How we're buying perfume could signal how we're feeling about the economy
How consumers are feeling about the health of the US economy, and of their own wallets, could be showing up in the way we're buying one particular indulgence — perfume.

How consumers are feeling about the health of the US economy, and of their own wallets, could be showing up in the way we're buying one particular indulgence — perfume.

During periods of economic uncertainty, consumer behavior experts say shoppers tend to alter their purchase patterns, especially for discretionary goods. They either switch to cheaper alternatives, cut back on how often they buy a product, or stop buying some products completely.

Perfume is no exception to these trends, as cheaper variants are seeing sales shoot through the roof.

Demand for more budget-friendly roll-on rollerball perfumes is up 207% so far this year over last year, followed by a 183% jump in cheaper perfume samplers and a 30% increase in body mists, according to Pattern, an ecommerce platform that analyzes online product search data across multiple product categories on Amazon and elsewhere.

And that's just one way in which consumers are pulling back, despite more traditional economic indicators telling a much rosier story.

Mini fragrances, costing less, surge in demand

Even during economic downturns, price-conscious shoppers don't completely abandon purchases of pricey pick-me-ups -- high-end chocolate, perfume, expensive makeup -- that make them feel better.

This is called the lipstick effect, when consumers spend on small luxuries even in a downturn.

When you look at the economy, consumer confidence is a little shaken right now and consumers are tightening their purse strings, said Dallin Hatch, a data analyst with Pattern. But similar to the lipstick effect, he said perfume now seems to be emerging as the new luxury item of choice for shoppers during a period of financial uncertainty.

Think of it as the new' lipstick indicator of consumer sentiment, said Hatch.

A separate report from Circana, a market research firm, showed mini bottles emerging as the leading size of choice for fragrance buyers in the first half of 2023.

The report, based on retailer point-of-sale data, said that mini-sized perfumes sales have outperformed the category, accounting for 38% of total fragrances sold so far this year, up from 35% last year.

Fragrances sized under one ounce are selling at three-times the rate of the total fragrance market, said Jacquelyn Wenskus, fragrance analyst at Circana. That pace is continuing from last year for the category, the firm noted.

Fragrances under one ounce cost a fraction of the price, about a third of the price of larger size, so these appeal to the consumer that is being cautious with her money but still looking to treat themselves, she said.

And despite jitters about the economy, the report said feel-good indulgence spending has more broadly also elevated sales of both higher-priced prestige and affordable mass market cosmetics, skincare and haircare in the first half of 2023 over the previous year.

The prestige segment logged sales of $14 billion in the first half of the year, up 15% for the same period a year ago, while the mass beauty market generated $28 billion, up 9% so far this year versus a year ago, the report said.

The beauty industry is hitting the right notes, meeting consumers' emotional needs through new and existing products, which is especially welcomed at a time when spending power continues to be squeezed, Larissa Jensen, beauty industry advisor at Circana, said in the report.

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