The 'lipstick index' and the strength of beauty retail amid inflation
CBC
At Calgary's Southcentre Mall, Paulette Harder stopped in at Sephora and emerged with a skincare set for herself and a face cream for her mom.
Harder has lately cut back on clothes shopping but said skincare is one area of spending that's tougher to quit.
"I don't like to admit it, but I come once a month," she said.
Harder's shopping philosophy falls in line with the so-called "lipstick index."
The term, popularized by former Estée Lauder chairman Leonard Lauder, suggests cosmetics sales stay strong amid tough economic times as shoppers substitute lipsticks and other small indulgences for higher-ticket items like clothing and handbags.
Some have disputed the idea, but economists at California State University demonstrated evidence in support of the concept after crunching the numbers from the 2008 recession.
WATCH | Shoppers weigh in on the 'lipstick index':
Women spent more on cosmetics and less on clothing during this period, the researchers found, lending support to the idea that consumers were opting for small luxuries instead of larger purchases. The team also dismissed other theories that have been floated to explain the lipstick index, such as that women wear more makeup during economic downturns to attract a mate or to be more appealing on the job market.
As the economy teeters on the verge of a possible recession, Canadian beauty sales have gone up 18 per cent this year, according to the analytics firm Circana. In comparison, apparel sales grew by four per cent while footwear sales declined by two per cent.
"Beauty is really an outlier," said analyst Alecsandra Hancas with Circana.
"Even though [shoppers] may be pulling back on those bigger commodities, they're definitely still treating themselves to those little luxuries and beauty plays a nice part in that."
Cosmetics have also become a reliable driver of business for pharmacy and drugstore retailers.
Loblaw, which owns Shoppers Drug Mart, has repeatedly said its healthy earnings aren't because the grocer is taking advantage of food inflation but are instead due in part to sales growth in high-margin areas like cosmetics.
"Beauty continued to outperform" in the most recent quarter, Loblaw chair Galen Weston said on the company's latest earnings call.