e-spaces

Lipstick sales were holding up at Clicks as women continued to spend on this “affordable” luxury despite the downturn that had hurt sales of discretionary goods, the retail chain said this week.

July 17, 2008

By Tom Robbins

Cape Town – Lipstick sales were holding up at Clicks as women continued to spend on this “affordable” luxury despite the downturn that had hurt sales of discretionary goods, the retail chain said this week.

Clicks, which is owned by New Clicks, had “north of 25 percent of the colour cosmetics market”, according to Michael Harvey, the chain’s managing director.

The Leading Lipstick Indicator is based on the theory that consumers turn to less expensive indulgences, such as lipstick and nail varnish, in tough economic times. Legend has it that the phrase was coined by Estée Lauder chairman Leonard Lauder, who found that sales of these highly visible and affordable luxuries grew during recessions.

Cheaper lipsticks sell for about R30 but at top-end retailers a tube of colour can cost up to R400.

Sales of pricier luxuries, such as cars and furniture, have registered negative growth for almost a year as high interest rates and inflation have dampened consumer spending on all but the most basic items.

Bruce Rubenstein, the chairman of Stuttafords, agreed that colour, which includes make-up for lips, nails and eyes, was outperforming sales of the other cosmetics categories such as fragrance and face creams.

Rubenstein said consumers were becoming more “frugal” in using fragrance and were trading down on face creams.

Woolworths, a more recent entrant into cosmetics, said its beauty business was a relatively steady seller. Customers loyal to high-end products continued to be so, but others sought better value in colour cosmetics.

Harvey said growth in Clicks’ cosmetics sales had slowed “slightly” from 13.9 percent in the half-year to February. Since then, growth had been about 12 percent.

“Our colour sales are off a huge base and are still showing real growth,” he said.

Paradoxically, the strongest cosmetic category was facial skincare, traditionally an area where women cut back spending first. He attributed this to consumers trading down from more expensive products at traditional department stores.

Clicks’ share of the fragrance market was “in the single digits”, but it was dedicating more shelf space to the category, as it saw an opportunity to boost its share.

Black haircare products continued to grow at 70 percent, as the chain benefited from having introduced the products into all its stores.