“That’s something I can’t go without,” most Americans still spend a lot on beauty and makeup despite skyrocketing inflation

NEW YORK — Karla Maldonado, like a lot of other people in the United States, has been trying to save money by reducing her spending. For example, in order to lessen the impact that high gas prices have on her life, she has been eating out less and going to fewer social gatherings.

However, the Portland, Oregon-based social worker, who is 26 years old and wears a face mask to work most of the time, has not spared any expense when it comes to her eye makeup, which includes mascara, eyeliner, and eyeshadow.

Maldonado stated, “That is something that I really require in my life.” And it does not appear that she is the only one.

As a result of customers cutting back on their spending on a variety of non-essential items in the most recent quarter, many of the nation’s largest retailers have reduced their financial forecasts for the remainder of the year. However, beauty stands out as a remarkable exception to this rule.

In their financial reports for the fiscal second quarter, which were released over the past several weeks, Target, Kohl’s, Macy’s, and Nordstrom each highlighted the strong sales of beauty products in their respective stores. Walmart, the largest retailer in the United States, reported that it is witnessing significant momentum in its beauty sector. The company cited good sales in the cosmetics business as well as industries dealing with skin and hair. In the meantime, Ulta Beauty, the country’s largest beauty shop, reported that the company’s most recent quarter saw an increase in overall sales of about 17% when compared to the same period in the previous year.

Now that the pandemic has passed, people in the United States are venturing out into the world and are more concerned than ever with how they present themselves. Coworkers, some of whom are just now getting to know each other for the first time, are attempting to make a favorable first impression on one another. After several months of staying indoors in their pajamas and binge-watching television shows on Netflix due to the pandemic, people are now going on dates, getting together for summer parties, and having barbecues.

A theory that has been around for a long time and is known as the “lipstick index” postulates that sales of lipstick will increase during times of economic downturn. This could be another possible explanation for why the beauty industry is thriving when consumers are more apprehensive about their spending.

The logic behind this assertion is as follows: When consumer sentiment falls, people in the United States seek escape by searching for tiny ways to delight themselves, such as buying a new lipstick rather than more expensive options that they can no longer afford. Others may consider a cheap beer or a $5 Caramel Macchiato from Starbucks, which announced record revenue in August for its fiscal third quarter, to be their version of lipstick. Starbucks reported the record revenue in August.

Generally speaking, the lipstick idea is correct, but this is not always the case. The Great Depression and the crisis that began in the early 2000s both contributed to a surge in demand for makeup. According to the findings of a market research company called NPD Group, however, sales dropped amid the economic crisis of 2008. The same thing occurred in the early days of the pandemic, when Americans stayed at home — or hid behind masks — and shifted their interests towards wellness and skincare as stimulus payments flooded bank accounts, helping to balloon the savings of consumers who were already spending less on traveling or eating out due to pandemic lockdowns.

Now more than ever, women are wearing cosmetics. According to a study conducted by IRI, which compared sales from one year to the next at a variety of retail locations, the amount of eye, face, and lip cosmetics purchased by American consumers increased by approximately 2%, 5%, and 12% correspondingly.

In an earnings call at the end of the previous month, Macy’s CEO Jeff Gennette mentioned that customers have been more focused on finding good deals and have reduced the amount of money they spend overall as a result of high inflation. According to Gennette, despite this, they were nevertheless able to purchase items for their personal grooming as well as travel necessities such as suitcases, footwear, and business attire.

In the meantime, Kohl’s stated that customers were shopping less frequently, spending less money during each transaction, and gravitating toward store brands that offered better prices. However, consumers are spending freely on skincare, makeup, and fragrance at the retailer’s Sephora beauty boutiques, which were opened up in the past year as part of a relationship with the beauty chain.

The chief executive officer of Kohl’s, Michelle Gass, was recently quoted by The Associated Press as saying that customers are unwilling to give up their spending on beauty products. “In this time of such intense pressure, people need to feel as wonderful as they possibly can.”

The revenues at Sephora are reflective of broader data that were published in July by NPD Group. These findings showed that out of 14 discretionary industries that NPD Group studied this year, the beauty industry was the only one that had an increase in sales. According to Larissa Jensen, the beauty industry adviser for NPD, high-income earners, or those with an annual salary of $100,000 or more, are principally responsible for the continued popularity of beauty products in more prestige shops like Macy’s, Sephora, and Nordstrom.

“While we’re all feeling these inflationary pressures, it has less of an impact on a consumer making six figures than it does on a customer earning a lower salary,” Jensen said. “While we’re all feeling these inflationary pressures.”

However, robust sales in other areas suggest that people of various economic levels in the United States are participating in the rise. At Target, the beauty department experienced sales rises in the low single digits while other departments, including home goods, clothes, and electronics, all experienced reductions. As a direct consequence of this, Target has said that it will exercise greater restraint when placing orders for non-essential goods like cosmetic products and will instead place a greater emphasis on non-negotiable items like groceries.

Walmart, one of its competitors, collaborated with the British store SpaceNK in March to develop higher-end cosmetic sections, and Walmart claims those sections have been successful since their launch. This shop, which has been providing customers with a variety of discounts, will organize a beauty event in September, during which customers will have the opportunity to find deals both in-store and online.

According to Jensen, the combination of these victories, low levels of price hikes, and supply chain concerns has given the beauty industry the impression that it is shielded from the challenges facing the broader economy.

She issued a stern warning, “But there are still so many things swirling about.” “And we need to be aware that things could change at any given minute,” the speaker continued.