Over the past year, the world has been living through economic challenges and inflationary pressures. Higher prices for groceries and other essential items have forced consumers to reconsider their budgets. To manage higher food costs, more than half of women in the U.S. shop at food stores that offer lower prices, and over 40% buy more store brand or private label foods and beverages, according to Circana’s February Omnibus survey results. Within the makeup industry, however, trends are moving in the opposite direction.
According to Circana, consumers are shifting their makeup spend away from mass channels to department stores, beauty specialty stores, and other prestige outlets that carry products with higher price points. In fact, prestige makeup unit sales share increased by 3 points in the first quarter of 2023 versus the same period last year. The growth likely indicates, Circana says, consumer desire to treat themselves with a non-essential yet affordable prestige beauty luxury. Circana first observed this phenomenon in 2022; it continues to prevail in 2023.
This “treat” mindset ties into the “Lipstick Index,” which reveals that lipstick sales are inversely related to the economic state of the country. While cosmetics other than lipstick can be part of this phenomenon, Circana cites lip products as the best category meeting this criterion. Lipstick and lip gloss, says Circana, are more likely than any other makeup category to be purchased on impulse, according to the company’s Makeup Consumer Report. More than 40% of lipstick and lip gloss users said that their most recent purchase of a lip product was an impulse one.
The “treat” mindset becomes more evident when comparing lip makeup sales in the mass market to prestige channels. While lip was the fastest-growing makeup segment in both markets in the first quarter, it grew more than 1.5 times faster in prestige than in mass – and the more expensive designer brands grew even faster.
How consumer response will play out to economic conditions in the coming months is unknown, but lips are the name of the game and all eyes will be on pampered pouts and how brands will move on this new, impulsive purchase opportunity.