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Inflation can’t stop the booming beauty industry
Consumers are prioritizing wellness as makeup, skin care and hair care prove to be a ‘low-ticket indulgence

Emily Dubrovsky struggled to recognize herself in the woman staring back at her on the Zoom screen. It was small things no one else would notice, especially around her eyes and mouth. The 39-year-old wasn’t afraid of aging, but the realization last year inspired her to do something about it.
The graphic designer from Minnetonka, Minn., started with skin care and makeup, seeking out clean, minimalist brands like Ilia and Jones Road. She bought Merit Beauty’s concealer/foundation stick and blending brush to blur her fine lines and a cream from Ursa Major to nourish her under the eyes.

Dubrovsky has since spent nearly $1,000 on beauty products in the past year — nearly triple what she spent the year before and “absolutely worth it.”
“It’s a little thing to invest in yourself, but it reaps big rewards — in my family life and in my self-esteem, and just how I feel about myself,” she said.
The sentiment reflects a subtle but significant shift in the beauty business, which experts say has become synonymous with wellness. Now, buying lipstick and moisturizer qualify as self-care and are increasingly viewed as necessities even when inflation is forcing consumers to cut elsewhere.
It’s a form of escapism, said Kendra Bracken-Ferguson, the founder andchief executive of the marketing agency BrainTrust.
“There’s so much divisiveness, there’s so much conflict” in the world, she said. “You get to have these moments of just joy and fun and putting on a bright lip, putting on an eye shadow. It gives you this really interesting way of just self expression … and it’s not complicated.”
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It’s the feeling Hilda Davis, 73, gets when massaging balm into her skin and running oil through her hair. The retired psychologist from Houston has been a loyal customer of EssenceTree for 17 years, a holistic and organic skin care line she says helped her get through the past few years, which have been “immensely stressful, distressful and a lot of uncertainty.”

But just taking in the scent of a fresh bottle of body oil instantly relaxes her.
“It feels like home. I’m like, ‘Ah, I’m okay. I’m going to be okay,’” she added. “It’s familiar. … It just allows me to know there are some things that remain the same.”
The sense of comfort and confidence consumers reap from their beauty regimen is a theme the industry has embraced. And it builds habits: U.S. mass market beauty and product sales — brands primarily sold at grocery and drugstores — hit $30 billion last year, up 4 percent from 2021, according to market research company Circana.
Another $27 billion in sales came from the prestige category — brands sold at department and specialty beauty stores — such as Armani, Charlotte Tilbury and Fenty. Sales grew 15 percent year-over-year, with makeup, skin care, fragrance and hair products each growing by double digits.
Ulta Beauty has been one of the leaders in the beauty sector. Total quarterly sales surged more than 18 percent in the fourth quarter of 2022. Fiscal year revenue exceeded $10 billion while annual net income hit more than $1 billion — both company records. That same period, Ulta opened about 48 new stores, according to a company spokeswoman, and foot traffic in early 2023 was up 16.5 percent year-over-year, according to data from analytics firm Placer.ai.
“Ulta’s success is more than just being a ‘rising tide lifting all boats kind of situation,’” said Placer.ai’s head of analytical research, R.J. Hottovy. “They’ve done a lot of things in terms of better targeting their customer, making the experience a lot more enjoyable.”
The Bolingbrook, Ill.-based retailer has an expansive mix of brands and price points, from e.l.f and CeraVe to Redken and Chanel, which has helped insulate it from economic uncertainty, said its chief operating officer, Kecia Steelman.
“We’ve got something for everyone no matter what your budget is, but what we see is that among all income sectors, we’re performing very well,” Steelman said. “Spending money on yourself to feel good about yourself is still really relevant” to consumers.
LVMH, the luxury goods group that owns Sephora, among other high-end brands, also saw significant gains. In its first-quarter report released Wednesday, perfume and cosmetics sales grew 11 percent compared to the same period last year.
This comes as shoppers pull back on discretionary spending because of inflation, which remains historically high even though it has moderated in recent months. Government data shows inflation stood at 5 percent in March, leaving many Americans struggling to afford groceries and other essentials. This has affected many segments, including furniture, apparel and technology, and overall retail sales fell 1 percent last month.
But beauty is an outlier, said Manola Soler, senior director in Alvarez & Marsal’s consumer and retail group. It’s resilient, as reflected by the “lipstick index,” a term coined during the 2001 recession by Estée Lauder heir and chairman Leonard Lauder, who noticed that lipstick sales still managed to climb during the economic downturn. The same was true during the Great Depression.
Despite a brief downturn at the start of the pandemic in 2020, the beauty industry saw a powerful rebound in 2021, when prestige beauty sales jumped 30 percent year-over-year, according to data from Circana. A surprising leader was the fragrance category, which surged almost 50 percent. Skin care was up 18 percent, hair care by 47 percent and makeup by 23 percent.
“When the economy is doing well, people feel good about it and spend it on beauty,” Soler said. “And then when the economy is not doing well, or is expected to not be doing well, beauty is still thought of as a relatively low-ticket indulgence.”
Plus, spending on skin care, hair care, fragrance and makeup are no longer viewed as frivolous — it’s an investment.
For Maria Clara Paul, a 19-year-old sophomore at Case Western Reserve University in Cleveland, dedicating part of her earnings on skin care, including a high-quality sunscreen and serum, is the price of health care.
“[It’s] so important — [skin is] an organ so you have to take care of it like you take care of your body like by drinking water, eating vegetables and exercising,” said Paul, a pre-med student majoring in nutrition. “But it also has the added bonus of being fun and relaxing.”
The options are vast and it’s gotten easier to find products that fit a consumer’s values and interests, said BrainTrust’s Bracken-Ferguson. Dollar General announced it is expanding its skin, hair, nails and makeup offerings at about 300 stores. Target and Kohl’s have also doubled down on beauty thanks to their partnerships with Ulta Beauty and Sephora respectively. There has been a proliferation of women- and minority-owned brands like Briogeo, Glow Recipe and Bossy Cosmetics, as well as skin care and makeup lines targeting men.