Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: If you're looking for a gut check on the health
Speaker 2: of the US economy, you could call up an economist,
Speaker 2: or you could ask a hairdresser.
Speaker 3: Do you feel like the economy is good right now?
Speaker 4: I'm nervous, honestly, I'm nervous for what's going to happen
Speaker 4: in the industry specifically.
Speaker 2: That's Sydney Jackson Green. She's a cosmetology student who works
Speaker 2: at a salon in Springfield, Pennsylvania. She met her colleague
Speaker 2: Ben Steverman at a beauty industry trade show in New
Speaker 2: York earlier this spring and told him that recently business
Speaker 2: has been slowing down.
Speaker 4: You know, I'm very young, and a lot of my
Speaker 4: clients Sele is young as well, so some of these
Speaker 4: outrageous prices is effecting business.
Speaker 3: She does a lot of braiding and the supplies you
Speaker 3: need for braiding hair. The prices have gone up significantly.
Speaker 4: Braiding hair has gone up probably at least like three
Speaker 4: dollars since I started doing hair. Now, if you need
Speaker 4: four or five packs for your hair now, it just
Speaker 4: went up twelve to twenty dollars depending on how much
Speaker 4: air you.
Speaker 3: Ad Also, hair coloring, hair dye, those have gone up.
Speaker 4: People still want their hair done, but now people are
Speaker 4: learning how to do it at home. I've had a
Speaker 4: bunch of at home disasters.
Speaker 3: Her clients will call her because they've done something at home,
Speaker 3: like they've dyed their own hair and it just looks terrible,
Speaker 3: So then she has to fix it.
Speaker 4: When it comes down to shampoo's conditioners, they're also increasing
Speaker 4: their pricing. So now when our client needs a deep conditioner,
Speaker 4: she's like, hey, can I get it next time? But
Speaker 4: that's your hair needs it this time.
Speaker 2: To Ben Sydney's story felt eerily familiar. People trying to
Speaker 2: save money by skipping trips to the salon experimenting with
Speaker 2: DIY styles. If that brings up memories of the COVID
Speaker 2: nineteen pandemic, think back even further to the aftermath of
Speaker 2: the two thousand and eight financial crisis.
Speaker 3: There was a hairstyle momana called recession hair. Supposedly, there's
Speaker 3: a trend of people getting lower maintenance cuts in the
Speaker 3: financial crisis.
Speaker 2: Official economic data can be slow to reflect the actual
Speaker 2: state of the economy, and though Trump's tariff policies and
Speaker 2: the reaction to them have stoked fears of another coming recession.
Speaker 2: So far, key economic indicators are stable. The stock market
Speaker 2: has mostly rebounded from its dive of last month, unemployment
Speaker 2: hasn't gone up, and an April inflation rose by less
Speaker 2: than forecasted. The strongest warnings have appeared in data that
Speaker 2: reflect how consumers and companies are feeling about the economy.
Speaker 2: A University of Michigan survey with data going back to
Speaker 2: the seventies found that in May, US consumer sentiment hit
Speaker 2: its second lowest level on record. Last week, Walmart warned
Speaker 2: it might soon have to raise prices, and this week,
Speaker 2: when Target released its first quarter earnings, it revealed sales
Speaker 2: have been slowing. In times like these, people hung for
Speaker 2: more real time color can get creative and turned to
Speaker 2: unofficial sources of economic data too. Like beauty industry trends.
Speaker 3: The first thing you cut down on in a slowdown
Speaker 3: might be that facial or that massage.
Speaker 2: Or that haircut. Today on the show, what beauty spending
Speaker 2: can tell us about the health of the US economy
Speaker 2: and what shifts in behavior at home and at the
Speaker 2: salon are signaling about where it's headed next. This is
Speaker 2: the big take from Bloomberg News. I'm Sarah Holder. Back
Speaker 2: in March, Ben Steverman went to a beauty show and
Speaker 2: cosmetics conference where he hoped to check the pulse of
Speaker 2: the US economy. Thirty two thousand spa technicians, hairstylists, colorists,
Speaker 2: and makeup artists were there too.
Speaker 3: It was two giant rooms connected by a tunnel, and
Speaker 3: on one side with all the spa stuff, and on
Speaker 3: the other side was all the hair stuff. And you
Speaker 3: would go buy these boots, and some of them were
Speaker 3: quite elaborate. They would have demonstrations going on where where
Speaker 3: they're putting goop on people's faces or they're cutting hair
Speaker 3: as a demonstration. It was one hundreds thousands of different
Speaker 3: products being sold and it was fun.
Speaker 2: What kind of mood were you picking up there? Was
Speaker 2: it jubilant? Was it anxious?
Speaker 3: It wasn't that they were in a bad mood. It
Speaker 3: was only when I asked them about how's business that
Speaker 3: they told me things that were a little troubling.
Speaker 2: Ben met a woman who does eyelash extensions and hair
Speaker 2: coloring in Brewer, Maine.
Speaker 4: I used to have a lot of like bleaching tones,
Speaker 4: whereas now they're kind of going for that lived in
Speaker 4: moment so they can go longer between our appointments.
Speaker 2: The more natural the hair color, the less obvious it
Speaker 2: is if you haven't had your hair dyed in a while.
Speaker 2: Ben also talked to an executive at a New Jersey
Speaker 2: based skincare company that's recently launched mini versions of its products.
Speaker 3: The price point was better, So I think having that
Speaker 3: as an option for people, they can still be entered
Speaker 3: into our product line without having to spend xt amounts
Speaker 3: of money.
Speaker 2: So and he met a massage therapist in Northern Virginia
Speaker 2: with a lot of federal government workers as clients.
Speaker 4: It's feeling on like two thousand and eight with the
Speaker 4: market crash and everybody not knowing what to do, and
Speaker 4: so they don't want to spend that access money.
Speaker 3: I was hearing this from Okay, here's this person in Manhattan,
Speaker 3: and here's this person in rural New Hampshire, and they're
Speaker 3: saying the same thing. That was really interesting. The people
Speaker 3: who'd been doing this for decades, they were the ones
Speaker 3: who said, this feels like other slowdowns I've been through
Speaker 3: in my career, and I'm worried.
Speaker 2: In spas and salons across America, beauty professionals are noticing
Speaker 2: clients cutting back and shifting their spending in the age
Speaker 2: of teriff related uncertainty, and beauty companies are noticing too.
Speaker 1: There's some indication that the major cosmetics companies expect at
Speaker 1: least a little bit of a slowdown in the coming year.
Speaker 2: That's Newman, a reporter on Bloomberg's Consumer team. She writes
Speaker 2: about the beauty and cosmetics industry, an industry that's experienced
Speaker 2: a massive surge and growth worldwide in recent years. Between
Speaker 2: twenty twenty one and twenty twenty three, industry analysts estimate
Speaker 2: that the global beauty market grew by up to eight percent,
Speaker 2: but that trajectory could be changing.
Speaker 1: The CEO of Looreal so one of the biggest beauty
Speaker 1: companies in the world, he said last month, so in April,
Speaker 1: that expects the beauty category to grow globally like four
Speaker 1: to four point five percent, and that was on the
Speaker 1: slightly lower end of what they had been expecting. I mean,
Speaker 1: this is not just lorel this is globally, So that
Speaker 1: just gives you a sense, like four to four point
Speaker 1: five percent, it's still really really good.
Speaker 2: Growth, but it's a slowdown in that growth exactly.
Speaker 1: It's a slow down in that growth.
Speaker 2: The Lorel CEO said that this year his growth prediction
Speaker 2: was on the lower end because of a slower than
Speaker 2: expected American market, and he said it didn't even account
Speaker 2: for how quote inter national turmoil and tariff wars could
Speaker 2: make things worse. Even though Trump has pumped the brakes
Speaker 2: on some of his most aggressive tariffs on China for now,
Speaker 2: reciprocal tariffs are still set to take effect in July,
Speaker 2: and there's concern those levees could make everything from manufacturing
Speaker 2: to packaging more expensive, driving up prices across the beauty
Speaker 2: market and pushing customers to be more selective.
Speaker 1: What they're really more worried about is that consumers seeing
Speaker 1: all of this talk of tariffs, concerns about higher prices,
Speaker 1: concerns about a potential recession in the US, will pull
Speaker 1: back on their spending.
Speaker 2: Over the past few years, highly involved multi step multi products,
Speaker 2: skincare and makeup routines have been on the rise. It
Speaker 2: all started during the pandemic, when people were stuck at
Speaker 2: home with time on their hands, sharing beauty tips on
Speaker 2: TikTok How I do my barely there glowy MAKEOVERROUTEAE. This
Speaker 2: is quite twenty nine years and you just pack it
Speaker 2: into your skin.
Speaker 3: Now most people use one prima I use.
Speaker 2: Three, but Jeannett says there are signs that trend could
Speaker 2: be moderating.
Speaker 1: So, for example, setting sprays have been declining in the
Speaker 1: past couple months, and some of the analysts I spoke
Speaker 1: with think that that is in part because people are
Speaker 1: starting to kind of cut some of these steps out
Speaker 1: of their of their routines.
Speaker 2: Certain products could be more vulnerable to getting cut than others.
Speaker 1: There's some incipient signs that we're seeing that people can
Speaker 1: prioritize their spending on kind of better and fewer products.
Speaker 1: Loloreal reported their earnings recently and their higher end offering
Speaker 1: actually did really well, better than their mass market products.
Speaker 1: And that can also be like I'm cutting back on,
Speaker 1: you know, step twelve or eleven of my beauty routine,
Speaker 1: or i could be cutting back several steps and I
Speaker 1: decide that I'm actually going to buy that really expensive
Speaker 1: lotion because I think that it, you know, works better,
Speaker 1: it's worth it. I'm going to focus on that and
Speaker 1: put my money towards that. So I'm buying a more
Speaker 1: expensive lotion because I'm not buying the setting spray. I'm
Speaker 1: not buying three or four different serums.
Speaker 2: And while some people are choosing to invest more in
Speaker 2: the products they do keep buying, others are willing to downgrade.
Speaker 2: According to data from a beauty industry research group called
Speaker 2: h Intelligence.
Speaker 1: What we've been seeing recently is that kind of less
Speaker 1: expensive versions of fragrance are becoming more popular, and this
Speaker 1: is potentially in reaction to just consumers saying, hey, I'm
Speaker 1: worried about potential recession, higher prices, I'm going to watch
Speaker 1: my wallet. So things like roller balls, which are cheaper
Speaker 1: versions of fragrance dupes, have continued to go from strength
Speaker 1: to strength.
Speaker 2: So it could be mid tier products that suffer the
Speaker 2: most as people continue to buy the higher end stuff
Speaker 2: and cheaper dupes or knockoffs. This is something Ben realized
Speaker 2: at the trade show too, that even in hard times,
Speaker 2: it's unusual for people to stop moisturizing entirely or go
Speaker 2: gray instead. Big beauty brands and solo stylists alike are
Speaker 2: noticing consumers making shifts, spacing out their appointments, buying smaller bottles,
Speaker 2: and finding less expensive alternatives after the break who the
Speaker 2: beneficiaries of these beauty industry shifts could.
Speaker 1: Be beauty is discretionary, but I think to a lot
Speaker 1: of us it feels a little bit less discretionary than
Speaker 1: some of these other categories.
Speaker 2: That's Janette Newman again.
Speaker 1: We're talking about discretionary spending, meaning things that you don't
Speaker 1: have to buy, but the lotion that you might use
Speaker 1: every night feels a little bit more like a have
Speaker 1: to buy than a piece of a skirt or a
Speaker 1: T shirt. So that's one reason that it's actually quite
Speaker 1: a resilient category in times of downturn.
Speaker 2: So beauty spending is discretionary, especially when it comes to
Speaker 2: services like massages and spa treatments, but it's also resilient
Speaker 2: to economic shocks, and some products and services are more
Speaker 2: resilient than others. Ben Steveerman says it's a dynamic that
Speaker 2: showed up in paws downturns during the post nine to
Speaker 2: eleven recession. Leonard Lauder Than, the chairman of the board
Speaker 2: of Estay. Lauder famously shared that lipstick sales had spiked.
Speaker 2: People kept buying cosmetics through the Great Recession too. Journalists
Speaker 2: and economists have a name for the phenomenon. They call
Speaker 2: it the lipstick effect.
Speaker 3: The idea is that there are certain luxuries that people
Speaker 3: stick with because it makes them happy and it's something
Speaker 3: that is a relatively inexpensive way to have something that
Speaker 3: gives you some pleasure. Just because we're in a slow
Speaker 3: down doesn't mean everything slows down.
Speaker 2: Lipstick wasn't exactly a COVID era winner, remember all the masks,
Speaker 2: but the pandemic's economic disruptions made people invest in other
Speaker 2: small self care luxuries like skincare, and now in our
Speaker 2: current era of economic uncertainty, Janette says, data from Dash
Speaker 2: Intelligence shows that a different set of beauty products are
Speaker 2: having their own sort of lipstick effect, seeing their sales
Speaker 2: increase as other slow down at home salon replacements.
Speaker 1: Artificial nail sales are up about thirteen percent in March
Speaker 1: versus February, and the growth has also been incredibly strong
Speaker 1: year over year, and we're also seeing strong increases in
Speaker 1: sales of color and bleach. So some signs that people
Speaker 1: are doing some of these things at home rather than
Speaker 1: going to salons with the same frequency.
Speaker 2: And some of the people who've continued going to the
Speaker 2: salon are choosing lower maintenance treatments. Industry analysts say when
Speaker 2: it comes to hair dye, for instance, they're expecting to
Speaker 2: see more natural roots, warmer hues, and fewer blondes.
Speaker 1: There's a term called procession blonde, which I think is
Speaker 1: maybe a TikTok term that people can kind of shift
Speaker 1: the coloring of their hair to make it easier to
Speaker 1: take care of. So if your roots start to come in,
Speaker 1: you don't have to go to the salon within like
Speaker 1: a week. You could wait a little bit longer, and
Speaker 1: so that keeps your costs down. And these are different
Speaker 1: theory that are kind of I think fun to debate.
Speaker 1: Are these economic trends or just beauty trends?
Speaker 3: Right?
Speaker 1: Beauty trends kind of come and go. Are some of
Speaker 1: the things that we're seeing because trends are just shifting
Speaker 1: or is it that they're pushed kind of by the economy?
Speaker 4: Right?
Speaker 2: The at home nail kits might be cool and trending
Speaker 2: on TikTok et cetera, in part because they're a little cheaper.
Speaker 2: Exactly exactly, So, does a rise and do it yourself
Speaker 2: manicures mean the market's about to crash? Does more at
Speaker 2: home bleach mean recession hair is officially back? Well? Ben
Speaker 2: and Jinette didn't go that far, but they both said
Speaker 2: that in corporate earnings reports, conversations with sources, and cultural trends,
Speaker 2: they are seeing recession indicators. And while none of these
Speaker 2: consumer behavior shifts alone can predict the US's economic trajectory,
Speaker 2: they do offer hints at what parts of the beauty
Speaker 2: industry are best positioned to get through a downturn. Like
Speaker 2: large multinational companies that operate several different brands, companies like
Speaker 2: Lareel and Esta Lauder.
Speaker 1: They have a lot of leverage to work with their
Speaker 1: suppliers and for example, on their higher end products to
Speaker 1: raise prices.
Speaker 2: It could be tougher for smaller players, like some of
Speaker 2: the people been met at the Beauty Convention, those salons
Speaker 2: and companies that are less able to quickly rework their
Speaker 2: supply chains to deal with new tariffs or adapt their
Speaker 2: product offerings or scales of production based on consumer spending.
Speaker 3: This is an industry that has been growing pretty strongly
Speaker 3: coming out of COVID, and so you hope that some
Speaker 3: of these businesses that started up, and there's hundreds and
Speaker 3: thousands of new businesses have started up in this area,
Speaker 3: you hope that they can survive it.
Speaker 2: Bloomberg Intelligence has been running a survey of American consumers
Speaker 2: over the past few years, and this January, almost half
Speaker 2: of the one thousand respondents said they'd cut back on
Speaker 2: other purchases before scaling back on beauty and personal care spending.
Speaker 2: But that's actually lower than the number of respondents who
Speaker 2: prioritize beauty spending in twenty twenty four and twenty twenty three.
Speaker 2: In other words, after so many years of pandemic fueled growth,
Speaker 2: peak beauty just might be behind us. Resilient but still discretionary.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: This episode was produced by Julia Press. It was edited
Speaker 2: by Tracy Samuelson and Tanya Garcia. It was fact checked
Speaker 2: by our editorial team and mixed and sound designed by
Speaker 2: Alex Sugiura. Special thanks to Lindsay Dutch. Our senior producer
Speaker 2: is Naomi Shaven. Our senior editor is Elizabeth Ponso. Our
Speaker 2: deputy executive producer is Julia Weaver. Our executive producer is
Speaker 2: Nicole Beamster. Bar Sage Bauman is Bloomberg's head of Podcasts.
Speaker 2: If you liked this episode, make sure to subscribe and
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Speaker 2: back next week.