The “Lipstick Index” is back – and retailers are trying to capitalize on it

Target has added new brands to its beauty department. There are also mini ultra beauty shops with prestige brands in a growing number of stores.

Melissa Repko | CNBC

As prices soar, some people have decided against a new outfit, postponed major purchases like TVs, or canceled Netflix accounts.

But for now, they still indulge in beauty.

For retailers, the beauty category has become a rare bright spot as people cut back on spending amid rising inflation. Often viewed as an affordable luxury, it’s the only discretionary retail category with rising volumes in the first half of the year, according to the NPD Group, which tracks categories like apparel, tech and toys, and beauty in specialty and produce department stores.

“You may not be able to eat out as much, but you can buy a lipstick,” said Olivia Tong, an analyst for Raymond James.

This spring, Target has highlighted the strength of its beauty sales, despite twice lowering its earnings outlook for the year. Walmart is also investing in the category, rolling out new beauty displays in hundreds of stores, despite its warnings that shoppers are skipping discretionary categories like clothing.

Other factors also speak in favor of the industry. Weddings and parties have increased again. More and more people are going back to the office and can no longer hide behind their zoom filters. And during the pandemic, some people have taken to pampering themselves at home with face masks, conditioners, and other beauty products.

Larissa Jensen, beauty analyst at NPD, called it the return of theLipstick Index” – a term made famous by Estee Lauder CEO Leonard Lauder to explain the rising sales of cosmetics during the recession of the early 2000s.

As consumer sentiment has plummeted, sales volume of lipsticks has increased, Jensen said. This surge has carried over to other beauty products. Sales of makeup, including lipstick, are up 20% in the first half, skincare is up 12%, perfume is up 15%, and haircare is up 28% in the first half — and they’re all growing in both units and dollars . She said.

Much of the growth in the beauty category is coming from households earning over $100,000 a year, and Jensen said discount retailers might find it harder to capitalize on this trend. Still, the resilience of the beauty industry could provide some cushion for big retailers in a slowdown — if they figure out how to make money.

Beauty at $3, $5, $9

Walmart and Target both lowered their earnings forecasts after cutting prices on apparel, home goods and other products that aren’t selling. Still, both companies are refreshing their beauty departments and adding new brands to attract customers.

A year ago, Target began opening hundreds of Ulta Beauty shops in its stores with brands like MAC Cosmetics and Clinique. The company plans to add more than 250 this year and eventually have the stores in 800 locations, which is about 40% of its U.S. footprint.

And after fragrance became the biggest sales driver for prestige beauty this past holiday season, the Ulta stores have also expanded with popular fragrance brands like Jimmy Choo Man, Juicy Couture and Kate Spade New York.

Since January, Target has added more than 40 brands to its beauty product lineup, including “clean” products that are free of certain ingredients, as well as black-owned and black-founded brands.

On a conference call in mid-May, CEO Brian Cornell said Beauty posted double-digit growth on comparable sales in the fiscal first quarter compared to the prior-year period. That broke away from other categories aside from food and beverages and staples, which saw a noticeable slowdown.

Walmart has added about a dozen prestige beauty brands to select stores. It struck a deal with British beauty retailer Space NK to expand its range and develop its own brand.

Melissa Repko | CNBC

Walmart rolled out new beauty displays at 250 of the company’s locations this summer, featuring Mario Badescu, Patchology and other brands typically found in beauty supply stores or makeup counters in department stores.

A more affordable display called “Beauty Finds” also rolled into nearly 1,400 stores, offering shoppers lip glosses, lotions and more for $3, $5 or $9.

Walmart has also struck exclusive deals with direct-to-consumer companies like Bubble, a skincare brand with colorful packaging and a focus on Gen Z and young millennial consumers. In recent quarters, the cosmetics business has grown at double-digit rates, said Creighton Kiper, Walmart’s vice president of merchandising for beauty.

“Beauty is this fascinating category where it’s not like food and it’s not like health and wellness, but it’s still something the customer interacts with and engages with every day,” he said in an interview earlier this summer. “You have this mental wellness component around confidence and feeling good about yourself.”

As budgets tighten, Kiper says customers could also draw on skills they picked up during the pandemic — like coloring their nails or hair at home — and head to Walmart for an at-home twist on the salon Looking for.

Ashley Marie Lemons, a stay-at-home mom in suburban Atlanta, said her family eats out less often because they spend more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys hot dogs instead of more expensive meats like ribs.

But she said she still allows herself to spend about $50 a month on beauty products like eyeshadow palettes and mascaras.

“It’s an outlet for me,” she said. “Some people like art. It’s a creative way for me to express myself.” The “Lipstick Index” is back – and retailers are trying to capitalize on it

Drew Weisholtz

World Time Todays is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button