Lipstick sells when economic times are tough

Mary Kay ladies are notorious for citing all sorts of phantom statistics to recruit anyone and everyone into their cosmetics "business opportunity." To hear them tell it, Mary Kay has made more female millionaires, has more women making $50,000 or more, has given away more free cars,.... and on and on and on. (Yes, all these statements are pure fiction with no hard facts to support them.)

Amazingly, one often cited "fact" might just be true. It's been said that during difficult economic times, women buy more cosmetics. When money is tight they might not be able to justify buying a new outfit or handbag, but a relatively small purchase of an "extra" like makeup will boost her spirits.The New York Times cites the theory pitched by Leonard Lauder, the chairman of Estée Lauder Companies. He said that during tighter economic times, lipstick sales surged, and so lipstick sales can be one way to gauge the economy. And economists agree, saying that during tough times, small indulgences like lipstick often sell well. Yet no economist in their right mind is going to use lipstick sales as a primary economic indicator.

Cosmetics are seen as a small indulgence for the shopaholic who uses "retail therapy" as a boost for her spirits. Stores like Sephora and Ulta, which feature a variety of cosmetic lines are primed to capitalize on these impulse buyers. I admit it.... Cosmetic purchases are fun, feel-good buys. And I can never have too many shades of lipstick. The newest one is always a little bit different. Except, of course, when it is accidentally a duplicate of a color already in my lipstick drawer.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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