The Lipstick Effect: Russia, the Beauty Industry, and the Financial Crisis

In the USSR, industrial products were prioritized over consumer goods. While industry produced many tanks and guns and much heavy machinery, women often struggled to find decent make-up or clothing.  Eighteen years after the communist behemoth collapsed, guerrillas worldwide employ leftover AK-47’s, post-Soviet states sell leftover Soviet tanks to African nations, and the levels of make-up consumption are higher than in many historically capitalist countries. Make-up is readily available now, and many middle-aged women rarely reminisce about the times when they literally used to spend one quarter of their salaries on black-market French mascara.

It is now the time of the year when it becomes especially obvious how far Russia has come in terms of consumerism. Around New Year’s, Russia’s consumerist equivalent of Christmas, stores are abuzz with customers looking for gifts for their near and dear. With online shopping still undeveloped, the number of customers in the stores is a good indicator of the current economic situation. The unemployment rate has skyrocketed,  petrodollar flow has decreased, stocks are down,  grocery prices went up, and the ruble is being slowly devalued. Yet, the atmosphere is not quite as morbid as I expected. Most stores have not resorted to the unprecedented sales of the US, although many of them have experienced a reduced flow of customers. While the ones selling furniture, expensive clothing, and electronics struggle to stay afloat, the ones offering make-up and sometimes jewelry are — surprisingly — experiencing a wave of consumerism.

In the somewhat pretentious chain make-up store to which I went in hopes of checking off some items of my gift lists, the dreaded krizis was seemingly ignored. The intrepid crowds were joyfully choosing between Chanel, Dior, and Givenchy.  But the displays with more modestly priced brands were even more crowded. The customers were scouting the store for the yellow sales labels, but once they identified them, they often bought multiples of the good. At the register, many were flashing the “gold” discount card,  which one gets after spending an equivalent of $340 at the store (may I remind you that the average monthly salary in Russia in 2008 is reported to be around $700 (in the pre-crisis exchange rate)?.

That sight reminded me of the article I recently read that discussed the “lipstick effect” apparent in Russia right now (here’s a link for the Russian speakers). In short, the “lipstick effect” is an increase in the demand for perfume and make-up during the times of financial instability. Since people can’t afford much, they resort to buying fun affordable goods such as a new shiny, candy-flavored lipgloss. This theory does appear to  be very true right now. Some friends of mine who would have bought more expensive gifts before opted to get perfumes for their male friends or make-up for their females friends instead. Men’s perfumes have been flying off the shelves, a buyer acquaintance of mine confessed. They are replacing the pricier cashmere sweaters, iPods, or cell phones, traditional New Year’s gifts for husbands, boyfriends, fathers, and sons.

Further research suggests the lipstick effect is felt worldwide: from the US to India to New Zealand, “small luxuries” are substituting “extravagant purchases.”  Consumerism is an inherent part of the 21st century, and it is quite understandable that people would go for cheaper goods on which to spend their disposable income when the times are tough. As the name suggests, these effect is primarily facilitated by women. And could you blame them for that? In the times of unemployment and the gloomy Russian winter, inexpensive bright lipstick may be the only available kind of retail therapy.

Although I couldn’t find any quantitative research on the lipstick effect in Russia, I would expect it to be even stronger than in other developed countries. First, there is an entire social strata — young, single, well-educated, middle-class women — who gladly spend their money at the make-up counter. Many of them make enough money to have some disposable income left after paying their bills. But it is not enough to buy an apartment or to take out a mortgage: the salaries are still low, and property prices some of the highest in the world (although the property bubble has been bursting recently). There is not much of an investment culture: years of communism and the volatile post-communist market did not exactly help develop one. Saving for retirement is still a foreign concept to many. So these women resort to renting and spending the rest of the money on make-up, hair cuts, pedicures, and salon anticellulite services.

Then, of course, there is the mentality: the “if you’ve got it, flaunt it” attitude is still de rigueur for many. I know plenty of women who would rather buy a mink coat and be on the potatoes-only diet for the next year or two than buy a regular coat and good food . This ostentatious approach causes producers of luxury good all over to swear by the Russian consumers. Those not rich enough to afford haute couture go for the hot finds of the numerous glossy magazines instead: the new mascara brush, the new season nail polish, the new miraculous anti-wrinkle skin cream. Considering the ridiculously low men to women ratio and a common belief that a woman has to a) get married to be successful; b) wear a lot of make up and be always perfectly groomed to catch a man — you get a perfect beauty industry consumer. There are more beauty salons in place in an average Russian provincial town than I have ever seen anywhere. Just a few months ago, everything was overpriced, but women were happy to pay. I remember running out of lipgloss and finding it to be three times as much in Moscow as I paid in NYC. A friend of a friend reportedly used to make a living by taking Russian upper middle-class women to Berlin, where they would stay at nice hotels, eat at fancy restaurants, and shop excessively. With plane tickets and visa costs, they still spent way less than they would have if they bought the same things in Russia.

Now that incomes are down, purse strings are tightened. The sun has set on expensive salon treatments. The beauty parlors, especially the more expensive ones, attract fewer customers, but women are not about to stop getting highlights. A friendly shop assistant reported a drastic increase in the demand for their home hair-dye kits. Likewise, women are not about to stop exfoliating, moisturizing, and de-wrinkling. Some internet forums featured  women admitting abandoning the more expensive foreign skin care lines and resorting to the reasonably-priced Russian and Belorussian ones instead (which is generally deemed “ok to do, if you don’t admit it publicly and still have a compact and lipstick by a fancy brand to use in public”).

I happen to like a certain hair conditioner that is made in Belarus. Every time I go to Russia, I attempt to buy several bottles — it does wonders for my hair, it’s very cheap, and it’s patriotic (Russia and Belarus are supposedly one state, no?). It is very popular, but I usually have no problems locating it. This time around, it was nowhere to be found. Previous L’Oreal and Schwarzkopf customers were now making an extra effort to find something cheaper and at least of the same quality, and that conditioner happened to be their best bet. Remember Chanel’s Black Satin hysteria two years back? This is actually worse: instead of the civilized waiting lists at Bloomingdale’s, women are said to bribe shop assistants to keep these conditioners for them when they next become available.

If I had several million dollars to spare, I would be very happy to invest in buying up a skin care factory — preferably in Belarus, for the workforce is cheaper there — and to hire chemists, package designers and advertising experts, pay for a  celebratory article in some glossy magazine, and promote my products as de luxe — there will be a high earning potential (and workplaces, too). Do you want to know why I think that? Here is a story:

A sales assistant at that make-up store helped me pick a few gifts, and I commented on the limited selection  of the Chanel nail polishes, given that the new line named after Russia just came out. Oh, she was very worried about it, she said. In fact, she wanted it for herself so badly that she had booked train tickets to Moscow to go to the headliner Chanel store, where said nail polished are still available. The dark red version was her favorite, and she was looking forward to finally being able to wear it.

I later found out that a sales assistant in that shop makes around $400 a month. The cheapest return trip to Moscow would cost around $60; that nail polish retails for $38 in the US, and it probably costs more in Russia. It looks like Russian women are still ready to drop a quarter of their salary on the nail polish. Forget Gazprom. With the oil prices plummeting, make-up may be the way to go.

Author: Anna Ershova

I am a rising senior at Yale who is originally from Russia/Ukraine. I was mostly educated in Hong Kong and Germany, and now attend Yale University in the U.S. I blog on and off about things that interest me: Russia, China, politics, and law. View all posts by Anna Ershova