As consumers hold their breath in anticipation of a potential recession, many are already feeling an inflationary pinch on their pocketbooks. Despite the rising price of consumer goods across the board, consumer buying habits tell a mixed story— especially in the beauty and skincare space.
In Numerator’s recent webinar, The Lipstick Effect: Inflation’s Influence on Beauty, we dove into a few key trends impacting the beauty industry, including ricing prices, channel shifting and future trends. Read on for highlights from the webinar.
Is “The Lipstick Effect” real?
The Lipstick Effect is a long time measure of economic wellbeing, and reflects the idea that consumers will turn to small indulgences in times of economic downturn when they’re unable to afford larger luxuries. In the fall of 2022, as consumers faced a second year of inflationary pressures, Numerator purchase data showed increased sales of premium lip products, with dollar sales, unit volume and households buying all up versus the prior period. These increases for high-end lip items were contrary to the lip makeup category as a whole, which saw decreased units and households buying overall.
How are rising prices impacting beauty buying?
While prices rise on beauty products across the board, overall unit sales and households purchasing the category are declining. Despite declining volume sales, projected spending in the beauty space is nearly flat versus year-ago, with makeup sales up slightly and skincare down. Although recent beauty buyers say they’ve noticed the rising prices, many are still finding ways to purchase their preferred beauty brands, seeking out promotions and sales to save on their favorite items.
Which channels are winning as beauty buyers seek value?
When it comes to location preference, mass channels continue to attract the highest spending in beauty and skincare products, followed by online, which saw immense growth during the COVID-19 pandemic and has held steady since. Prestige channels like specialty beauty stores and department stores saw the biggest dip during COVID, but they have also seen a steady increase in sales since then. What’s more, the prestige channel is the only channel to reflect consistent growth after consumers started feeling the pinch of inflation.
There is heavy overlap between channels when it comes to makeup and skincare spending— less than half of beauty buyers are exclusive to one channel, with the majority buying their products across multiple locations and store types.
Do shoppers prefer online or in-store for beauty purchases?
Despite significant ecommerce growth during the COVID-19 pandemic, it is important to note that beauty buyers still prefer to do most of their makeup and skincare shopping in-store. More than half say they “exclusively” or “mostly” buy their makeup (55%) and skincare (52%) at a brick-and-mortar location.
Top Reasons for In-Store Beauty Shopping
- To use in-store promotions (35%)
- To try on or test in-person (26%)
- Easier to navigate, shop or compare (26%)
- Shopping in-store is more fun (23%)
- Finding unplanned items to buy (22%)
Top Reasons for Online Beauty Shopping
- Can search for the best prices (41%)
- What I want isn’t sold in-store (32%)
- To find / use promo codes (28%)
- Easier to navigate, shop or compare (26%)
- To look at customer reviews (26%)
Which beauty brands are winning with Gen Z & Millennials?
When it comes to exploring future trends, brands would do well to pay attention to younger consumers. Not only are social media cult followings driving sales, but more Gen Z and Millennial consumers consider themselves experts in makeup skills than their Gen X+ counterparts. They also also report following more elaborate skincare routines in general.
Gen Z and Millennials are in alignment in what matters to them in their beauty product purchases: effectiveness, value and reliability. Younger shoppers are also paying attention to trends behind the label, with a significant number of Gen Z and Millenials reporting a preference for cosmetics that are cruelty-free, use natural ingredients and use ingredients backed by science. Gen Z and Millennials are also far more likely to spend with up-and-comers such as The Ordinary and Hero, while Boomers+ are more likely to stick with the large, established brands.
Learn more by watching our webinar on demand
Interested in diving deeper? Our on-demand webinar provides a closer look into the trends outlined in this article, with additional insights and action items for brands in the beauty space. To learn more about your specific brand or buyers, get in touch with us today.