e-spaces

By Florence de Vries

Recessions mean wistful meanders past designer dress racks and reluctantly hanging on to your four-year-old car. It means more Land Rovers stay put in showrooms and lavish dinners at swanky restaurants become few and far between.

But retail analysts believe the sales of cosmetics may be bucking the trend and they are tossing the term “lipstick index” around left, right and centre.

This is with good reason. Leonard Lauder, the chairman emeritus of Estée Lauder, coined the term “lipstick index” during a previous recession, claiming that lipstick sales could be an economic indicator in that cosmetics purchases tended to be inversely correlated to economic health.

Of course, the economic indicator bit has since been discredited, but the phrase stuck and has found its way back into analysts’ parlance when considering the local retail industry in a recession.

For instance, if Foschini’s recent sales figures are used as a yardstick, cosmetics sales are bustling while things look rather rocky in the jewellery division. In the past five months, sales of lipsticks and perfumes grew 17.7 percent while that of sparkly golden trinkets fell by 3 percent.

Another recent example came from diversified food manufacturing group AVI, where the sales of personal care goods far outweighed those of pumps and moccasins at its Spitz footwear subsidiary.

One analyst noted that because AVI’s personal care brands, such as Lenthéric, fell into lower price categories than competitors, the group had undoubtedly been on the receiving end of the so-called buying down trend displayed by consumers.

Clicks chief executive David Kneale supports the argument that life’s little luxuries need not cost an arm and a leg.

He posits that even during a recession people still need to relax and feel good about themselves. “Cosmetics remain an affordable indulgence,” he says, adding that the group has already seen exciting growth in this division this financial year.

And so, even though we are spending less, the point is that we’re still buying.

The economy, which comprises about 60 percent consumer spending, needs us to buy. And we will continue buying even if it means we have to look past the branded goods. It appears that in-store brands are on the rebound as people opt to move away from name brands.

Woolworths, Shoprite, Pick n Pay and Spar have all introduced in-store brands, with Pick n Pay’s brand making up at least 10 percent of goods on its shelves.

A few years ago, Woolworths started selling branded goods while Shoprite’s private labels put in a good performance over the past year. But, according to one retail expert, it is not that generic brands are significantly cheaper than the ones with the distinctive labels, it is the value attached to the actual store selling them.

In tough times we look for value – something Woolworths chief executive Simon Susman is determined to get right in his final year at the helm. Recently Susman agreed that the group did not act fast enough in getting Woolworths basics to the counter on time. And it showed in the company’s financials.

At the same time, on the near-opposite end of the consumer spectrum, value retailer Mr Price still appears to be cashing in on the trading down trend through a careful selection of fashion at low prices.