Is the lipstick effect over? IP activity and what it indicates

What does IP activity tell us about the state of the cosmetics and personal care market, and what do you need to know to protect your distinctive products, slogans and packs, or ensure you’re not infringing on others’? Ella Newell and Elizabeth Dennis from Marks & Clerk explain

At times of economic crisis, it is the affordable luxury goods that are said to do best – the so-called ‘lipstick effect’ theory. Recognising that they must make some budgetary concessions, but not willing to let go of their luxuries completely, consumers turn their attention instead to lower cost indulgences, such as designer brand lipsticks.

Cosmetic goods such as lipsticks have certainly been ‘recession proof’ in the past. During the 2008 financial crisis, spending in the industry only fell slightly and fully bounced back by 2010, according to McKinsey & Company. The question today is whether those sectors are also Covid-proof, and what the long-term impact has been on make-up, skin and personal routines of more than a year spent away from offices and social events.

A lesson in resilience & flexibility

We may have spent more time in front of our computer screens, but we spent less time making our faces up in front of the mirror in 2020, according to market researcher NPD. The increase in online retail, as high street stores have been forced to close, is also challenging for an industry where skin tone and colour matching can play such a crucial role.

On the other hand, with hairdressers, barbers and salons shut for extended periods of time, we have spent more on DIY skincare, nail care, hair care and personal care products, including detox and wellness products, such as face masks and luxury hand soaps, to recreate some sense of luxury and pampering at home.

More promisingly, the recent lifting of lockdown restrictions also led to a surge of sales of make-up, as well as clothing and high heels. Investment in lipstick itself remains low, but spending on eye make-up has grown, as a reflection of the masks we all now wear when outside our homes.

Social media has played an important role in the emergence of influencer beauty brands in this lockdown period, as well as new marketing routes for established household names. New opportunities have also opened up for companies that have been able to react quickly to rising demand for luxury antiviral hygiene products, from hand sanitiser to antibacterial make-up applicators. Ethical beauty and conscious consumerism also look set to play an important role in the industry in years to come.

What trade marks tell us about the industry

Trade mark applications and registrations can provide an early insight into market trends, as well as industry confidence. Indeed, despite the economic downturn associated with the pandemic, the number of global trade mark applications increased considerably over 2020.

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