The Beauty Industry And The Beast Known As The Recession

Elana Centor — Sun, 19 Oct 2008 16:41:29 -0500

Sitting in a Russian operated nail salon in a Chicago suburb yesterday, I spent 45 minutes reading an article in Nailpro Magazine about the industry and the recession. Time was that the beauty industry was seen as "recession proof." Not so much today for nail technicians.

In the article, nail techs across the country shared that business was very tough. A celebrity manicurist who typically charges her clientele $100 for an in-home visit said even celebrities are cutting back --going to salons instead of paying the $100 for a personal visit.

I would have asked my nail tech about the state of her business but she didn't speak English.

Growing up my mom always wore Revlon Red nail polish. I coveted that polish but the only time she would allow me to wear it was when I was home sick.Manicures were a big deal in my house. Every Sunday my mother would gather her equipment -- a bowl of lukewarm water with ivory soap,two towels, a cuticle remover, nail clippers, polish remover, red polish for her, clear polish for me.

My mother did not/does not have kind thoughts for women who do not groom their nails. She does not understand how women can spend a fortune on their hair and makeup but will walk around with broken nails and unkempt cuticles.

The message stuck.

For the better part of my adult life, I have had a standing appointment to get my nails done. However, I am part of a minority. Studies indicate only four in 10 women get manicures and that number is on the decline.

According to a survey in Nails Magazine,the nail business has suffered its third straight year of losses.

While nail salon services may be suffering, a couple of recent surveys in the UK suggest that the majority of women would rather give up food than their beauty regimes.

Most recently beauty retail website feelingunique.com asked 1,000 women in the UK about their shopping habits and found that the credit crisis may reveal itself more clearly in cupboards than bathrooms.

Nearly one in three female respondents said they would prefer to eat less than reduce their spending on ‘essential’ beauty items.

… The results support the findings of a ShopSmart survey of female customers in the US carried out last month.

Polling 1,000 women by telephone the magazine concluded that female shoppers were more likely to opt for cheaper food essentials than give up their chosen cosmetic brands.

While 67 per cent would switch to less expensive brands for eggs and milk, only 30 per cent said they would be willing to turn to cheaper cosmetics.”

Monica Corcoran of the Los Angeles Times found that sales of luxury skincare products are up 21% this year ( luxury is priced at $150 a bottle) that's compared to a modest 2% growth rate for the overall beauty industry.

This month, La Prairie introduced its Cellular Cream Platinum Rare, priced at $1,000. "The world has grown outrageously wealthy," trills the news release. "New wealth has spawned new dreams. . . ."

Of course, until a few months ago, visions of vacation homes in Gstaad and mink-lined oven mitts weren't so snort-worthy for some. And yet, perhaps it would have behooved the company to temper its pitch when Wall Street first started begging for a bailout.

"Our customer has always been a woman who seeks the best in luxury skin care," says La Prairie President Lynne Florio. "Despite the economy, investing in their skin is a part of their lifestyle."

La Prairie is no pioneer when it comes to haughty pricing.

Last month, Kanebo unveiled a $400 body cream. Chantecaille has its $420 Nano Gold Energizing Cream, and Sisley Paris recently introduced a $460 anti-aging cream. Even Clinique, the lower-priced brand in that signature clover green packaging I treasured during my lean college years, has a $225 entry in the super-premium face-cream market. Et tu, Clinique?

Writing in Portfolio.com, Rachel Felder says many experts believe the beauty industry is going to feel this recession.

Niche brands are proactively changing to weather a challenging economic climate. Shiseido, for example, is cutting the number of its products by nearly a third over the next two years, discontinuing less-successful lines to place emphasis on popular offerings. Skin-care line Skyn Iceland has lowered the price of its key product launch for fall to make it more appealing to potential customers.

When I turned 30 I started using Erno Lazlo products. The cost was not trivial.For a while I bought the product at discount prices on eBay. Then last week, I decided I would really make the break and I went to Target and bought Oil of Olay's Regenerist line.

I saved so much money that I icelebrated by buying a new tube of lipstick--Bare Escentuals Bavarian Creme.

Turns out that a lot of women turn to lipstick when they are cutting back on spendingIt's known as the "lipstick effect."

Not only is the lipstick theory plausible, “it’s perfectly consistent with all kinds of economic theory,” said Richard DeKaser, the chief economist with National City Corporation, a financial holding company and bank in Cleveland.

Three sorts of products sell robustly during tough times, said Lou Crandall, the chief economist at Wrightson ICAP, an independent research firm.

The first is what economists call traditional inferior goods, what people have to buy when they can no longer afford their favorites. If you’re a salmon lover eating tuna casserole, you’re chewing on inferior goods.

Lipsticks aren’t inferior goods, economists say, but they could be small indulgences, an inexpensive treat meant to substitute for a bigger-ticket item. Or lipsticks could also be morale boosters, like Charlie Chaplin films were during the Depression. A warm shade that perfectly matches your skin tone might make you forget how far your 401(k) has tanked.

Although this relationship exists, Mr. Lauder was wrong about one thing: counting lipstick purchases won’t confirm whether we’re in a recession. “It doesn’t surprise me that lipstick sales go up,” Mr. Crandall said, “but if I had to choose my top economic indicators to take to a desert island with me, I’m not sure it would make my top 20.”

Major cosmetic lines are optimistic this is going to be a very good year for the lipstickbusiness. Think color and they will be marketing lipstick much heavier than gloss because lipstick costs more.

How bout you? Have you treated yourself to a new tube of lipstick as a reward for cutting back on other items?

Elana writes about business culture at FunnyBusiness

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The Beauty Industry And The Beast Known As The Recession