Fragrance Mists ($17-$20) give consumers the indulgence of fragrance without the high cost of an Eau de Parfum.
• Rollerballs & Travel Sprays – Instead of committing to a full bottle, shoppers are buying travel-sized perfumes ($30-$50), allowing them to enjoy their favorite scents without a hefty investment.

Nail Care – The DIY Manicure Boom

Instead of spending $50-$100+ per month on salon visits, consumers are opting for at-home nail kits and premium press-on nails, which cost significantly less but still provide a polished, professional look.

• Press-On Nails & Gel Strips – Brands like Glamnetic and Olive & June offer salon-quality press-ons that last up to two weeks for $8-$15 per set—a fraction of a professional manicure cost.
• Luxury Nail Polishes – High-end brands like Chanel, Gucci, and Dior are seeing increased sales in their nail polish lines ($30-$50 per bottle) as consumers trade in frequent salon trips for long-lasting, high-end formulas they can apply at home.

Skincare & Self-Care – Affordable Spa-Like Indulgences

With stress levels high, self-care has become a priority, and consumers are investing in premium skincare that makes them feel pampered without a high price tag.

• Face Masks & Serums – Shoppers are looking for high-performance yet affordable options like The Ordinary ($10-$20) or Glow Recipe ($30-$50) instead of splurging on luxury spa treatments.
• Aromatherapy & Relaxation – Essential oil rollers, sleep sprays, and calming body butters are being purchased as small luxuries to provide comfort and relaxation at home. Brands like Lush and This Works are seeing strong demand for their stress-relief beauty products.

Hair Fragrance & Body Oils – The Rise of Everyday Luxury

Lightweight but ultra-luxurious, hair perfumes, body oils, and hydrating mists have become a new way for consumers to indulge in fragrance and beauty without a major investment.

• Hair Perfumes– High-end brands like Gisou, Kayali, and Oribe are offering hair mists that last all day and add shine and nourishment for $40-$60 per bottle—a more budget-friendly way to smell luxurious.
• Body Oils for an Extra Glow – Instead of high-end body lotions, shoppers are gravitating toward hydrating body oils like OUAI, Nuxe, and Fenty Beauty’s Butta Drop, which nourish skin while leaving a lasting scent. These products retail for $30-$50—a reasonable indulgence for those cutting back on expensive spa treatments.

How Is This Time Different?

Unlike past recessions, today’s consumers are facing higher costs across essentials, meaning they are more mindful of their spending than ever before. Instead of impulse buys, they are investing in quality products that offer lasting value. This shift explains why categories like fragrance, skincare, and multi-use beauty products are thriving—people want something that feels special but also justifies its cost.

Why the Lipstick Effect Still Matters

While the economy may be uncertain, the need for small joys remains constant. Whether it’s a bold lipstick, a signature fragrance, or a luxurious hand cream, beauty remains one of the few accessible luxuries that make people feel good without breaking the bank.

So, next time you reach for a perfume, lipstick, or skincare essential, remember—you’re not just buying a product. You’re embracing a moment of joy, resilience, and self-expression.