While speaking at the MoU signing ceremony at IIM Ahmedabad (IIM-A) on September 27 where Nykaa and the B-school established ‘Nykaa Chair in Consumer Technology’, Nykaa founder and CEO Falguni Nayar spoke about the ‘Lipstick Effect’. She said that post the second wave of the Covid pandemic, websites like Nykaa registered higher sales of skin products.
The Lipstick Effect is a term used to refer to a situation where consumers still manage to buy a luxury product like lipstick, amid an economic crisis. When there is a recession, consumers are expected to focus their purchases on goods that don’t impact their already limited income. However, some consumers still have the cash to buy luxury items like premium lipstick.
“While we did not see it in lipstick per se—primarily due to the use of masks—we did see the effect in skin products,” she said. The IIM-A alumna said, “Due to longer screen time, people became conscious of their skin, and we saw an upward trend in the sale of skincare products. The sale of fragrances peaked after Covid, so much so that some categories reported a shortage. It’s because people want to feel good; it’s associated with their sentiments.”
Nayar recently became India’s richest self-made woman, according to the IIFL Wealth Hurun India Rich List 2022. She surpassed Kiran Mazumdar-Shaw’s net worth of Rs 24,800 crore and has assets worth nearly Rs 38,700 crore.
Talking about the positive impact of technology on the fashion and cosmetics business, she said, “Today every user generates about 2,000-odd tags when they navigate the websites. The use of machine learning and artificial intelligence is a must to correlate these points and predict behaviour. It leads to tailor-made recommendations for personalisation. The upcoming 5G would also be a major boost with tech such as the use of a screen as a mirror to try out products in real-time being rolled out for apps/websites.”
The ‘Nykaa Chair in Consumer Technology’ is set up for an initial period of three years and is facilitated by the IIM-A Endowment Fund. Prof Errol D’Souza, director of IIM-A, said that through the partnership, they aim to work together on finding research solutions to immediate, real-time questions in consumer-tech space.