The Atlanta Journal-Constitution
Despite pullbacks elsewhere, beauty products sales strong
Many return to using cosmetics for in-person gatherings.
Like many Americans, Karla Maldonado has been cutting back her spending to spare her wallet from rising costs: She is eating out less and attending fewer social events to curb the impact of high gas prices.
But the 26-year-old social worker of Portland, Oregon, hasn’t skimped on her eye makeup — the mascara, eyeliner and eyeshadow she typically wears to work just above her face mask.
“That’s something I can’t go without,” Maldonado said. And she doesn’t seem to be alone.
Many major retailers slashed their financial outlooks for the year after seeing shoppers pull back on many discretionary items in the latest quarter. But among the notable exceptions: beauty.
Target, Kohl’s, Macy’s and Nordstrom all highlighted strong sales of beauty items in their fiscal second-quarter earnings reports issued over the past few weeks. Walmart, the nation’s largest retailer, said it’s seeing increased momentum in its beauty business, citing strong sales in cosmetics as well as skin and hair businesses. Meanwhile, Ulta Beauty, the largest beauty retailer in the country, said overall sales spiked nearly 17% in its most recent quarter, compared to the same period last year.
Americans, once stuck behind Zoom screens in the thick of the pandemic, are out and about and wanting to look their best. Co-workers — some of whom are meeting each other for the first time — are trying to make an impression. Meanwhile, people are going out on dates and getting together for summer parties and barbecues after months of pandemic-induced leisurewear and Netflix binges at home.
But another possible explanation for why beauty is thriving when consumers are more apprehensive about their spending is a long-held theory known as the “lipstick index,” which posits that lipstick sales rise during times of economic downturn.
The reasoning goes: When consumer sentiment declines, Americans seek escapism by looking for small ways to indulge themselves, such as by purchasing a new lipstick instead of pricier alternatives they can no longer afford. For others, their version of lipstick might be cheap beer or a $5 Caramel Macchiato from Starbucks, which reported record revenue in August for its fiscal third quarter.
The lipstick theory has held, though not always. Makeup sales spiked during the Great Depression and the recession in the early 2000s. But sales declined during the 2008 economic collapse, according to market research firm NPD Group. The same happened during the early days of the pandemic as Americans stayed home — or behind masks -- and shifted their interests towards wellness and skincare as stimulus payments flooded bank accounts, helping balloon the savings of consumers who were already spending less on traveling or eating out due to pandemic lockdowns.
Now, makeup is roaring back. Americans have bought more eye, face and lip makeup — roughly 2%, 5% and 12% respectively — in a year-over-year analysis of sales across stores, according to the market research firm IRI.
At Macy’s, CEO Jeff Gennette noted in an earnings call late last month that consumers have focused on deals and cut back on purchases amid high inflation. Still, they managed to buy beauty products as well as travel-related items like luggage, shoes and clothes to wear to the office, Gennette said.
Kohl’s reported that shoppers were making fewer trips, spending less per transaction and shifting toward value-oriented store brands. But at its Sephora beauty shops, launched last year as part of a partnership with the beauty chain, shoppers are spending freely on skincare, makeup and fragrance.