The Road To Retail Recovery: The Lipstick Index

The term “lipstick index” was coined by Leonard Lauder, Chairman of Estée Lauder, during the 2001 recession as an economic indicator. Lipstick sales increased in the early 2000’s recession as women would purchase lipsticks as an affordable luxury instead of expensive apparel items. Then came the 2020 pandemic, and lipstick sales declined since we masked up our lips when we went outside.   

With our lips and half of our faces covered, makeup sales fell sharply last year. Lipstick, in particular, took a significant hit. Occasionally, we might gloss on some color to get zoom-ready, but most of the time, makeup stayed backstage during the pandemic. 

Amazon sales in the U.S. tracked by McKinsey & Company in the four weeks up to April 11 showed “lip care and color” had the steepest decline in retail sales of any segment, with sales falling 15% and prices falling 28%. Fragrance, makeup, skincare, and personal care will make up the projected $510 billion global beauty and personal care industry this year. While the beauty industry has been seeing steady growth year over year in the last decade, the makeup segment is trending a bit lower when comparing to the skincare industry that is taking a larger piece of the market share.  

Amid this pandemic period, going against the odds, a luxury beauty brand has emerged. 

Valdé Beauty launched last fall with one particular item – The Lipstick. The Valdé lipstick collection is no ordinary lipstick; it took four years to carefully crafted and formulated. The lipstick case shapes like a women’s armor with intricate feathering detail, a symbol of freedom, and is hand-polished and coated with liquid gold. It is a piece of artfully crafted accessory.  

The founder of Valdé Beauty is Margarita Arriagada, the former chief merchant of Sephora and a veteran of the retail industry. She was born in Peru and immigrated to Los Angeles when she was 12 years old, and raised by a single mother with tremendous courage and determination. Margarita dedicated Valdé Beauty to her mother, Carolina Valdelomar, who passed away with dementia a few years ago.  

Margarita: I created Valdé in honor of my mother, who is my greatest inspiration. I don’t remember ever seeing her without wearing lipstick. Lipstick was the armor to her. While suffering from dementia, one thing my mother never forgot was how beautiful she felt when she wore lipstick. Each time I put lipstick on her, she would perk up. 

We have always known what beauty means to everyone. But I felt that the industry had overlooked the deeper meaning of beauty and lipstick lately.

There is a personal experience in wearing lipstick. Valdé takes that experience quite a few notches up, from the sculptural shape to the clicks of the product to sensorial formulas that make you feel armed and ready to conquer.  

Angela: Why did you choose to launch Valdé Beauty (valdebeauty.com) during Covid?

Margarita: I witnessed that in our attempt to cope, we were settling and potentially giving up on the thought of making ourselves up, which has so many uplifting benefits (mask or no mask). I decided to defy where this path was going and boldly lean into Valdé’s narrative, which is the experience of how wearing lipstick makes us feel. I wanted to provoke the thought that wearing makeup is not a mindless afterthought but a conscious choice as it should be.

It was the warrior in me that said: enough.

Angela:  What are your thoughts on lipstick sales this year, and what have you seen so far?

Margarita: I sold more sets in February than in December, if that’s any indication. I think women are ready. I am happy to see more brands also lean into being bold about launching and shining a spotlight on the category because we need to inspire the evolution. We have to lead the narrative.

Angela:  Do you think online sales for lipsticks (or color cosmetics overall) will decline and in-store purchases will pick up this year? or do you think that people will continue to buy online post covid?

Margarita: There may be some minor correction for some brands, but as the lip category overall declined last year, we should see growth both online and in stores as soon as Fall/Holiday.

The beauty category has grown substantially over the last 15 years and exploded in 2015-2018, reaching saturation and over commoditization point. It is getting promotional, and prices are reaching record lows. Beauty products are losing their intrinsic value. Yet, the most crucial benefit of beauty is how it makes us feel. I feel so strongly that this aspect needs to course correct that I have invested in creating a concept that challenges the very notion of the commodity. And there is no more perfect product to do it with than lipstick. Valdé is attempting to elevate the experience in cosmetics I feel is worthy of having.

Angela: you have pivoted your career from home furnishings to cosmetics and had been very successful at Sephora; that’s a significant shift; how did you make that jump?

Margarita:  I have pivoted several times in my career. I started at fashion accessories and had gone into the home and housewares business which I resisted. At the time, my boss and mentor encouraged me to try something new. I finally dared to embrace the change, and it was a transformational experience. When I was offered the opportunity at Sephora, my immediate reaction was to resist. But then I thought of my past, and I had to let go of my fear and took a chance with an opportunity that proves to be very rewarding. 

Angela: The pandemic has impacted women in the workforce a great deal. Many women are being pushed out, have to pivot or move downwards; what are your thoughts and advice to the women going through this challenging process?  

Margarita: My advice is to lean into it, be introspective, and have faith. Everything happens for a reason. Make conscious decisions to close the chapter, explore, and be unconventional.

I think you should pivot if you are unhappy but take the time to submerge and take the journey to understand your true self. It will be enlightening. And to the women whom this pandemic has impacted, seek a support system. First, surround yourself with supporters and get in a place for hope and possibility, and then this situation can course correct. If you trust the process, you will attract the opportunities. Your gifts, your passion, other people can help you. We all have a destiny and a purpose. Through the journey, and that’s where we can expand on your potential.

Angela: Looking back at your career and knowing what you know today, what advice would you give the young-adult self that would have given you an even more significant impact?

Margarita:  We never spoke about purpose when we were growing up. It was all about getting a good education and a job to earn a living, get married, have kids, and retire. While achievement was important, never stop having faith to explore who you are and tap into the gifts you were given. Do not miss out on the moment. It is the moment that allows the universe to speak to you and seek what life has to offer.

This pandemic has affected so many in our retail economy, but with courage, hard work, and faith, we will see new women entrepreneurs, like Margarita, rise in this decade. Here’s to the courage and determination in all of the women founders and leaders. It’s time to put on your armor.

Margarita Arriagada is an entrepreneurial Founder/CEO of Valdé Beauty, a distinctive luxury, clean, and sustainable beauty brand. 

Arriagada is also a beauty industry expert and strategic advisor through her own agency Top Shelf Consulting (TSC). She sits on several boards and is the former Chief Merchant of Sephora USA