MadameNoire Featured Video

Perhaps even more inspirational than the “O Effect” that Oprah Winfrey has on making companies successful just by mentioning them as one of her favorite things, comes the “Mrs. O” effect that Michelle Obama has on the fashion industry. The first lady’s wardrobe has given fashion and industries an unexpected lift during the recession by increasing the sales earnings of the brands she wears.

Her wardrobe features a mix of couture and retail and she wears pieces from up and coming designers. The Mrs. O fashion portfolio has been a very good bet for those that copy her look as well as for the brands’ investors.

According to the Harvard Business Review, Professor David Yermack of the New York University Stern School of business found that following 189 public appearances between November 2008 and December 2009, Michelle Obama created $2.7 billion in cumulative abnormal returns—value over and above normal market variations—for fashion and retail companies associated with the clothes she wore.

On average, every time Michelle leaves her home, she creates an average of $14 million in value for the companies that outfit her. These gains created by the Michelle Obama effect have been called abnormal because they are much higher than the 0.5% average gain a company makes when it announces a new celebrity endorser.

For example, on one of the first lady’s European tours, an index made up of stocks associated with her wardrobe gained 16.3%, while the S+P 500’s gain was a 6.1% during the same time period. This is a recession and the 6.1% is good, and 16.3% is unreal. That’s power, and it cuts both ways.

The brands Michelle chooses to wear gain value, and the companies who make and sell clothes that she doesn’t wear have lost 0.4% over the same time period. Michelle is not merely shifting consumers from one brand to another with her looks, she is creating new consumers for brands with her looks.

Mrs. Obama mentioned her J. Crew outfit during an appearance on The Tonight Show, and was photographed two months later wearing J. Crew gloves while clutching the Lincoln Bible. The company’s stock went soaring. The Michelle Obama effect reportedly persisted throughout the following year.

It is likely helpful that Obama mixes the price range of her outfits, so that average consumers can copy her style. She wears couture with affordable retail brands that are available to the masses. Even if they don’t buy the same items that Michelle wears, traffic to those stores has increased because of their association with Michelle. Interest in the brand could lead them to the purchase of other items under the Mrs. O Effect, and increase earnings.

Michelle Obama is known to frequently exercise and has made a stand against childhood obesity. It seems natural that her interest in health would extend into the world of style and fashion. She is a feel good, look good first lady. Although she is not the first or only icon of this caliber, her influence on the fashion markets may be more extensive and immediate than her predecessors.

Technology allows us to immediately post, share and purchase Mrs. O’s wardrobe. However, the authenticity of the first lady’s interest in fashion may be the ultimate value that she brings to the table. How can anyone doubt the fashion sense of a first lady that wears her sweater with an open back on Saturday and wears that same sweater the next day, open in the front – and looks great in it both times? What a great idea, I can do it too. That’s the Mrs. O Effect.

Candi Sparks is the author of the “Can I Have Some Money?” books series.

Comment Disclaimer: Comments that contain profane or derogatory language, video links or exceed 200 words will require approval by a moderator before appearing in the comment section. XOXO-MN