TORONTO — In Keon Zhang’s household, it started with a rite of passage when his eight-year-old son discovered acne.
“She said, ‘Dad, you need to get rid of them…you need a skin care routine,'” said the CEO of beauty brand Back to Earth Skin.
“And my son came to me and said, ‘Do you need it?’
Or from endlessly scrolling through social media posts showing influencers slathering on Drunk Elephant skincare products, reaching for Dior lip oil, or badmouthing Sol de Janeiro’s Brazilian Bumbun Cream. Some people feel the urge to dive into beauty regimens.
The flurry of purchases they sparked in the midst of an economic downturn confirmed what the industry has known for years: beauty is popular even when the propensity to spend is not high.
Leonard Lauder, heir to the Estée Lauder cosmetics empire, coined the term “lipstick” to describe how cash-strapped customers were still willing to splurge on lipstick in the early ’80s, when many countries were in recession. I coined the word “effect”. Accessories.
Now, although younger shoppers are flooding into the market and inflation remains above the Bank of Canada’s 2% target, weighing on spending power, the trend toward “treating yourself” is waning. As a result, this trend is progressing again.
“When you’re a little bit constrained and a little stressed financially, you tend to cut back on big luxuries, and then you spend more on smaller luxuries,” Chan says.
“Skin care can be expensive sometimes, but it’s not like going on a cruise. You’re spending your money on something that gives you instant gratification.”
And it’s not just shoppers who are taking notice.
LVMH reported revenue of about $12 billion last year across its fragrance and cosmetics businesses, which include Christian Dior, Guerlain, Fenty Beauty by Rihanna, Loewe and Benefit.
The company’s select retail division, home to beauty mecca Sephora, had sales of $25.9 billion, up from $21.5 billion in 2022. Sephora declined to comment.
LVMH’s experience was part of a broader pattern. In Canada, sales in the beauty category increased by 18% in the first nine months of 2023 compared to the same period in 2022, according to research firm Circana. That’s a “staggering” 47% increase from 2021, despite nearly 80% of Canadians surveyed saying so. Due to the high cost of living, I had to cut back on my expenses.
The company lists skin care, makeup, and fragrance as its fastest-growing general merchandise categories, outpacing video game hardware, construction toy sets, and even portable beverage products (stanley cup boom).
Part of the beauty industry’s resilience is due to the lipstick effect, but social media and influence are also driving recent growth, Angus McCourt said.
“At least 50 percent, and perhaps more, of Gen Z millennials make decisions about products in this category based directly on what they see on social media or online,” says McKinsey & Company Partner, said the head of the company’s Canadian subsidiary. Consumer and retail practices.
For example, his daughter learned beauty techniques by watching the “Get Ready with me” video, where posters explain makeup and wardrobe choices.
“She does it every night,” he said. “She’s 12 years old and doesn’t know why she needs skin care, but she feels like she needs it.”
Skin care has been a particular beneficiary for the industry. That’s because brands are more resilient in this part of their beauty budgets, and shoppers who buy these types of products are less likely to trade them in even if prices rise.
They also believe that the more they spend on products in that category, the better the results, McWatt said.
“If you’re using a skin cream that you like and it’s working and makes your skin look better and younger-looking… that’s one of the last things you want to give up,” he says. To tell. He said.
Back to Earth Skin, a Vernon, British Columbia-based company specializing in natural, vegan, and cruelty-free products, is one of many companies benefiting from this idea.
The company’s business grew by 18.4% from 2022 to 2023, with its online division increasing by 24.8% over the same period.
“We have soared and made a leap forward, and we will even surpass that in 2024,” Zhang said.
Eileen Doody, head of beauty category management at Shoppers Drug Mart, also expects the category to remain popular.
Loblaw, Shoppers’ parent company, reported retail pharmaceutical sales, including cosmetics, rose 7.4% to $2.6 billion in the most recent quarter. Loblaw said the increase reflected the “continued strength” in beauty sales.
“There’s always a reason to buy beauty products. There’s always something new,” Doody said.
“A certain segment of our population is definitely interested in that innovation. I don’t know where they’re getting the money from, but they’re definitely buying it.”
Some of these buyers are looking for “luxury” or “emotional excitement.” Some people are opening their wallets because of influencers who can spread a product overnight.
And indeed, many of these shoppers are young, “curious” shoppers who “go to the mall because they have time.”
“But I also went to the mall when I was that age,” Doody pointed out.
Doody predicted these shoppers will continue to grow the beauty market, with skin care and damaged hair repair products becoming popular this year.
“I think we’ve only scratched the surface.”
This report by The Canadian Press was first published Feb. 18, 2024.
Companies mentioned in this article: (TSX:L)
Tara Deschamps, Canadian Press