“It’s really nice to be speaking with an industry that’s growing,” said Circana’s president of thought leadership, Don Unser.

After tracking declines in unit — and in certain cases, dollar — sales across several consumer goods sectors, beauty and its cross-channel resilience is a “happy place” for him, he quipped.

“You are the only industry that has been growing by both units and dollars,” said Unser, while Circana’s vice president of beauty, Larissa Jensen, added: “When you look at the total industry, inclusive of mass and prestige, it’s a very healthy market — it’s up 13 percent.”

While the industry’s performance overall is promising, the growth of prestige beauty in particular — which is up in both unit sales and dollar sales, versus mass beauty which is up solely in the latter, largely due to rising prices — offers important insight into shifting consumer purchase behaviors.

“The bifurcation that is playing out in our industry implies that consumers are trading up,” said Jensen, noting that among beauty shoppers who are cutting back on spending due to inflation, 70 percent are not reducing their beauty spending.

She has dubbed the phenomenon the “treat mindset,” which, similar to the lipstick index, alludes to consumers’ ongoing desire to indulge in beauty goods during hard times.

Said Jensen of the higher-middle-income consumers propelling the trend: “They may not be able to afford a Rolex watch, but they can buy that luxury fragrance, and we’re seeing this play out not just in the U.S., but around the world.”

Globally, the performance of luxury fragrance is outpacing that of total fragrance. In skin care, meanwhile, the opposite effect endures: “With the exception of the U.K. and China, total skin care sales are actually outpacing luxury,” said Jensen, adding that makeup sales are up on all fronts. “The lipstick index is back, y’all — we’re looking at makeup super strong across mass and prestige — it’s phenomenal.”

Another prominent global trend is the dominance of brick-and-mortar versus e-commerce sales in both mass and prestige beauty. “There could be different drivers: On the mass side, it could be about convenience, and on the prestige side, it could be about the destination — going there for the experience, to experiment and play,” said Jensen.

Across industries, said Unser, the pandemic prompted a slowdown in innovation as companies shifted funds from R&D to support their supply chains.

“[Pre-pandemic] we were getting about 4 to 5 percent, on average, of new items across all general merchandise per month. We’re now down to about 1.5 percent, and the latest data for the first quarter is down about 1.3 percent, so a huge reduction of new products in the market,” he said.

Beauty, however, is one of the few industries where new launches are rebounding, particularly in 2022, with Jensen saying that new launches have sustained 6 to 7 percent share of overall sales.

“We are an industry steeped in emotion, and that has been the catalyst to our resiliency,” Jensen said.

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