Domestic retail experiences ‘lipstick effect’

Chinese consumers’ pursuit for quality would not change amid rising economic pressure from external as well as internal factors although the “lipstick effect” has emerged in China, said a consumption analyst.

The term “lipstick effect” refers to a phenomenon where disposable income is under pressure, so shoppers hold off on buying big-ticket household items like TVs. Instead, they treat themselves to cheap and fun items such as lipstick, shoes, takeaway coffee and snacks.

A Shanghai-based shopper surnamed Wang told the Global Times on Monday that she’s been feeling the pressure of higher costs for daily necessities, but she still treats herself to small gifts every month.

The woman, with a monthly salary of about 10,000 yuan ($1,467), bought a lipstick while window-shopping recently. “I liked the color so I bought it,” she said.

“I don’t want to burn money on expensive items, but I’ll spend a bit on affordable things to make myself happy – lipstick, perfume or clothes,” she said.

With pressure such as the China-US trade dispute, which drives up import tariffs, as well as the increasing cost of many materials, the growth of consumption spending is slowing.

Data from the National Bureau of Statistics on August 14 showed that retail sales grew 8.8 percent year-on-year in July, down from 9 percent in June.

Chen Min, editor-in-chief of cosmetics industry website C2CC, said that the “lipstick effect” has indeed emerged.

“But I think China’s ‘lipstick effect’ is a little different from what the term originally meant. Although China is facing economic weakening, the country is not experiencing so-called consumption downgrading, and Chinese consumers’ pursuit of quality has not changed,” Chen told the Global Times on Monday.

“For example, the really popular lipsticks in China are still famous brands or well-known global versions,” he said.

A report from 163.com in April noted that sales of US lipstick surged by more than 25 times in December 2017 compared with January 2017 on tmall.com.

“Even though China’s economy is facing challenges such as the trade dispute or global economic sluggishness, Chinese consumers’ buying power and potential are still strong,” Chen said.