Like many Americans, Karla Maldonado has cut back on spending, eating less at restaurants and attending fewer social events. But the 26-year-old social worker from Portland hasn’t skimped on makeup.
“That’s something I can’t do without,” Maldonado said. And she is not the only one.
Many major retailers cut their financial outlook for the year after seeing shoppers stop buying many discretionary items in the latest quarter, except for beauty items.
Target, Kohl’s, Macy’s and Nordstrom highlighted strong beauty sales in their fiscal second-quarter reports. Walmart, the nation’s largest retailer, said it is seeing more momentum in its beauty business, citing strong sales in cosmetics, skin care and hair. Meanwhile, Ulta Beauty, the nation’s largest beauty retailer, said overall sales were up nearly 17% in its most recent quarter, compared to the same period last year.
Americans, after months of being cooped up at home due to the pandemic, now want to look their best. Many people in the office are meeting in person for the first time and trying to make a good impression. Meanwhile, people are dating and partying after months of casual wear and binge-watching Netflix at home.
But another possible explanation for why beauty thrives when consumers are more cost-conscious is a theory known as the “lipstick index,” which posits that lipstick sales rise in times of economic downturn.
The reasoning goes like this: when consumer confidence drops, people look for small ways to escape, for example by buying a new lipstick instead of more expensive alternatives they can no longer afford. For others, their version of lipstick might be a beer or a Caramel Macchiato at Starbucks, which reported record revenue in August for its fiscal third quarter.
Americans have bought more eye, face and lip makeup, 2%, 5% and 12% respectively, according to market research firm IRI.
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