In Keon Zhang鈥檚 household, it started with a rite of passage: his eight-year-old discovering a pimple.

鈥淪he was like, 鈥楧addy, I need to get rid of them 鈥� I need a skin care routine,鈥欌�� said the chief executive of beauty brand Back to Earth Skin.

鈥淎nd then, here my son comes up and he鈥檚 like, 鈥楧o I need it?鈥欌��

For others, the impulse to dive into a beauty regimen has come from the endless scroll of social media posts showing influencers slathering on Drunk Elephant skin care products, reaching for Dior鈥檚 lip oil and swearing by Sol de Janeiro鈥檚 Brazilian Bum Bum cream.

The flurry of purchases they have inspired in the middle of an economic downturn has confirmed what the industry has long known: beauty is hot, even when the propensity to spend is not.

Leonard Lauder 鈥� heir to the Estee Lauder cosmetics empire 鈥� coined the term 鈥渓ipstick effect鈥� in the early aughts, when many countries were in the throes of a recession, to describe the way customers with less to spend were still willing to splurge on a small item.

Now, the trend is playing out again as younger shoppers flood the market and inflation remains above the Bank of Canada鈥檚 two per cent target, weighing on spending power but not dampening the inclination to 鈥渢reat yourself.鈥�

鈥淲hen you鈥檙e a little bit constrained and you鈥檙e a little stressed on your financial side, you tend to cut the big luxury items, so then you spend on smaller luxury items,鈥� Zhang said.

鈥淪kin care is sometimes pricey, but it鈥檚 not like going on a cruise. You鈥檙e spending on something that gives you gratification immediately.鈥�

And shoppers aren鈥檛 the only ones getting a glow.

LVMH reported about $12 billion in revenue last year across its perfume and cosmetics businesses, which includes Christian Dior, Guerlain, Fenty Beauty by Rihanna, Loewe and Benefit.

In its selective retailing category, where beauty mecca Sephora resides, revenue hit $25.9 billion, up from $21.5 billion in 2022. Sephora declined to comment.

LVMH鈥檚 experience was part of a wider pattern. Research firm Circana found beauty category sales grew 18 per cent in the first nine months of 2023 in Canada from the same period in 2022. They were up 鈥渁n astonishing鈥� 47 per cent from 2021, despite almost 80 per cent of Canadians it surveyed saying the high cost of living had them curtailing spending.

The firm named skin care, makeup and fragrances as the fastest-growing general merchandise categories, outranking video game hardware, toy-building sets and even portable beverageware (hello, Stanley cup boom).

While some of the beauty industry鈥檚 resiliency comes from the lipstick effect, Angus McOuat said social media and influencing are also driving recent growth.

鈥淎t least 50 per cent, if not more, of millennials, gen Z are making their product decisions in this category based on social media and directly what they saw online,鈥� said the McKinsey & Co. partner, who leads the consultancy firm鈥檚 Canadian consumer and retail practice.

His daughter, for example, picked up a beauty regimen after watching 鈥済et ready with me鈥� videos, where posters explain their makeup and wardrobe choices.

鈥淪he does it every night,鈥� he said. 鈥淚鈥檓 not sure why she needs skin care at 12, but she feels she does.鈥�

Skin care has been a particular boon for the industry because brands see more elasticity in this part of beauty budgets and shoppers picking up these kinds of products are less likely to trade down when prices rise.

They also believe the more they spend on a product in the category, the better results they will see, McOuat said.

鈥淚f you鈥檙e with a skin cream that you like and it works and you feel like it鈥檚 sort of making your skin feel better and look younger 鈥� that鈥檒l be one of the last things you would want to drop,鈥� he said.

Back to Earth Skin, a Vernon, B.C.-based company specializing in natural, vegan and cruelty-free products, is one of the many companies benefitting from this thinking.

Its business grew 18.4 per cent between 2022 and 2023 and its online division increased 24.8 per cent over the same time period.

鈥淲e just skyrocketed, flew and I can tell you 2024, it鈥檚 even going to be higher than that for us,鈥� Zhang said.

Irene Doody, who leads category management for beauty at Shoppers Drug Mart, also foresees the the sector remaining hot.

In its most recent quarter, Shoppers鈥� parent company Loblaw Cos. Ltd. reported drug retail sales, which includes cosmetics, rose 7.4 per cent to $2.6 billion. The increase reflected 鈥渙ngoing strength鈥� in beauty sales, Loblaw said.

鈥淭here鈥檚 always a reason to buy beauty. There鈥檚 always something new,鈥� Doody said.

鈥淐ertain parts of our population, they are definitely interested in that innovation, and I don鈥檛 know where they get their money, but they definitely are buying.鈥�

Some of those buyers are looking for 鈥渋ndulgence鈥� or an 鈥渆motional lift.鈥� Others are opening their wallets because of influencers who can make a product go viral overnight.

And yes, many of these shoppers are young, 鈥渃urious鈥� shoppers with 鈥渢ime on their hands, so they鈥檙e at the malls.鈥�

鈥淏ut I was at the mall when I was that age, too,鈥� Doody pointed out.

All of these shoppers, along with skin care and products to repair damaged hair she sees gaining ground this year, will help the beauty market continue to rise, Doody predicted.

鈥淚 think we鈥檝e only scraped the surface.鈥�

Companies in this story: (TSX:L)

Tara Deschamps, The Canadian Press