September 30, 2022

The 'lipstick pointer' is back - and retailers are trying to make money

The ‘lipstick pointer’ is back – and retailers are trying to make money

Target has added new brands to its beauty division. In an increasing number of stores, she also has small Ulta beauty boutiques with prestigious brands.

Melissa Rybko | CNBC

With prices rising, some people have decided not to get new clothes, delay big purchases like TVs, or cancel Netflix accounts.

But for now, they still flaunt the beauty.

For retailers, the beauty category has become a rare bright spot as people hold back on spending amid rising inflation. Often viewed as affordable luxury, it’s the only discretionary retail category with unit sales rising in the first half of the year, according to NPD Group, which tracks categories including apparel, technology and toys, as well as specialty beauty products and department stores.

“You might not be able to go out to eat, but you can buy a lipstick,” said Olivia Tong, an analyst at Raymond James.

This spring, target Summoned her sales force of beauty, even if she It lowered its earnings forecast twice for the year. Walmart It also invests in this category and rolls out new beauty deals to hundreds of stores, though His warnings that shoppers skip discretionary categories such as clothing.

There are other factors working in favor of the industry as well. Weddings and parties are booming again. More people are returning to the office, and they can no longer hide behind them Zoom filters. And during the pandemic, some people are pampering themselves at home with face masks, hair treatments, and other beauty products.

Larissa Jensen, beauty analyst at NPDAnd the It’s called backLipstick Index” – a term made famous by Leonard Lauder, Chairman of the Board of Directors Estee LauderTo explain the rise in cosmetics sales during the recession in the early 2000s.

Jensen said that as consumer sentiment declined, so did the lipstick sales volume. This increase carried over to other beauty products. Sales of makeup, including lipstick, rose 20%, skin care 12%, perfume 15%, and hair care 28% in the first half of the year — all growing in units, plus dollars, she said.

Much of the beauty category’s growth comes from families earning more than $100,000 a year, and Jensen said discounters may have a harder time taking advantage of the trend. However, beauty flexibility could offer some protection for big retailers in the event of a slowdown — if they can figure out how to make money.

Beauty at $3, $5 and $9

Walmart And the targeting Both lower their earnings expectations After having to lower the prices of clothes, household goods and other products that are not being sold. However, both companies are modernizing their beauty divisions and adding new brands to attract customers.

A year ago, the goal started Hundreds of Ulta Beauty Stores Opening Inside its stores with brands including MAC Cosmetics and Clinique. The company plans to add more than 250 stores this year and eventually have stores in 800 locations, representing about 40% of its US presence.

And after seeing the fragrance become the top sales driver in the coveted beauty space this past holiday season, he’s also added popular fragrance brands to Ulta stores, including Jimmy Choo Man, Juicy Couture, and Kate Spade New York.

Since January, Target has introduced more than 40 brands to its beauty lineup, including “clean” products that are free of certain ingredients and the proprietary black and white brands.

On an earnings call in mid-May, CEO Brian Cornell said Beauty saw double-digit growth in comparable sales in the fiscal first quarter compared to the same period last year. This has split from other categories, along with foods, drinks and essentials, which have seen a marked slowdown.

Walmart has added about a dozen reputable beauty brands to its selection of stores. It has struck a deal with British beauty store, Space NK, to add to the lineup and develop a private label.

Melissa Rybko | CNBC

At Walmart, new beauty shows were held this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology and other brands usually found in specialty beauty stores or makeup counters in department stores.

An affordable display called “Beauty Finds” is also starting to pop up in nearly 1,400 stores, offering shoppers lip glosses, lotions, and more for $3, $5 or $9.

Walmart also has exclusive deals with consumer-oriented companies like Bubble, a color-packed skincare brand focused on Generation Z and young millennial customers. Over the past few quarters, Creighton Keeper, Walmart’s vice president of beauty promotion, said it’s seen double-digit growth in its cosmetics business.

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

When budgets tighten, Kiper said customers may also be holding back on skills they’ve acquired during the pandemic — like doing their nails or coloring their hair at home — and going to Walmart to shop for an at-home touch at the salon.

Ashley Marie Lemons, a homemaker mom in an Atlanta suburb, said her family eats less outside because they spend more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys sausages 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 pads and mascara.

“It’s an outlet for me,” she said. “Some people love art. It’s a creative way for me to express myself.”