Unpacking Beauty’s End-of-Year Price ‘Hacks’

KEY INSIGHTS
Beauty is the only luxury category seeing year-over-year growth in the US, according to Circana. Even so, consumers are obsessed with cost-saving hacks for beauty, buying items with extra value, such as luxury gift sets with a pouch that could double as a clutch. Retailers such as Sephora are adding sections to their sites to promote beauty products eligible for purchase from pre-tax health funds.

In a recent TikTok with over 6 million views, influencer Stefanie Price unboxed the “cheapest” bag available to purchase from Dior. The gold rectangular clutch with a shoulder chain she pulled out of the package wasn’t one of the $2,000-plus purses from the brand’s handbag section, however — it was a $290 gift set from Dior Beauty, the Rouge Dior Minaudière Clutch that comes with four lipsticks inside.

“You cannot tell me this doesn’t look so reminiscent of the Diorama,” Price said, referring to Dior’s discontinued bag with a chain strap that typically costs more than $1,000 on resale sites.

Price’s viral content around the Dior gift bag illustrates the current consumer desire for value-driven products amid continued inflation and other cost-of-living pressures. But because cosmetics and personal care products are by nature cheaper than handbags and ready-to-wear, beauty is the only luxury category seeing year-over-year sales growth going into the holiday season, according to market research firm Circana. Sales of US luxury beauty were up 10 percent this year in the second quarter, Circana data shows. Luxury apparel and footwear were down 9 percent for the same time period.

Earlier this month, Coty, which licences and produces cosmetics for brands like Gucci and Burberry, attributed its 18 percent quarterly growth to its “affordable luxury” beauty category.