Beauty Is in Its Flop Era
The Business of Fashion Podcast
The Business of Fashion
4.6 • 770 Ratings
🗓️ 27 May 2025
⏱️ 22 minutes
🧾️ Download transcript
Summary
The beauty sector historically thrived during economic downturns, earning a recession-proof reputation encapsulated in the “lipstick index.” However, recent earnings from major beauty conglomerates like Estée Lauder, L'Oréal, Coty and Shiseido indicate that beauty’s resilience is being tested. Sales are declining, layoffs are coming and consumer habits appear to be shifting dramatically.
BoF Senior Beauty Correspondent Daniela Morosini joins Brian Baskin and Sheena Butler-Young on The Debrief to examine what's driving this slowdown and how the industry is adapting.
Key Insights:
- Traditionally, small luxury purchases like beauty products thrived during economic pressure. But the landscape has changed. “Prices have really, really grown, and there's just so much more to choose from,” says Morosini. The combination of escalating prices, excessive market saturation, and a shift to online platforms like Amazon and TikTok has diluted the impact of small luxury indulgences. "It's really hard to get seen. So even if you have a more affordable product that more people can afford, you still have to get people to come and look at you and come and interact with you," she adds.
- Brands once benefited from consistent replenishment and customer loyalty. Today, consumers are more transient, constantly seeking newness. “Customers seem to have this insatiable appetite for more products and more newness,” Morosini notes. But after years of heavy consumption, shoppers are starting to tire of new for the sake of new. “Something that’s really starting to come into focus is that, specifically, American middle-class shoppers are starting to buy fewer beauty products – and that’s having a big knock-on effect.”
- As consumers become more price-sensitive, brands need to redefine value beyond just pricing. Morosini suggests brands return to basics, emphasising their core strengths and fostering loyalty through consistent, quality products rather than frequent launches. "People are really, really attuned to perceptions of value," says Morosini.
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Transcript
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| 0:00.0 | Hello and welcome to the debrief from The Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. |
| 0:17.3 | I'm executive editor Brian Baskin. And I'm senior correspondent Sheena Butler Young. |
| 0:22.8 | The beauty category has long been viewed as recession proof. When times got tough, consumers |
| 0:27.7 | traditionally turned to small luxuries like makeup and skin care for comfort. But recent results |
| 0:32.9 | from beauty giants like Estee Lauder, L'Oreal, and Cody tell a new tale. Sales are down, layoffs are looming, |
| 0:39.2 | and the so-called lipstick index seems to have lost its shine. Today we're diving into what's |
| 0:44.5 | driving this slowdown. Why are consumers pulling back and what do they still want to buy? And how are |
| 0:50.1 | brands responding? To answer all these questions and many more, we're joined by BOF Senior Beauty |
| 0:55.4 | Correspondent, Danielle Maracini. Hello, Daniela, and welcome back to the debrief. Always a pleasure. |
| 1:03.1 | Danielle, let's start Big Picture. Your article that prompted this episode was called The End of the Lipsick |
| 1:08.3 | Index. I think the best place to start is telling us what is the |
| 1:11.5 | lipstick index. So this is one of economists' favorite terms, I think, for those that cover the consumer |
| 1:17.3 | goods industry. In 2008, in the wake of the global financial crisis, Leonard Lauder, who is the son |
| 1:22.9 | of the Esté Lauder, and at the time was the company's leader, coined this expression because even |
| 1:27.8 | though the global world economy was crashing, beauty was doing really well and seemed very resilient. |
| 1:32.6 | And his theory was that when times get tough and people are really suffering, suffering for money, |
| 1:37.7 | they will still want small luxuries. And the beauty products are the ultimate small luxury |
| 1:42.3 | because a lipstick, especially from like a prestige |
| 1:44.5 | brand like Chanel, is maybe $35, right? But one of their handbags is going to be $3,500. |
| 1:50.9 | If you're lucky. Not today. That $3,500 has evolved. Can we talk about then what is so different |
| 1:58.2 | this time around? We're in probably the third alleged recession, |
| 2:02.9 | if you want to believe the headlines. But why are consumers not then flocking to small luxuries |
... |
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