November 14, 2025 • 41 mins
As the government reopens, the Trump administration introduces a new solution to the American housing crisis—the 50 year mortgage. The idea is getting hammered from the right and the left alike but gets support from at least one person: economist and Bloomberg Opinion contributor Allison Schrager. Can this new concept take some pressure off of struggling first-time homebuyers or will it be yet another white whale in an increasingly impossible financial game? Max and Stacey pick Allison’s brain to find out.
Also, Amanda Mull joins in the studio to talk about her new Businessweek cover story on Ulta, which she dubs the " Home Depot of the beauty industry.” While other retailers are struggling, Ulta is thriving as the largest beauty store in America. Does all this success ultimately come down to the so-called “lipstick effect?” Amanda explains.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Everybody's Business
from Bloomberg BusinessWeek.
Speaker 2 (00:15):
I'm Max Chafkin and I'm Stacey Mannicksmith. And this week
we have a shutdown that ended.
Speaker 3 (00:21):
Yeah, and we have some really interesting ideas for how
to make buying a home maybe a little more affordable
for people.
Speaker 2 (00:29):
Yes, as long as you live a really long time.
Speaker 4 (00:32):
Also, this week, Business Week has a special about beauty
and takes a big, deep dive.
Speaker 2 (00:37):
Into this half trillion dollar industry.
Speaker 4 (00:40):
We have Amanda Molan talking about one of the biggest
but maybe less talked.
Speaker 1 (00:45):
About players yep. And then a double barrel underrated story, right, feud,
one death. It's going to be great.
Speaker 3 (00:51):
It's going to be great, all right, Stacy. Great news.
We are recording this on Thursday, November thirteenth. The government down.
It lasted seven weeks, longest in history. It's over.
Speaker 2 (01:04):
It is over.
Speaker 4 (01:05):
Yes, there is a lot of coming back to do
as far as you know, people getting their paychecks that
are long overdue, people going back to work, flight schedules
smoothing out. But it is good news at least as
far as getting the government back on track.
Speaker 3 (01:21):
Well, I do also think we're sort of in this
weird moment of maybe political reckoning. You had the Democrats
obviously perform well in the elections.
Speaker 1 (01:30):
We talked about that last week.
Speaker 3 (01:32):
You have this shutdown ending, you know, the Trump administration
kind of scrambling essentially to come up with ideas to
change the conversation to sort of try to embrace that
message that Democrats have been pushing around affordability that Trump
had kind of had for a time but maybe lost.
You know, that's coming in the conversation that's coming up.
But before we get there, I want to talk about
(01:53):
beauty and specifically the lipstick effect. You have a new
piece in Business Week. Business Week the Beauty Issue is coming.
It's on the web now as you're listening to this,
and you wrote about this kind of interesting phenomenon that
happens with sort of I.
Speaker 1 (02:08):
Don't know luxury items or why don't you explain.
Speaker 2 (02:10):
It's makeup specifically. It's super interesting.
Speaker 4 (02:12):
So, I mean, one of the issues that happened during
the shutdown was we just did not get data. And
this is a moment where the economy feels a little
bit like maybe it's at a turning point or like
a really key point, especially the job market, so people
are looking at anything. One of the kind of more
interesting recession indicators that is out there is called the
lipstick effect. It was identified by Leonard Lauter, who was
(02:35):
the CEO of s Day latter at the time, and
he noticed that during economic downturns, makeup sales went up.
Speaker 2 (02:43):
It's been dubbed the lipstick effect, but it actually.
Speaker 4 (02:46):
Does seem to hold true, and there's been all the
speculation as to why. So I looked into it. There
was some sort of annoyingly disturbing theories. One of them
was that when economic times get tight, women will gussy
up to like land a wealthy man, or maybe to
make it easier to.
Speaker 2 (03:04):
Find a job.
Speaker 1 (03:05):
Do not repeat this insight.
Speaker 4 (03:06):
Do not repeat this insight, indeed, But there actually have
been some studies on that. I tracked on. This economist,
her name is Yasmine dil Dhar. She's a professor of
economics at California State University, San Bernardino, and she looked
into the lipstick effect and actually compared makeup spending and
broke it down by people who were employed versus unemployed,
and people who were married versus unmarried, and here's what
(03:29):
she found.
Speaker 5 (03:31):
Lipstick effect is completely innocent in my opinion, It's definitely
not driven by those SIXUS assumptions about women, like appealing
to higher earning males, Like it has nothing to do.
Speaker 6 (03:42):
With mating or beauty or whatever.
Speaker 5 (03:44):
It's just a simple treat.
Speaker 2 (03:45):
So what she found was it's the same.
Speaker 3 (03:47):
Reason beer sales go up during a recession. Basices, it's
just like you're bummed out. You gotta find some like
small way to feel better.
Speaker 4 (03:55):
Yes, well, what happens is like people cut back, and
this is true for men and women cut back on
bigger purchases, and then they will buy smaller treats like beer.
Speaker 2 (04:03):
For women, it tends to be makeup.
Speaker 4 (04:05):
So there's like a forty dollars sweet spot according to like,
you know, Deloitte.
Speaker 2 (04:10):
It's a little higher for men.
Speaker 4 (04:12):
But there's like a forty dollars sweet spot of little
luxuries that people turn to. And they're doing that now,
which is kind of an interesting omen.
Speaker 1 (04:21):
Yikes.
Speaker 2 (04:22):
I know it's happening now, but it could be happening
for a number reason.
Speaker 4 (04:25):
It doesn't necessarily mean a recession is coming, but it
is one of those little indicators that people watch so
I looked at a bunch of data. It seems like
the lipstick effect is happening. But we have a Sephora
very close to our office, which I have possibly visited
a time or two, and so I found some people
coming in and out of that Sephora, and I talked
to them to see if they were, in fact, maybe
(04:46):
spending your own research on makeup. Yes, research on the ground.
Here's what they said.
Speaker 2 (04:50):
How much would you say you spend on makeup a month?
Speaker 6 (04:53):
At least fifty bucks?
Speaker 1 (04:55):
I just buy what I need.
Speaker 7 (04:56):
Or a paycheck, might as well go directly to Sephora. Yeah,
soon does that paycheck? We're here trying out like the
latest lip gloss, lipstick.
Speaker 4 (05:03):
How much would you say you spend like a month
in some wards.
Speaker 2 (05:08):
I'm not even exaggerating. We last time went here like
like eight hundred dollars. Yeah. What are some of your
favorite products?
Speaker 7 (05:16):
Nars Concealer could like I could be dead and it
will wake me up from Like, like you could make
a zombie look good.
Speaker 2 (05:21):
I've been really into Haley Beaber's new line Road. Their
products are really nice.
Speaker 7 (05:27):
Sometimes you just buy it because it looks cute in
your makeup.
Speaker 2 (05:30):
What is it about beauty products that like bring you
back to the.
Speaker 7 (05:33):
Store the way they make you feel like I will
fall in love with the perfume and I will wear
it and I'll spray a hundred times, like killing everyone
in the office. But I don't care because I'm like,
it makes me feel nice. And the high that I
get from makeup or perfumes is not the same if
I bought like a nice little blazer. It's a different
joy that you get from getting a new blush, getting
(05:55):
in your lipstick, getting in you perfume.
Speaker 2 (05:57):
I don't know someone telling you, oh, that smells.
Speaker 1 (06:01):
Like thank you.
Speaker 7 (06:02):
Someone's walking around and saying like, oh, that's a nice blazer.
Speaker 1 (06:04):
Oh my god. Eight hundred dollars a month, that's a four.
Speaker 2 (06:09):
Uh yeah, wow, it can happen faster than you think.
Speaker 4 (06:13):
I've never quite gone into the eight hundred dollars, but yeah,
people were spending and everybody said they were spending less
on clothes and that they were spending a.
Speaker 2 (06:20):
Little more on makeup.
Speaker 3 (06:21):
So I was trying to think about, okay, like what
is the male equivalent of this? And like I said
beer before, but it might be sports betting.
Speaker 1 (06:28):
Now, Oh that's true.
Speaker 3 (06:29):
You have these stories about people like my spouse is
lost like three hundred thousand dollars doing betting on sports
or whatever.
Speaker 1 (06:36):
I feel like we're kind of getting into that territory
here with some of these.
Speaker 2 (06:40):
Yes, well, I actually I looked into that a little bit.
Speaker 4 (06:43):
For men, it seems to be video gaming is a
big one, and electronics, so those are there little Like
probably next week maybe we can.
Speaker 2 (06:51):
Go stock people outside a best Buy. They're sad how
much money they're dropping every nice.
Speaker 1 (06:57):
As having people tell tell you that you smell good.
Speaker 4 (07:00):
I know, it is sort of true that like spending
on makeup, it's a little different. It's like there's something
of like a little dream.
Speaker 3 (07:07):
In there, you know, Stacey, this conversation makes me want
to hear from the people listening to the show me too,
because first of all, I want to hear how much
money they're spending at Sephora and the like is it
eight hundred dollars? But also like, when you think about this,
the economy is not great, but I'm still I gotta
(07:28):
treat myself somehow.
Speaker 1 (07:29):
What are you treating yourself?
Speaker 7 (07:31):
Is it?
Speaker 3 (07:32):
Is it kind of sad? Video gaming? Is it smelling awful?
But it makes you feel nice.
Speaker 7 (07:37):
What is it like?
Speaker 1 (07:39):
Let us know, send us an email.
Speaker 3 (07:41):
Everybody's at Bloomberg dot net and tell us like, first
of all, what you're buying and how much money it
costs if you don't want us to use your name, and.
Speaker 2 (07:49):
If you're spending than you do.
Speaker 4 (07:57):
So Max, we've been talking about the government shutdown and
it's kind of the effects that it's had across the economy,
including one of the questions that it brings up, which
is like how we're going to pay for things going forward?
Speaker 3 (08:11):
Yeah, and just like there were all these questions swirling
about just how bad the economy was, how bad consumers
were feeling affordability. Now it feels like government shutdowns over,
we can go back to thinking about those questions.
Speaker 4 (08:24):
Yes, but you know, our president is a real estate person, right,
and he made the suggestion that has caused quite a
splash this week.
Speaker 2 (08:33):
Which was to introduce a fifty year mortgage.
Speaker 1 (08:36):
I love it.
Speaker 2 (08:36):
It's like, you have a mortgage. I don't have a mortgage.
Speaker 1 (08:39):
You have just a normal thirty year one, not a
cool new fifty year one.
Speaker 4 (08:43):
And this sparked a big debate, which actually I didn't
quite understand it first, like thirty years, fifty years, it
didn't seem to make a difference.
Speaker 1 (08:50):
So basically everyone thinks this is a bad idea.
Speaker 3 (08:53):
The left thinks this is a really bad idea, A
bunch of people on the right think it's a bad idea.
But there's one person who's here with us right now
now who actually made up I thought, a pretty persuasive
argument that it could be an okay idea.
Speaker 4 (09:05):
Yes, we're very lucky to be joined by economist Alison Schrager,
a senior fellow at the Manhattan Institute and an opinion
columnist here at Bloomberg. Welcome Allison, thanks for having me. Okay,
before we get into the like hot takes, like what
is the difference between a thirty year mortgage and a
fifty year mortgage? And like how what is this supposed
to fix?
Speaker 2 (09:24):
What's the idea?
Speaker 7 (09:25):
So?
Speaker 8 (09:26):
I mean, in financial terms, it's not a huge difference,
And in a lot of ways, I feel like everyone
freaking out about this idea has been very illuminating to me.
You realize you're an economist who does like a into bonds,
and how you think about things and how everyone else's
about things is completely different and that's been revealed to
me this week because it has been this unifying left
and right idea. And so a fifty year of the
(09:47):
obvious difference is its twenty years longer, which means your
interest rate payments in prince paying the principle is spread
out longer, so you pay less month to month, and
of course you're also paying off the prince more slowly.
So I'm noticing a lot of people are very upset
about this idea because there's this idea that you I
have a thirty year mortgage too, that you buy a home,
(10:10):
it's yours, one day, you pay it off, and then
it's all yours, and a fifty year would mean twenty
years longer, and most people will not be alive then.
Speaker 4 (10:18):
Like if you buy a home when you're forty and
you pay it off just the average age of a
home purchaser now exactly, and that's part of the problem,
and you pay it off when you're seventy, then you
don't have to pay for your house in retirement. But
now if it's fifty, you're like ninety, and you know,
maybe you know dead, or you know you had to
(10:39):
pay your mortgage.
Speaker 1 (10:40):
Throughout retiring or you've downsized.
Speaker 8 (10:42):
Maybe well, that's actually the thing that I realize, how
I think about it differently than everyone else because most
people don't do this. Most people don't buy their first
home in their forties and then pay it off when
they're seventy and continue to live there. Things happen in
life between forty and seventy, like you might move, you
might ref finance, you might just decide to pay your
(11:02):
mortgage off for early, and most people end up doing that.
Speaker 6 (11:04):
Most people aren't paying it off at the end anyway,
So it.
Speaker 8 (11:08):
Really it's I mean, I guess you could argue that,
you know, you get more less money back when you
sell it, you know, with a thirty year than a
fifty year. But there's also the time value of money,
which Peter Croy just pointed out, which is, if you
have a lower mortgage payment, you could use those savings.
One makes it more likely to afford the house. You
could also use those savings to invest in other things,
can maybe get a higher return, maybe diversify your assets
(11:28):
a bit from this house that's most of your assets.
Speaker 3 (11:30):
Can we just back up and explain why Trump is
floating this like he's floating this because home prices have
been going up like crazy, and there is a real
affordability challenge with home ownership, and it's part of it
has to do with the fact that interest rates were
low for a very long time. So's a lot of
people who are who have these really great mortgages paying
(11:53):
like two and a half percent or something over thirty years. Now,
if you look to buy a house, you're talking about
six percent, seven percent, something like that. And as a result,
no one is selling their houses and that is driving
the price of real estate up, which means that the
amount you can afford to buy is much less because
your monthly payment is mu much higher. If it's a
fifty year mortgage, your monthly payment goes down.
Speaker 1 (12:14):
Did I get all that right? Yeah?
Speaker 8 (12:15):
I think that's the justification is we need to do
something because no one's moving and that's adding to the
supply issue.
Speaker 4 (12:22):
So why are people so against this idea? It seems
on its face, I will admit, like a fine idea.
Speaker 2 (12:28):
I don't know, Yeah, that's what I would have thought.
Speaker 8 (12:30):
But again, it's this romantic notion of romance is the
right word ideal that you buy a house, you pay
it off, and then it's yours and this effectively, I
think I'm noticing when people's commentaries this makes this impossible.
Speaker 2 (12:43):
I did hear it described.
Speaker 4 (12:44):
I really liked this by Ernie Tadeshi on Twitter as
shrink flation, which I did kind of like. I mean,
I guess the ideas you're now building equity much more
slowly and the benefits of home ownership, which are very
tied in with ideas of the American dream, and also
kind of moving up the ladder financially. I think a
lot of it is like building equity and things like
(13:06):
that that's just gonna happen much more slowly.
Speaker 2 (13:09):
I guess that's the big issue.
Speaker 3 (13:10):
I mean, for me, the worst thing about this potentially
would be that basically it just causes home prices to
go up more because like suddenly you could afford even more.
And maybe I don't know, Alison, I don't know what
you think about this. Maybe if they actually created this policy,
it would force the federal government to essentially like backstop
these loans because no one in their right mind is
(13:31):
gonna give a fifty year fixed mortgage. So like you're
just creating yet another federal subsidy that benefits like one
part of the population people own homes, and you're creating
an even worst gap between renting and homeowning or something
like that.
Speaker 6 (13:48):
But we already entered that world with a thirty year mortgage.
Speaker 1 (13:50):
You're just like, it's too late.
Speaker 8 (13:51):
We gotta just like, if they put me in charge,
I would do a lot of radical things to the
housing market better.
Speaker 2 (13:57):
What would you do to the housing market, Well, I mean,
you know, I would build more.
Speaker 8 (14:02):
I'd probably have more portable mortgages. I'm not sure a
thirty year fixed rate should exist, but they do.
Speaker 6 (14:07):
I have one. I love it, but like I'm not.
Speaker 8 (14:09):
It's a financial abomination that also requires a ton of
government intervention for that to even to exist. It's insane
that a bank would lend a consumer a thirty year
fixed rate loan at such a low rate. That should
never happen, and it takes all of this government intervention
for that to happen.
Speaker 3 (14:25):
Given the like the politics even that, you had a
lot of kind of sort of like people to Trump's
right kind of hating this because of usury. You had
people on the left talking about it as a handout
to banks that just like further exacerbates inequality.
Speaker 1 (14:40):
Do you see any path for any of this stuff
to actually happen.
Speaker 8 (14:43):
I think one thing we're learning is housing affordability is
becoming but most salent political topic. But I think with
real estate it's particularly say thorny, because home prices are
just too high. People are just being shut out because
prices are high. And the problem is is we've sold
old real estate. Is this American dream that both will
be your home where you invest in, but will also
(15:04):
be this amazing asset that pays off. And the problem
is if we actually built enough housing to really meet demands,
housing prices would also fall. A lot of Americans own
a home and it's their primary asset and their portfolio.
And this is one reason why people are nimbi's is
they have a financial interest. And as a homeowner, I
get this. You know, I don't want to see the
(15:24):
value of my home fall anyway.
Speaker 4 (15:26):
It is don't want to some huge apartment building coming
up next to you with a million years.
Speaker 3 (15:30):
We should say it's not just that you don't want
to see it, it's that many people can't afford to
see the value of their own A.
Speaker 6 (15:35):
Lot of people this is their main nesting This is
what they're going to retire on.
Speaker 8 (15:38):
So when we talk a good game about wow, you know,
it would be really great to build more and have
home prices be more affordable. You know, there's winners and
losers in that, and there's a reason why it's not
just so easy is you know, you will be sort
of honestly destroying but like really so decimating the portfolios
of pretty much every homeowner in America, which is pretty
(15:59):
much a lot.
Speaker 6 (15:59):
Of almost all the middle and upper middle class.
Speaker 4 (16:02):
Well, I was just I mean, the affordability issues really interesting.
I was just looking at this chart of the median
age of first time home buyers, and five years ago
it was thirty three and now it's forty.
Speaker 2 (16:14):
I mean that is a huge jump.
Speaker 8 (16:16):
Yeah, and a lot of it is the sort of
messed up housing market that we have. We're just prices
because you know, on the one hand, people it was
like it's never been harder to buy a house, and
that is true, although mortgage rates were like thirteen seventeen
percent in the eighties.
Speaker 4 (16:29):
Yeah, my mom said she was like shopping around for
mortgages when she and my dad were buying their first
house in Boise, and she got like an eight percent
mortgage and she said she was thrilled at which now
would be outrageous. Yes, of course, house prices were a
lot cheaper then too. Yes, that's also true.
Speaker 3 (16:46):
Wait, but you were about to say people were able
to afford homes in the eighties because just because they
were cheaper, they were cheaper.
Speaker 8 (16:52):
Also, there was less of an economic need to live
in high density areas, so people, you know, boys has
gotten a lot more expensive. It's become a much more
desirable city than it was in the eighties.
Speaker 4 (17:05):
Also, that time when interest rates were that high, like
that caused a huge recession, Like it wasn't good for
the economy, like I think it probably did.
Speaker 6 (17:13):
So, oh, it did break inflation.
Speaker 3 (17:15):
It did break What happened to all the wonderful predictions
we heard from like the tech companies during the pandemic
about how Zoom etc. Was going to remake real estate
and like you were going to have it was going
to suddenly be like way easier to None of that happened.
Speaker 7 (17:30):
Huh.
Speaker 3 (17:30):
It's just people even in these like far flowng communities
that people moved from San Francisco to home prices are
high like that whole prediction just turned out to be well,
I think.
Speaker 2 (17:40):
The I mean, Alison would know better than me.
Speaker 4 (17:44):
But my take on that is that the job market
changed and companies were like, you have to come back
to the office. So suddenly the real estate market became
concentrated on cities again.
Speaker 2 (17:53):
But I don't know.
Speaker 8 (17:54):
Yeah, and you know, you know, young ambitious people want
to be in cities, and that's still true. I mean,
I think we saw even in New York before people
had to come back to the office, you saw this
influx of young people, you know, who want to make
their careers here. I mean it's not only fun for them,
but you also do important networking and skill building and development.
So I can see this is part of the problem
(18:15):
with affordability is if you're in your twenties and you're
not making a lot of money yet you still feel
a lot of pressure even sort of for your career
to be in a very expensive place. But very expensive
places are pricing people out.
Speaker 4 (18:27):
Okay, so Allison final take fifty year mortgage thumbs up
thumbs down.
Speaker 6 (18:33):
You know, it's a week thumbs up. Like, Okay, I'm
sort of I don't think it's terrible, but like I
don't see.
Speaker 4 (18:39):
As being particularly worse or better than a thirty year.
This isn't going to solve the housing It will make
it marginally better.
Speaker 6 (18:46):
I mean, it will bring down mortgage rates.
Speaker 8 (18:47):
And I would I think I said in my column,
I would prefer a fifty year mortgage to say financial
repression where we just go in and force interest rates down.
That would be worse, or relaxing lending standards that would
also be worse. So of all the things they could
potentially do short of these portable mortgages, this would be better.
Speaker 4 (19:06):
Fifty year mortgage not the worst solution to the housing crisis, exactly.
Speaker 2 (19:10):
Okay, all right, Allison.
Speaker 3 (19:18):
Stacy, I don't think you're gonna be surprised to hear this.
But I am not a big spender when it comes
to items of beauty.
Speaker 2 (19:27):
You know, I am. Come up before we do account
hair products.
Speaker 8 (19:32):
Though, there I do it.
Speaker 1 (19:33):
You're thank you, thank you for seeing me.
Speaker 4 (19:35):
Yeah, well I know that you did not you have
refused to call the person who cut your hair. You're
barber like your syst Brian.
Speaker 1 (19:45):
If you're listening, love you.
Speaker 2 (19:47):
But see, Okay, so maybe I'm wrong, But.
Speaker 3 (19:51):
I nonetheless had not heard of Alta, the company that
is on the cover of this month's issue of Bloomberg
Business Week. It is one of the hot things both
in retail and in beauty. And Amanda mal who wrote
that story, is with us.
Speaker 1 (20:06):
Now. Hey, Amanda, Hey, So I had heard.
Speaker 4 (20:09):
Of Alta because my parents live in Eagle, Idaho, and
there's an Alta in Meridian, and it's a big deal there,
but like it's much less of a deal in New York.
New York's all about Saphora. But that was kind of
what your piece was about. I was like really floored
that Alta is at the size of it. Will you
just kind of like describe this company to us?
Speaker 1 (20:32):
Yeah?
Speaker 9 (20:32):
Absolutely. Alta is a Fortune five hundred public company. They
are a beauty retailer. They have, at most recent count,
fifteen hundred stores in the US. They've been around since
nineteen ninety. They opened their first three stores in the
North Chicago suburbs and it was founded by two executives
from Osco Drug which is a Midwestern chain pharmacy, and
(20:54):
their fundamental insight was that they have a lot of
customers at the pharmacy who so buy a lot of
beauty products there, but then also buy a lot of
high end beauty products. So what if we made a
beauty retailer that carried low end, middle range and high
end stuff and people could you know, come and get
it all at the same place in a convenient shopping
(21:15):
center location. And the overall sort of value proposition of
alta remains that it's just grown sort of massively and
you can get everything from like a you know, an
eight dollars maybe Lene eyebrow pencil to you know, Chanel
and Prada, perfume. They carry six hundred brands, They carry
over thirty thousand skews products, most of them in store.
(21:37):
They are like the best buy or home depot of
the beauty industry.
Speaker 1 (21:40):
First of all, eleven billion dollars a year in revenue.
Speaker 9 (21:43):
This is a big and that's like a huge growth
trajectory over even recent years. In twenty nineteen they brought
in about six billion dollars of revenue.
Speaker 3 (21:50):
So what's crazy to me is I feel, like, you know,
I've read a lot of stories over the last five
ten years that are basically about how this model is done,
that big box stores are not good anymore. BusinessWeek has
done stories about best Buy, you know, basically going down
the drain, bed bath and beyond doing not great like
I thought, at least I thought I thought that this
(22:13):
model was dead.
Speaker 1 (22:14):
With the Internet.
Speaker 3 (22:15):
You would never go to like a strip mall and
spend a couple hundred bucks, you know, on products, you
would you would do that on the internet.
Speaker 9 (22:24):
Yeah, in almost every other sector, this model is dead.
Beauty is particularly unique in this way in that it
has in the US it has two sort of thriving,
large scale, multi brand retailers. It has both Alta and Sephora.
They sort of take different views of the beauty industry
and of beauty retail. Sephora is very like mall based.
It is smaller in footprint. They only carry high end products.
Speaker 2 (22:47):
Very cool too.
Speaker 4 (22:48):
Like the vibe of a Sephora is it's kind of
cool and there's loud music, and the people are chic
and yeah.
Speaker 9 (22:54):
Yeah, and it's very slick like it's it's it's sort
of like a candy store, whereas Alta is more of
a utilitarian a drug store.
Speaker 1 (23:02):
Yeah.
Speaker 9 (23:02):
I can't tell you how many times the executives that
I spoke with for this story said that they their
priority is to be welcoming and inclusive and to have
a little bit of something for everybody and to serve
everybody's needs and whatever those needs are in the you know,
full spectrum. And the beauty industry in particular is like
a very segmented, very sort of like branding driven industry
because a lot of these products aren't like that different.
(23:24):
There's like only so many you know, chemical cosmetic, you
know advances.
Speaker 2 (23:30):
Every every year, stick foundation.
Speaker 9 (23:32):
Yeah, so you get a lot of like similar products
across brands, across price points. And in order to compel
somebody to buy a forty two dollars Chanel liip gloss
when a ten dollars elf flipgloss sort of does the
same thing to your lips, you have to give them
an environment, You have to give them a feeling. You
have to give them, you know, sort of a sales pitch,
and that traditionally doesn't work really well when all of
that stuff is under the same roof and you can
(23:53):
like swipe them both on the back of your hand
and see that they're like very similar.
Speaker 2 (23:56):
But alta, their theory was like, actually you can do that.
Speaker 1 (24:00):
It's fine.
Speaker 9 (24:00):
Like consumers understand that, like there might not be like
a ton of difference in these two products, but they
want the Chanel version because it has the cool packaging,
because it feels cool to buy something from Chanel, And
the existence of that Chanel lip gloss in the same
place that they buy Sarah V body wash for nine
dollars is not like one does not damage the other.
In fact, it's great that they're both together, because you
(24:21):
might come in for that lip gloss and then be like, oh,
I need some shower gel. And they put themselves in
these shopping centers that are sort of unglamorous, you know.
I went to one in New Jersey that was next
to a Pet Smart and a Marshal's and like across
the parking lot from a Walmart, in places that people go,
like on the way to work on their lunch break,
things like that.
Speaker 3 (24:37):
I do wonder, to Stacy's point about Sephora, if part
of what makes the company smart is that Sephora is
too cool for people, or too young or something. Maybe
only because I'm a parent of a tween, like now,
I think of Sephora as like basically a brand for
twelve year olds, as a store for twelve year olds,
and I realize it isn't exclusively that, although maybe there's
(24:59):
something more well welcoming about a home depot like environment
versus a place that's trying super hard. Yeah.
Speaker 9 (25:05):
Sephora, which is owned by LVMH, which is of course
a huge French luxury conglomerate, takes itself a little bit
more seriously. They tend to be in higher end malls
or like very pricey sort of like flagship real estate
in city shopping districts. They carry mostly more expensive products,
a smaller assortment.
Speaker 2 (25:24):
The aisles are a little bit tighter.
Speaker 9 (25:26):
You know, you're going to get sort of bugged a
little bit more by the people who work there.
Speaker 2 (25:30):
It is just like a different feeling. Well, I think too.
Speaker 4 (25:32):
Like to Max's point about the big box stores, one
of the differences in beauty is that that is a
product you want to try, yes, and also it's not
only that you want to try it, but it's that
there's something kind of nice about those being in those
stores and trying products on.
Speaker 2 (25:49):
It feels maybe a little self carry or something like that.
Speaker 9 (25:52):
Yeah, I think that first beauty is an in person business.
Alta has a huge, you know, internet presence, so does Sephora,
but eighty percent of Alta's purchases still like originate in stores.
It's people walking in. It's not somebody ordering online and
picking up in store. It is eighty percent it's people
walking in, buying something, walking out. And that's because, like
you said, beauty is just like a very tactile, very
(26:13):
like in person industry. Like you want to be able
to see how the eyeshadow palette shimmers, You want to
be able to see if this new color of foundation
actually matches your skin. I think for a lot of people,
beauty and beauty products feel like possibility. You might be
like one product away from like your new self, which is,
you know, a marketing gambit that the beauty industry loves.
(26:35):
But also like it really does feel that way to
a lot of people, and which makes it. You know,
if you're going into pet Smart to get cat food
or to buy there's snow or something like that, that's
not that fun. But if there's an altar right next
to it, maybe go over there and see if they
got a you know, something new that you might like.
See if they've got the new Mescira that you read
about or saw on TikTok or something like that.
Speaker 4 (26:56):
Yeah, I think the CEO of Revlon at one point
said we we don't sell makeup, We sell hope. One
of the things that came up in this beauty issue,
it's it's BusinessWeek's beauty issue, is the fact that that
makeup's actually doing really well at this moment that a
lot of other parts of the economy are not.
Speaker 2 (27:11):
Is that maybe part of why.
Speaker 9 (27:13):
Yeah, I think we're in like a sort of odd
economic space right now, and we've been there before, we'll
be there again, and throughout these times, the beauty industry
tends to thrive. It's you know, it's what is called
the lipstick effect. So retailers like Alta, I think, really
have an advantage during these periods because they are places
where people go to like have a little bit of fun,
(27:34):
to buy a little something that feels special, that feels
like they're not going to have to like sacrifice other
things in life to get it.
Speaker 3 (27:39):
So I feel like that concept will not surprise people.
The ultimate example of the lipstick effect the pandemic when
all sorts of products like this say, of course, not
just beauty products.
Speaker 1 (27:50):
But like we had a whole you know, yolo buying.
Speaker 2 (27:52):
And you know, also we were all on zooms.
Speaker 9 (27:54):
I feel like a lot of people got on TikTok
for the first time and started seeing TikTok is huge
for beauty.
Speaker 3 (28:00):
ALTA sales have nearly doubled since before the pandemic. If
you look at there's a chart with the growth like
it is crazy, like twenty twenty one, twenty two, twenty three,
twenty four, it really grew quickly, but growth has kind
of leveled off, and like, it does seem like the
industry while when you're reporting the story they told you, like,
we're not seeing sales fall off, We're not seeing like
(28:22):
economic uncertainty impact ALTA, it does seem like the industry
as a whole is kind of not as hot as
it was, you know, during those those go go pandemic years.
Speaker 9 (28:32):
Yeah, there was this burst of activity over the course
of a few years. There was a lot of pent
up demand from higher income consumers who had been sort
of stuck at home, not traveling, not going out to dinner,
not doing all these things that they might otherwise spend
their money on working from home, and then they suddenly
went back to being perceived by other people in like,
you know, real life.
Speaker 2 (28:52):
It was a rough transition.
Speaker 9 (28:53):
Yeah, and you know, there's a lot of things that
happened in those few years, like a lot of people
got botox for the first time. There was like a
surgeon like MEDSPA sales, there was a lot of inquiries
to plastic surgeons, and the beauty industry in general just
sort of really really boomed across retailers, across brands, across countries.
Speaker 1 (29:12):
That growth has.
Speaker 9 (29:13):
Slowed down a little bit, like obviously there's no more
pent up demand, but it continues to grow. I think
the growth estimates right now annually for the next five
years or between three and a half to five percent.
Before this year the estimate was like more like seven percent,
I think. So it's still growing, but it's not growing
quite as much. Alta is still growing though they had
(29:33):
been flat for a little while, but in January they
brought in a new CEO, Keisha Steelman, who had been
their chief operations officer previously, and she for the past
two quarters has beaten Wall Street expectations. The company is
expanding overseas. They opened a store in Kuwait recently, a
store in Mexico before that. The Middle East and Latin
(29:54):
America are huge emphasis for them in the next couple
of years, and they also added an online marketplace, which
is the same type of business model that allowed Amazon
in Walmart to sort of scale up their e commerce
very quickly for you know, low overhead. What they're doing
differently is they're vetting beauty brands that are sort of
coming into their marketplace and listing their own things. But
(30:16):
it means that they, you know, if a hot new
brand shows up on TikTok, they don't have to like
send their buyers out to that team and try to
buy inventory and compete against other people for inventory. They
can say to this brand, hey, put your stuff on
our website. You can fulfill it directly, and then they
get a bunch of data about like who they actually
should bring into the store. So they've they've found a
couple of like creative ways in a relatively short period
(30:38):
of time to find additional white space where it seemed
like there.
Speaker 1 (30:41):
Might not be any one thing.
Speaker 3 (30:42):
I was wondering as you've been talking, you've written a
lot about the drug store business. Obviously, like these the
founders of this company came from drug stores. It sells
a lot of same products that are available in drug stores,
and like one of the things you've talked about, you've
written about a lot is the way that drug stores
have basically repay held their customers, like set up all
of these systems and policies that basically make them miserable
(31:06):
to shop, and the most famous one being the locking
up of everything, including some very inexpensive items.
Speaker 1 (31:13):
So my first question is, yeah, did they lock anything
up at these stores?
Speaker 3 (31:16):
I assume they have to because it seems like every
retailer does that And second, are there lessons here for
for other struggling retailers.
Speaker 9 (31:24):
Yeah, it's some Also locations there are locked perfume displays.
Perfume in in particular is like a it's easy to
resell online and it's like very it's it's small form factor,
high price tag.
Speaker 2 (31:37):
So like anything like that is always a shoplifting target.
Speaker 9 (31:40):
So some stores do have locked perfume displays, they still
have the testers out where you can try them.
Speaker 4 (31:45):
That way, they have you know the step yes, yeah,
they're basically like.
Speaker 2 (31:53):
Yeah, the retractable leash.
Speaker 5 (31:55):
Yeah.
Speaker 3 (31:55):
Yeah.
Speaker 9 (31:56):
They find ways to do it that sort of like
don't harm your experience as like somebody who wants to
touch things and smell things and experience things before you
buy them. And I think you know alta and Sephora
both do this well, but it's they staff their stores.
If you need something, if you have a question, if
you need a recommendation, if you need somebody with keys,
there's a lot of people around who can do that
for you. And Alta also they have tried a lot
(32:19):
of different things in their stores as far as like
services and events go, and I think that that sort
of engages people in like a quite positive way that
makes people want to go into a store, gets people
familiar with a store near them. Like the store that
I visited in New Jersey to talk to some Alta customers,
there was a flyer on the door for a masterclass
in figuring out how to blow your hair out in
(32:41):
the same way that Sabrina Carpenter does. You could go
in and also would have their hairstylists like show you
how to recreate Sabrina Carpenter's hairstyle with the products that
she endorses from Redkin, which they can carry in their
store because they have a functioning salon in almost all
of their locations, which means that they can carry a
lot of hair pops that only distribute through salon businesses.
(33:03):
So you know, there's like a real experiential element of
what Alta offers to people that I think other retailers,
you know, whether it's just like staffing the stores well
so people feel like they're getting an added value for
going in, or like you know, having events, having services.
They do a really good job of making it worthwhile
to come in.
Speaker 3 (33:22):
Amanda, that was awesome. Everyone should check out the article,
but you need to stick around, and we are going
to talk about our underrated stories this week. Okay, listeners,
I have great news for you, which is that we
are trying a new ender this week, which is that
there are going to be two underrated stories instead of one.
Speaker 2 (33:42):
Yes, you can email in to say whose was better.
Speaker 3 (33:46):
Everybody's at Bloomberg got net all right, So I'm going
to tell you mine.
Speaker 1 (33:50):
Stacey, Okay, you can give me yours. But and Amanda,
I want you to weigh in.
Speaker 3 (33:54):
I assume that both of you are familiar with X,
the everything app X Twitter. Yes, you know a lot
of people feel like it has not really been the
same since Elon Musk bought it. Usage has gone down.
I'd say there are a lot of bots, a lot
of bots. The value has gone down except as an
AI thing. But but I want to present a sort
(34:15):
of like a counterpoint, which is that there was an
amazing literary feud playing out on X the everything app
over the weekend that I think is the underrated story.
Speaker 1 (34:26):
A man I think already knows what it is.
Speaker 3 (34:28):
It is Joyce Carol Oates, the one of the great
living American fiction writers, beefing in public with Elon Musk,
the owner of X, and I gotta say it was
so funny.
Speaker 1 (34:42):
You're already laughing, so I think you know.
Speaker 3 (34:43):
But for anyone who doesn't, Joyce Carol Oates wrote kind
of a lengthy message basically suggesting that Musk was not
touching grass enough. So curious that such a wealthy man
never posted that's like it is one, which I I
think is why it kind of cut to the bone
a little bit. What did she write, I'll read a
(35:04):
little excerpt. So curious that such a wealthy man never
posts anything that indicates that he enjoys or is even
aware of what virtually everyone appreciates scenes from nature, pet
dogg or cat, praise for a movie, music, a book,
a preend.
Speaker 1 (35:17):
But doubt he reads.
Speaker 3 (35:19):
Yeah, okay, so here's what makes this funny is that
Musk of course, Musk reads his mentions, as I think
anyone has following for a long time knows, he was
on top of this, and he responded, Oats is a
liar and delights in being mean.
Speaker 1 (35:33):
That's not a good human. And then he wrote, eating
a bag of sawdust.
Speaker 3 (35:37):
Would be vastly more enjoyable than reading the laboriously pretentious
drivell of Ootes. That sounds like Grock helped him.
Speaker 4 (35:43):
With that one, But muriously pretentious Drivell is a laboriously
pretentious sentence.
Speaker 3 (35:48):
Okay, so this would be kind of a lame feud,
I would argue, But what happened next was the best.
Is because he spent the weekend basically talking about his
favorite movies.
Speaker 1 (35:57):
So he likes Man on Fire, he likes the fifth element.
It's like where I am from.
Speaker 2 (36:04):
The phrase for this would be hit Dog's holler.
Speaker 9 (36:09):
Means you know, she clearly got him a little bit
in a way that he had to that clearly evoked
something in him. And I mean Joyce Carol Oates. I
am a fan of her entire posting catalog.
Speaker 3 (36:22):
She is.
Speaker 9 (36:22):
She has put out some incredible bangers on X the
Everything app over the years, but this one was just
like it clearly unnerved him in a way that that
not everything does.
Speaker 2 (36:33):
It's such a simple point to make.
Speaker 4 (36:35):
It's like this, do you like anything, like you're always
like yelling at the moon.
Speaker 2 (36:40):
Go get a n ice cream cone with one of
your thirteen children.
Speaker 9 (36:44):
Yeah, watch Monday night football.
Speaker 2 (36:45):
See how it feels.
Speaker 1 (36:46):
Yes, he does every now and then post some preference.
Speaker 2 (36:50):
But I feel like you watch you watched, like is
this true?
Speaker 1 (36:56):
I'd say She's mostly right.
Speaker 3 (36:57):
He does every now and then express preference, but it
has the quality of Rob Low in the NFL hat
like a kind of a forced I am doing this
because you know, somebody involved in advertising told me or
there's been so much Nazi content this week that I
kind of just like need to balance the scales a
little bit or whatever. So so, Yeah, but I think
(37:18):
it is nice that he took the note to me.
This kind of redeems X a little, like the fact
that we're still getting a high quality like celebrity beef
billionaire v big time ninety five year old eighty seven
year old authors in her ninety spending her twilight years
beefing on X, like you gotta say, like we are he's.
Speaker 2 (37:41):
A little bit changed.
Speaker 4 (37:43):
Mane x is alive, like maybe his life got a
little bit better because of Twitter, And there aren't many
people who can say that.
Speaker 1 (37:51):
All right, what's yours, Stacy?
Speaker 2 (37:52):
Okay? Mine is is sad? It's an ending? Which is this?
I can already tell Max is gonna irritated by this?
This week.
Speaker 4 (38:04):
I'm guessing this week the last penny was minted. Oh no, right,
the pennies like the oldest form of currency that has
been around since the seventeen hundreds, in in its kind
of current form, and that shaped our culture in many ways,
Like I put in my two cents or all this stuff,
(38:24):
and now no more pennies?
Speaker 9 (38:27):
Yeah, what are kids gonna put in those machines and
smash in like the the gift shops at rural tourist attractions?
Yeah exactly, Yeah, yeah, Like I still I'm pretty sure
somewhere in my childhood bedroom at home, mom will have
to weigh in. I probably have like a tallula gorge
like smashed penny that came out of one of those machines.
Are what are the kids gonna smash?
Speaker 3 (38:47):
Now?
Speaker 2 (38:48):
Now it's nickels, which is inflation.
Speaker 3 (38:50):
Well, I am not upset about this daste. I'm not mad,
but I do as someone who is excited about when
our politics get gets weird, I am happy that this
one thing has happened.
Speaker 2 (39:04):
And the penny.
Speaker 3 (39:05):
That period during the early part of the Trump administration
when they were like, we're gonna get rid of the penny,
We're gonna get rid of daylight saving time, we're like
the get weird period of the Trump beginning of the
Trump presidency.
Speaker 1 (39:15):
I don't know, I'm kind of like I'm into it.
Speaker 2 (39:16):
I feel like, okay, you're accomplishing, like.
Speaker 1 (39:18):
Pick, yeah, this is promise, has made promises.
Speaker 2 (39:22):
They're in their bag right now with like this, specifically
with the penny.
Speaker 4 (39:25):
I mean, the penny costs more than a cent to make,
so there's an economic case for it. But the nickel,
and I believe the dime also costs more, which it
just does push the price of things up.
Speaker 3 (39:38):
No one carries around change. It's annoying. It just it
just piles up in your jar. They should get rid
of it.
Speaker 4 (39:43):
I will have you know that I was recently at
the Money Museum in Saint Louis and I purchased They
have a lot of penny jewelry for sale, which is
very reasonably priced, and I purchased a pair of Penny
earrings that are pretty fetching.
Speaker 2 (39:58):
I'll wear them next week.
Speaker 1 (40:00):
Okay, Amanda, you heard the two underrated stories. Which do
you like best?
Speaker 9 (40:04):
You know, as like a longtime fan of belligerent posting,
I have to sign.
Speaker 2 (40:11):
Hundreds of years of history.
Speaker 9 (40:13):
Well, Joyce Carol Oates is like eighty seven years of
history and she's still a national treasure. She's still out
here creating value for the public.
Speaker 3 (40:23):
Listeners, tell us which story you like the best? Team
Penny have a favorite coin that's not the Penny home. Yeah,
let us know which one was best.
Speaker 2 (40:34):
But we I think we Penny for the old guy.
Speaker 1 (40:37):
Amanda Mall, thanks for being here. Thank you so much
for having me.
Speaker 2 (40:45):
This show is produced by Stacy Wong.
Speaker 4 (40:47):
Magnus Hendrickson is our supervising producer, and Amy Kean is
our executive producer. Sam Rogic handle's engineering and Dave Purcell
fact checks, Sage Bawman heads Bloomberg Podcast Special thanks to
Jeff Muscus, Julia Rubin, and Link. If you have a minute,
please rate and review the show. It means a lot
to us. And if you have a story that should
be our business. Send us an email. Everybody's at Bloomberg
dot net. That is, everybody's with an us at Bloomberg
(41:10):
dot net.
Speaker 1 (41:11):
Yeah, you gotta tell us. Video games, perfume?
Speaker 4 (41:15):
What is?
Speaker 7 (41:15):
Yeah?
Speaker 2 (41:15):
Max wants to know, and so do. I thank you
for listening and see you next week.
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Everybody's Business
from Bloomberg BusinessWeek.
Speaker 2 (00:15):
I'm Max Chafkin and I'm Stacey Mannicksmith. And this week
we have a shutdown that ended.
Speaker 3 (00:21):
Yeah, and we have some really interesting ideas for how
to make buying a home maybe a little more affordable
for people.
Speaker 2 (00:29):
Yes, as long as you live a really long time.
Speaker 4 (00:32):
Also, this week, Business Week has a special about beauty
and takes a big, deep dive.
Speaker 2 (00:37):
Into this half trillion dollar industry.
Speaker 4 (00:40):
We have Amanda Molan talking about one of the biggest
but maybe less talked.
Speaker 1 (00:45):
About players yep. And then a double barrel underrated story, right, feud,
one death. It's going to be great.
Speaker 3 (00:51):
It's going to be great, all right, Stacy. Great news.
We are recording this on Thursday, November thirteenth. The government down.
It lasted seven weeks, longest in history. It's over.
Speaker 2 (01:04):
It is over.
Speaker 4 (01:05):
Yes, there is a lot of coming back to do
as far as you know, people getting their paychecks that
are long overdue, people going back to work, flight schedules
smoothing out. But it is good news at least as
far as getting the government back on track.
Speaker 3 (01:21):
Well, I do also think we're sort of in this
weird moment of maybe political reckoning. You had the Democrats
obviously perform well in the elections.
Speaker 1 (01:30):
We talked about that last week.
Speaker 3 (01:32):
You have this shutdown ending, you know, the Trump administration
kind of scrambling essentially to come up with ideas to
change the conversation to sort of try to embrace that
message that Democrats have been pushing around affordability that Trump
had kind of had for a time but maybe lost.
You know, that's coming in the conversation that's coming up.
But before we get there, I want to talk about
(01:53):
beauty and specifically the lipstick effect. You have a new
piece in Business Week. Business Week the Beauty Issue is coming.
It's on the web now as you're listening to this,
and you wrote about this kind of interesting phenomenon that
happens with sort of I.
Speaker 1 (02:08):
Don't know luxury items or why don't you explain.
Speaker 2 (02:10):
It's makeup specifically. It's super interesting.
Speaker 4 (02:12):
So, I mean, one of the issues that happened during
the shutdown was we just did not get data. And
this is a moment where the economy feels a little
bit like maybe it's at a turning point or like
a really key point, especially the job market, so people
are looking at anything. One of the kind of more
interesting recession indicators that is out there is called the
lipstick effect. It was identified by Leonard Lauter, who was
(02:35):
the CEO of s Day latter at the time, and
he noticed that during economic downturns, makeup sales went up.
Speaker 2 (02:43):
It's been dubbed the lipstick effect, but it actually.
Speaker 4 (02:46):
Does seem to hold true, and there's been all the
speculation as to why. So I looked into it. There
was some sort of annoyingly disturbing theories. One of them
was that when economic times get tight, women will gussy
up to like land a wealthy man, or maybe to
make it easier to.
Speaker 2 (03:04):
Find a job.
Speaker 1 (03:05):
Do not repeat this insight.
Speaker 4 (03:06):
Do not repeat this insight, indeed, But there actually have
been some studies on that. I tracked on. This economist,
her name is Yasmine dil Dhar. She's a professor of
economics at California State University, San Bernardino, and she looked
into the lipstick effect and actually compared makeup spending and
broke it down by people who were employed versus unemployed,
and people who were married versus unmarried, and here's what
(03:29):
she found.
Speaker 5 (03:31):
Lipstick effect is completely innocent in my opinion, It's definitely
not driven by those SIXUS assumptions about women, like appealing
to higher earning males, Like it has nothing to do.
Speaker 6 (03:42):
With mating or beauty or whatever.
Speaker 5 (03:44):
It's just a simple treat.
Speaker 2 (03:45):
So what she found was it's the same.
Speaker 3 (03:47):
Reason beer sales go up during a recession. Basices, it's
just like you're bummed out. You gotta find some like
small way to feel better.
Speaker 4 (03:55):
Yes, well, what happens is like people cut back, and
this is true for men and women cut back on
bigger purchases, and then they will buy smaller treats like beer.
Speaker 2 (04:03):
For women, it tends to be makeup.
Speaker 4 (04:05):
So there's like a forty dollars sweet spot according to like,
you know, Deloitte.
Speaker 2 (04:10):
It's a little higher for men.
Speaker 4 (04:12):
But there's like a forty dollars sweet spot of little
luxuries that people turn to. And they're doing that now,
which is kind of an interesting omen.
Speaker 1 (04:21):
Yikes.
Speaker 2 (04:22):
I know it's happening now, but it could be happening
for a number reason.
Speaker 4 (04:25):
It doesn't necessarily mean a recession is coming, but it
is one of those little indicators that people watch so
I looked at a bunch of data. It seems like
the lipstick effect is happening. But we have a Sephora
very close to our office, which I have possibly visited
a time or two, and so I found some people
coming in and out of that Sephora, and I talked
to them to see if they were, in fact, maybe
(04:46):
spending your own research on makeup. Yes, research on the ground.
Here's what they said.
Speaker 2 (04:50):
How much would you say you spend on makeup a month?
Speaker 6 (04:53):
At least fifty bucks?
Speaker 1 (04:55):
I just buy what I need.
Speaker 7 (04:56):
Or a paycheck, might as well go directly to Sephora. Yeah,
soon does that paycheck? We're here trying out like the
latest lip gloss, lipstick.
Speaker 4 (05:03):
How much would you say you spend like a month
in some wards.
Speaker 2 (05:08):
I'm not even exaggerating. We last time went here like
like eight hundred dollars. Yeah. What are some of your
favorite products?
Speaker 7 (05:16):
Nars Concealer could like I could be dead and it
will wake me up from Like, like you could make
a zombie look good.
Speaker 2 (05:21):
I've been really into Haley Beaber's new line Road. Their
products are really nice.
Speaker 7 (05:27):
Sometimes you just buy it because it looks cute in
your makeup.
Speaker 2 (05:30):
What is it about beauty products that like bring you
back to the.
Speaker 7 (05:33):
Store the way they make you feel like I will
fall in love with the perfume and I will wear
it and I'll spray a hundred times, like killing everyone
in the office. But I don't care because I'm like,
it makes me feel nice. And the high that I
get from makeup or perfumes is not the same if
I bought like a nice little blazer. It's a different
joy that you get from getting a new blush, getting
(05:55):
in your lipstick, getting in you perfume.
Speaker 2 (05:57):
I don't know someone telling you, oh, that smells.
Speaker 1 (06:01):
Like thank you.
Speaker 7 (06:02):
Someone's walking around and saying like, oh, that's a nice blazer.
Speaker 1 (06:04):
Oh my god. Eight hundred dollars a month, that's a four.
Speaker 2 (06:09):
Uh yeah, wow, it can happen faster than you think.
Speaker 4 (06:13):
I've never quite gone into the eight hundred dollars, but yeah,
people were spending and everybody said they were spending less
on clothes and that they were spending a.
Speaker 2 (06:20):
Little more on makeup.
Speaker 3 (06:21):
So I was trying to think about, okay, like what
is the male equivalent of this? And like I said
beer before, but it might be sports betting.
Speaker 1 (06:28):
Now, Oh that's true.
Speaker 3 (06:29):
You have these stories about people like my spouse is
lost like three hundred thousand dollars doing betting on sports
or whatever.
Speaker 1 (06:36):
I feel like we're kind of getting into that territory
here with some of these.
Speaker 2 (06:40):
Yes, well, I actually I looked into that a little bit.
Speaker 4 (06:43):
For men, it seems to be video gaming is a
big one, and electronics, so those are there little Like
probably next week maybe we can.
Speaker 2 (06:51):
Go stock people outside a best Buy. They're sad how
much money they're dropping every nice.
Speaker 1 (06:57):
As having people tell tell you that you smell good.
Speaker 4 (07:00):
I know, it is sort of true that like spending
on makeup, it's a little different. It's like there's something
of like a little dream.
Speaker 3 (07:07):
In there, you know, Stacey, this conversation makes me want
to hear from the people listening to the show me too,
because first of all, I want to hear how much
money they're spending at Sephora and the like is it
eight hundred dollars? But also like, when you think about this,
the economy is not great, but I'm still I gotta
(07:28):
treat myself somehow.
Speaker 1 (07:29):
What are you treating yourself?
Speaker 7 (07:31):
Is it?
Speaker 3 (07:32):
Is it kind of sad? Video gaming? Is it smelling awful?
But it makes you feel nice.
Speaker 7 (07:37):
What is it like?
Speaker 1 (07:39):
Let us know, send us an email.
Speaker 3 (07:41):
Everybody's at Bloomberg dot net and tell us like, first
of all, what you're buying and how much money it
costs if you don't want us to use your name, and.
Speaker 2 (07:49):
If you're spending than you do.
Speaker 4 (07:57):
So Max, we've been talking about the government shutdown and
it's kind of the effects that it's had across the economy,
including one of the questions that it brings up, which
is like how we're going to pay for things going forward?
Speaker 3 (08:11):
Yeah, and just like there were all these questions swirling
about just how bad the economy was, how bad consumers
were feeling affordability. Now it feels like government shutdowns over,
we can go back to thinking about those questions.
Speaker 4 (08:24):
Yes, but you know, our president is a real estate person, right,
and he made the suggestion that has caused quite a
splash this week.
Speaker 2 (08:33):
Which was to introduce a fifty year mortgage.
Speaker 1 (08:36):
I love it.
Speaker 2 (08:36):
It's like, you have a mortgage. I don't have a mortgage.
Speaker 1 (08:39):
You have just a normal thirty year one, not a
cool new fifty year one.
Speaker 4 (08:43):
And this sparked a big debate, which actually I didn't
quite understand it first, like thirty years, fifty years, it
didn't seem to make a difference.
Speaker 1 (08:50):
So basically everyone thinks this is a bad idea.
Speaker 3 (08:53):
The left thinks this is a really bad idea, A
bunch of people on the right think it's a bad idea.
But there's one person who's here with us right now
now who actually made up I thought, a pretty persuasive
argument that it could be an okay idea.
Speaker 4 (09:05):
Yes, we're very lucky to be joined by economist Alison Schrager,
a senior fellow at the Manhattan Institute and an opinion
columnist here at Bloomberg. Welcome Allison, thanks for having me. Okay,
before we get into the like hot takes, like what
is the difference between a thirty year mortgage and a
fifty year mortgage? And like how what is this supposed
to fix?
Speaker 2 (09:24):
What's the idea?
Speaker 7 (09:25):
So?
Speaker 8 (09:26):
I mean, in financial terms, it's not a huge difference,
And in a lot of ways, I feel like everyone
freaking out about this idea has been very illuminating to me.
You realize you're an economist who does like a into bonds,
and how you think about things and how everyone else's
about things is completely different and that's been revealed to
me this week because it has been this unifying left
and right idea. And so a fifty year of the
(09:47):
obvious difference is its twenty years longer, which means your
interest rate payments in prince paying the principle is spread
out longer, so you pay less month to month, and
of course you're also paying off the prince more slowly.
So I'm noticing a lot of people are very upset
about this idea because there's this idea that you I
have a thirty year mortgage too, that you buy a home,
(10:10):
it's yours, one day, you pay it off, and then
it's all yours, and a fifty year would mean twenty
years longer, and most people will not be alive then.
Speaker 4 (10:18):
Like if you buy a home when you're forty and
you pay it off just the average age of a
home purchaser now exactly, and that's part of the problem,
and you pay it off when you're seventy, then you
don't have to pay for your house in retirement. But
now if it's fifty, you're like ninety, and you know,
maybe you know dead, or you know you had to
(10:39):
pay your mortgage.
Speaker 1 (10:40):
Throughout retiring or you've downsized.
Speaker 8 (10:42):
Maybe well, that's actually the thing that I realize, how
I think about it differently than everyone else because most
people don't do this. Most people don't buy their first
home in their forties and then pay it off when
they're seventy and continue to live there. Things happen in
life between forty and seventy, like you might move, you
might ref finance, you might just decide to pay your
(11:02):
mortgage off for early, and most people end up doing that.
Speaker 6 (11:04):
Most people aren't paying it off at the end anyway,
So it.
Speaker 8 (11:08):
Really it's I mean, I guess you could argue that,
you know, you get more less money back when you
sell it, you know, with a thirty year than a
fifty year. But there's also the time value of money,
which Peter Croy just pointed out, which is, if you
have a lower mortgage payment, you could use those savings.
One makes it more likely to afford the house. You
could also use those savings to invest in other things,
can maybe get a higher return, maybe diversify your assets
(11:28):
a bit from this house that's most of your assets.
Speaker 3 (11:30):
Can we just back up and explain why Trump is
floating this like he's floating this because home prices have
been going up like crazy, and there is a real
affordability challenge with home ownership, and it's part of it
has to do with the fact that interest rates were
low for a very long time. So's a lot of
people who are who have these really great mortgages paying
(11:53):
like two and a half percent or something over thirty years. Now,
if you look to buy a house, you're talking about
six percent, seven percent, something like that. And as a result,
no one is selling their houses and that is driving
the price of real estate up, which means that the
amount you can afford to buy is much less because
your monthly payment is mu much higher. If it's a
fifty year mortgage, your monthly payment goes down.
Speaker 1 (12:14):
Did I get all that right? Yeah?
Speaker 8 (12:15):
I think that's the justification is we need to do
something because no one's moving and that's adding to the
supply issue.
Speaker 4 (12:22):
So why are people so against this idea? It seems
on its face, I will admit, like a fine idea.
Speaker 2 (12:28):
I don't know, Yeah, that's what I would have thought.
Speaker 8 (12:30):
But again, it's this romantic notion of romance is the
right word ideal that you buy a house, you pay
it off, and then it's yours and this effectively, I
think I'm noticing when people's commentaries this makes this impossible.
Speaker 2 (12:43):
I did hear it described.
Speaker 4 (12:44):
I really liked this by Ernie Tadeshi on Twitter as
shrink flation, which I did kind of like. I mean,
I guess the ideas you're now building equity much more
slowly and the benefits of home ownership, which are very
tied in with ideas of the American dream, and also
kind of moving up the ladder financially. I think a
lot of it is like building equity and things like
(13:06):
that that's just gonna happen much more slowly.
Speaker 2 (13:09):
I guess that's the big issue.
Speaker 3 (13:10):
I mean, for me, the worst thing about this potentially
would be that basically it just causes home prices to
go up more because like suddenly you could afford even more.
And maybe I don't know, Alison, I don't know what
you think about this. Maybe if they actually created this policy,
it would force the federal government to essentially like backstop
these loans because no one in their right mind is
(13:31):
gonna give a fifty year fixed mortgage. So like you're
just creating yet another federal subsidy that benefits like one
part of the population people own homes, and you're creating
an even worst gap between renting and homeowning or something
like that.
Speaker 6 (13:48):
But we already entered that world with a thirty year mortgage.
Speaker 1 (13:50):
You're just like, it's too late.
Speaker 8 (13:51):
We gotta just like, if they put me in charge,
I would do a lot of radical things to the
housing market better.
Speaker 2 (13:57):
What would you do to the housing market, Well, I mean,
you know, I would build more.
Speaker 8 (14:02):
I'd probably have more portable mortgages. I'm not sure a
thirty year fixed rate should exist, but they do.
Speaker 6 (14:07):
I have one. I love it, but like I'm not.
Speaker 8 (14:09):
It's a financial abomination that also requires a ton of
government intervention for that to even to exist. It's insane
that a bank would lend a consumer a thirty year
fixed rate loan at such a low rate. That should
never happen, and it takes all of this government intervention
for that to happen.
Speaker 3 (14:25):
Given the like the politics even that, you had a
lot of kind of sort of like people to Trump's
right kind of hating this because of usury. You had
people on the left talking about it as a handout
to banks that just like further exacerbates inequality.
Speaker 1 (14:40):
Do you see any path for any of this stuff
to actually happen.
Speaker 8 (14:43):
I think one thing we're learning is housing affordability is
becoming but most salent political topic. But I think with
real estate it's particularly say thorny, because home prices are
just too high. People are just being shut out because
prices are high. And the problem is is we've sold
old real estate. Is this American dream that both will
be your home where you invest in, but will also
(15:04):
be this amazing asset that pays off. And the problem
is if we actually built enough housing to really meet demands,
housing prices would also fall. A lot of Americans own
a home and it's their primary asset and their portfolio.
And this is one reason why people are nimbi's is
they have a financial interest. And as a homeowner, I
get this. You know, I don't want to see the
(15:24):
value of my home fall anyway.
Speaker 4 (15:26):
It is don't want to some huge apartment building coming
up next to you with a million years.
Speaker 3 (15:30):
We should say it's not just that you don't want
to see it, it's that many people can't afford to
see the value of their own A.
Speaker 6 (15:35):
Lot of people this is their main nesting This is
what they're going to retire on.
Speaker 8 (15:38):
So when we talk a good game about wow, you know,
it would be really great to build more and have
home prices be more affordable. You know, there's winners and
losers in that, and there's a reason why it's not
just so easy is you know, you will be sort
of honestly destroying but like really so decimating the portfolios
of pretty much every homeowner in America, which is pretty
(15:59):
much a lot.
Speaker 6 (15:59):
Of almost all the middle and upper middle class.
Speaker 4 (16:02):
Well, I was just I mean, the affordability issues really interesting.
I was just looking at this chart of the median
age of first time home buyers, and five years ago
it was thirty three and now it's forty.
Speaker 2 (16:14):
I mean that is a huge jump.
Speaker 8 (16:16):
Yeah, and a lot of it is the sort of
messed up housing market that we have. We're just prices
because you know, on the one hand, people it was
like it's never been harder to buy a house, and
that is true, although mortgage rates were like thirteen seventeen
percent in the eighties.
Speaker 4 (16:29):
Yeah, my mom said she was like shopping around for
mortgages when she and my dad were buying their first
house in Boise, and she got like an eight percent
mortgage and she said she was thrilled at which now
would be outrageous. Yes, of course, house prices were a
lot cheaper then too. Yes, that's also true.
Speaker 3 (16:46):
Wait, but you were about to say people were able
to afford homes in the eighties because just because they
were cheaper, they were cheaper.
Speaker 8 (16:52):
Also, there was less of an economic need to live
in high density areas, so people, you know, boys has
gotten a lot more expensive. It's become a much more
desirable city than it was in the eighties.
Speaker 4 (17:05):
Also, that time when interest rates were that high, like
that caused a huge recession, Like it wasn't good for
the economy, like I think it probably did.
Speaker 6 (17:13):
So, oh, it did break inflation.
Speaker 3 (17:15):
It did break What happened to all the wonderful predictions
we heard from like the tech companies during the pandemic
about how Zoom etc. Was going to remake real estate
and like you were going to have it was going
to suddenly be like way easier to None of that happened.
Speaker 7 (17:30):
Huh.
Speaker 3 (17:30):
It's just people even in these like far flowng communities
that people moved from San Francisco to home prices are
high like that whole prediction just turned out to be well,
I think.
Speaker 2 (17:40):
The I mean, Alison would know better than me.
Speaker 4 (17:44):
But my take on that is that the job market
changed and companies were like, you have to come back
to the office. So suddenly the real estate market became
concentrated on cities again.
Speaker 2 (17:53):
But I don't know.
Speaker 8 (17:54):
Yeah, and you know, you know, young ambitious people want
to be in cities, and that's still true. I mean,
I think we saw even in New York before people
had to come back to the office, you saw this
influx of young people, you know, who want to make
their careers here. I mean it's not only fun for them,
but you also do important networking and skill building and development.
So I can see this is part of the problem
(18:15):
with affordability is if you're in your twenties and you're
not making a lot of money yet you still feel
a lot of pressure even sort of for your career
to be in a very expensive place. But very expensive
places are pricing people out.
Speaker 4 (18:27):
Okay, so Allison final take fifty year mortgage thumbs up
thumbs down.
Speaker 6 (18:33):
You know, it's a week thumbs up. Like, Okay, I'm
sort of I don't think it's terrible, but like I
don't see.
Speaker 4 (18:39):
As being particularly worse or better than a thirty year.
This isn't going to solve the housing It will make
it marginally better.
Speaker 6 (18:46):
I mean, it will bring down mortgage rates.
Speaker 8 (18:47):
And I would I think I said in my column,
I would prefer a fifty year mortgage to say financial
repression where we just go in and force interest rates down.
That would be worse, or relaxing lending standards that would
also be worse. So of all the things they could
potentially do short of these portable mortgages, this would be better.
Speaker 4 (19:06):
Fifty year mortgage not the worst solution to the housing crisis, exactly.
Speaker 2 (19:10):
Okay, all right, Allison.
Speaker 3 (19:18):
Stacy, I don't think you're gonna be surprised to hear this.
But I am not a big spender when it comes
to items of beauty.
Speaker 2 (19:27):
You know, I am. Come up before we do account
hair products.
Speaker 8 (19:32):
Though, there I do it.
Speaker 1 (19:33):
You're thank you, thank you for seeing me.
Speaker 4 (19:35):
Yeah, well I know that you did not you have
refused to call the person who cut your hair. You're
barber like your syst Brian.
Speaker 1 (19:45):
If you're listening, love you.
Speaker 2 (19:47):
But see, Okay, so maybe I'm wrong, But.
Speaker 3 (19:51):
I nonetheless had not heard of Alta, the company that
is on the cover of this month's issue of Bloomberg
Business Week. It is one of the hot things both
in retail and in beauty. And Amanda mal who wrote
that story, is with us.
Speaker 1 (20:06):
Now. Hey, Amanda, Hey, So I had heard.
Speaker 4 (20:09):
Of Alta because my parents live in Eagle, Idaho, and
there's an Alta in Meridian, and it's a big deal there,
but like it's much less of a deal in New York.
New York's all about Saphora. But that was kind of
what your piece was about. I was like really floored
that Alta is at the size of it. Will you
just kind of like describe this company to us?
Speaker 1 (20:32):
Yeah?
Speaker 9 (20:32):
Absolutely. Alta is a Fortune five hundred public company. They
are a beauty retailer. They have, at most recent count,
fifteen hundred stores in the US. They've been around since
nineteen ninety. They opened their first three stores in the
North Chicago suburbs and it was founded by two executives
from Osco Drug which is a Midwestern chain pharmacy, and
(20:54):
their fundamental insight was that they have a lot of
customers at the pharmacy who so buy a lot of
beauty products there, but then also buy a lot of
high end beauty products. So what if we made a
beauty retailer that carried low end, middle range and high
end stuff and people could you know, come and get
it all at the same place in a convenient shopping
(21:15):
center location. And the overall sort of value proposition of
alta remains that it's just grown sort of massively and
you can get everything from like a you know, an
eight dollars maybe Lene eyebrow pencil to you know, Chanel
and Prada, perfume. They carry six hundred brands, They carry
over thirty thousand skews products, most of them in store.
(21:37):
They are like the best buy or home depot of
the beauty industry.
Speaker 1 (21:40):
First of all, eleven billion dollars a year in revenue.
Speaker 9 (21:43):
This is a big and that's like a huge growth
trajectory over even recent years. In twenty nineteen they brought
in about six billion dollars of revenue.
Speaker 3 (21:50):
So what's crazy to me is I feel, like, you know,
I've read a lot of stories over the last five
ten years that are basically about how this model is done,
that big box stores are not good anymore. BusinessWeek has
done stories about best Buy, you know, basically going down
the drain, bed bath and beyond doing not great like
I thought, at least I thought I thought that this
(22:13):
model was dead.
Speaker 1 (22:14):
With the Internet.
Speaker 3 (22:15):
You would never go to like a strip mall and
spend a couple hundred bucks, you know, on products, you
would you would do that on the internet.
Speaker 9 (22:24):
Yeah, in almost every other sector, this model is dead.
Beauty is particularly unique in this way in that it
has in the US it has two sort of thriving,
large scale, multi brand retailers. It has both Alta and Sephora.
They sort of take different views of the beauty industry
and of beauty retail. Sephora is very like mall based.
It is smaller in footprint. They only carry high end products.
Speaker 2 (22:47):
Very cool too.
Speaker 4 (22:48):
Like the vibe of a Sephora is it's kind of
cool and there's loud music, and the people are chic
and yeah.
Speaker 9 (22:54):
Yeah, and it's very slick like it's it's it's sort
of like a candy store, whereas Alta is more of
a utilitarian a drug store.
Speaker 1 (23:02):
Yeah.
Speaker 9 (23:02):
I can't tell you how many times the executives that
I spoke with for this story said that they their
priority is to be welcoming and inclusive and to have
a little bit of something for everybody and to serve
everybody's needs and whatever those needs are in the you know,
full spectrum. And the beauty industry in particular is like
a very segmented, very sort of like branding driven industry
because a lot of these products aren't like that different.
(23:24):
There's like only so many you know, chemical cosmetic, you
know advances.
Speaker 2 (23:30):
Every every year, stick foundation.
Speaker 9 (23:32):
Yeah, so you get a lot of like similar products
across brands, across price points. And in order to compel
somebody to buy a forty two dollars Chanel liip gloss
when a ten dollars elf flipgloss sort of does the
same thing to your lips, you have to give them
an environment, You have to give them a feeling. You
have to give them, you know, sort of a sales pitch,
and that traditionally doesn't work really well when all of
that stuff is under the same roof and you can
(23:53):
like swipe them both on the back of your hand
and see that they're like very similar.
Speaker 2 (23:56):
But alta, their theory was like, actually you can do that.
Speaker 1 (24:00):
It's fine.
Speaker 9 (24:00):
Like consumers understand that, like there might not be like
a ton of difference in these two products, but they
want the Chanel version because it has the cool packaging,
because it feels cool to buy something from Chanel, And
the existence of that Chanel lip gloss in the same
place that they buy Sarah V body wash for nine
dollars is not like one does not damage the other.
In fact, it's great that they're both together, because you
(24:21):
might come in for that lip gloss and then be like, oh,
I need some shower gel. And they put themselves in
these shopping centers that are sort of unglamorous, you know.
I went to one in New Jersey that was next
to a Pet Smart and a Marshal's and like across
the parking lot from a Walmart, in places that people go,
like on the way to work on their lunch break,
things like that.
Speaker 3 (24:37):
I do wonder, to Stacy's point about Sephora, if part
of what makes the company smart is that Sephora is
too cool for people, or too young or something. Maybe
only because I'm a parent of a tween, like now,
I think of Sephora as like basically a brand for
twelve year olds, as a store for twelve year olds,
and I realize it isn't exclusively that, although maybe there's
(24:59):
something more well welcoming about a home depot like environment
versus a place that's trying super hard. Yeah.
Speaker 9 (25:05):
Sephora, which is owned by LVMH, which is of course
a huge French luxury conglomerate, takes itself a little bit
more seriously. They tend to be in higher end malls
or like very pricey sort of like flagship real estate
in city shopping districts. They carry mostly more expensive products,
a smaller assortment.
Speaker 2 (25:24):
The aisles are a little bit tighter.
Speaker 9 (25:26):
You know, you're going to get sort of bugged a
little bit more by the people who work there.
Speaker 2 (25:30):
It is just like a different feeling. Well, I think too.
Speaker 4 (25:32):
Like to Max's point about the big box stores, one
of the differences in beauty is that that is a
product you want to try, yes, and also it's not
only that you want to try it, but it's that
there's something kind of nice about those being in those
stores and trying products on.
Speaker 2 (25:49):
It feels maybe a little self carry or something like that.
Speaker 9 (25:52):
Yeah, I think that first beauty is an in person business.
Alta has a huge, you know, internet presence, so does Sephora,
but eighty percent of Alta's purchases still like originate in stores.
It's people walking in. It's not somebody ordering online and
picking up in store. It is eighty percent it's people
walking in, buying something, walking out. And that's because, like
you said, beauty is just like a very tactile, very
(26:13):
like in person industry. Like you want to be able
to see how the eyeshadow palette shimmers, You want to
be able to see if this new color of foundation
actually matches your skin. I think for a lot of people,
beauty and beauty products feel like possibility. You might be
like one product away from like your new self, which is,
you know, a marketing gambit that the beauty industry loves.
(26:35):
But also like it really does feel that way to
a lot of people, and which makes it. You know,
if you're going into pet Smart to get cat food
or to buy there's snow or something like that, that's
not that fun. But if there's an altar right next
to it, maybe go over there and see if they
got a you know, something new that you might like.
See if they've got the new Mescira that you read
about or saw on TikTok or something like that.
Speaker 4 (26:56):
Yeah, I think the CEO of Revlon at one point
said we we don't sell makeup, We sell hope. One
of the things that came up in this beauty issue,
it's it's BusinessWeek's beauty issue, is the fact that that
makeup's actually doing really well at this moment that a
lot of other parts of the economy are not.
Speaker 2 (27:11):
Is that maybe part of why.
Speaker 9 (27:13):
Yeah, I think we're in like a sort of odd
economic space right now, and we've been there before, we'll
be there again, and throughout these times, the beauty industry
tends to thrive. It's you know, it's what is called
the lipstick effect. So retailers like Alta, I think, really
have an advantage during these periods because they are places
where people go to like have a little bit of fun,
(27:34):
to buy a little something that feels special, that feels
like they're not going to have to like sacrifice other
things in life to get it.
Speaker 3 (27:39):
So I feel like that concept will not surprise people.
The ultimate example of the lipstick effect the pandemic when
all sorts of products like this say, of course, not
just beauty products.
Speaker 1 (27:50):
But like we had a whole you know, yolo buying.
Speaker 2 (27:52):
And you know, also we were all on zooms.
Speaker 9 (27:54):
I feel like a lot of people got on TikTok
for the first time and started seeing TikTok is huge
for beauty.
Speaker 3 (28:00):
ALTA sales have nearly doubled since before the pandemic. If
you look at there's a chart with the growth like
it is crazy, like twenty twenty one, twenty two, twenty three,
twenty four, it really grew quickly, but growth has kind
of leveled off, and like, it does seem like the
industry while when you're reporting the story they told you, like,
we're not seeing sales fall off, We're not seeing like
(28:22):
economic uncertainty impact ALTA, it does seem like the industry
as a whole is kind of not as hot as
it was, you know, during those those go go pandemic years.
Speaker 9 (28:32):
Yeah, there was this burst of activity over the course
of a few years. There was a lot of pent
up demand from higher income consumers who had been sort
of stuck at home, not traveling, not going out to dinner,
not doing all these things that they might otherwise spend
their money on working from home, and then they suddenly
went back to being perceived by other people in like,
you know, real life.
Speaker 2 (28:52):
It was a rough transition.
Speaker 9 (28:53):
Yeah, and you know, there's a lot of things that
happened in those few years, like a lot of people
got botox for the first time. There was like a
surgeon like MEDSPA sales, there was a lot of inquiries
to plastic surgeons, and the beauty industry in general just
sort of really really boomed across retailers, across brands, across countries.
Speaker 1 (29:12):
That growth has.
Speaker 9 (29:13):
Slowed down a little bit, like obviously there's no more
pent up demand, but it continues to grow. I think
the growth estimates right now annually for the next five
years or between three and a half to five percent.
Before this year the estimate was like more like seven percent,
I think. So it's still growing, but it's not growing
quite as much. Alta is still growing though they had
(29:33):
been flat for a little while, but in January they
brought in a new CEO, Keisha Steelman, who had been
their chief operations officer previously, and she for the past
two quarters has beaten Wall Street expectations. The company is
expanding overseas. They opened a store in Kuwait recently, a
store in Mexico before that. The Middle East and Latin
(29:54):
America are huge emphasis for them in the next couple
of years, and they also added an online marketplace, which
is the same type of business model that allowed Amazon
in Walmart to sort of scale up their e commerce
very quickly for you know, low overhead. What they're doing
differently is they're vetting beauty brands that are sort of
coming into their marketplace and listing their own things. But
(30:16):
it means that they, you know, if a hot new
brand shows up on TikTok, they don't have to like
send their buyers out to that team and try to
buy inventory and compete against other people for inventory. They
can say to this brand, hey, put your stuff on
our website. You can fulfill it directly, and then they
get a bunch of data about like who they actually
should bring into the store. So they've they've found a
couple of like creative ways in a relatively short period
(30:38):
of time to find additional white space where it seemed
like there.
Speaker 1 (30:41):
Might not be any one thing.
Speaker 3 (30:42):
I was wondering as you've been talking, you've written a
lot about the drug store business. Obviously, like these the
founders of this company came from drug stores. It sells
a lot of same products that are available in drug stores,
and like one of the things you've talked about, you've
written about a lot is the way that drug stores
have basically repay held their customers, like set up all
of these systems and policies that basically make them miserable
(31:06):
to shop, and the most famous one being the locking
up of everything, including some very inexpensive items.
Speaker 1 (31:13):
So my first question is, yeah, did they lock anything
up at these stores?
Speaker 3 (31:16):
I assume they have to because it seems like every
retailer does that And second, are there lessons here for
for other struggling retailers.
Speaker 9 (31:24):
Yeah, it's some Also locations there are locked perfume displays.
Perfume in in particular is like a it's easy to
resell online and it's like very it's it's small form factor,
high price tag.
Speaker 2 (31:37):
So like anything like that is always a shoplifting target.
Speaker 9 (31:40):
So some stores do have locked perfume displays, they still
have the testers out where you can try them.
Speaker 4 (31:45):
That way, they have you know the step yes, yeah,
they're basically like.
Speaker 2 (31:53):
Yeah, the retractable leash.
Speaker 5 (31:55):
Yeah.
Speaker 3 (31:55):
Yeah.
Speaker 9 (31:56):
They find ways to do it that sort of like
don't harm your experience as like somebody who wants to
touch things and smell things and experience things before you
buy them. And I think you know alta and Sephora
both do this well, but it's they staff their stores.
If you need something, if you have a question, if
you need a recommendation, if you need somebody with keys,
there's a lot of people around who can do that
for you. And Alta also they have tried a lot
(32:19):
of different things in their stores as far as like
services and events go, and I think that that sort
of engages people in like a quite positive way that
makes people want to go into a store, gets people
familiar with a store near them. Like the store that
I visited in New Jersey to talk to some Alta customers,
there was a flyer on the door for a masterclass
in figuring out how to blow your hair out in
(32:41):
the same way that Sabrina Carpenter does. You could go
in and also would have their hairstylists like show you
how to recreate Sabrina Carpenter's hairstyle with the products that
she endorses from Redkin, which they can carry in their
store because they have a functioning salon in almost all
of their locations, which means that they can carry a
lot of hair pops that only distribute through salon businesses.
(33:03):
So you know, there's like a real experiential element of
what Alta offers to people that I think other retailers,
you know, whether it's just like staffing the stores well
so people feel like they're getting an added value for
going in, or like you know, having events, having services.
They do a really good job of making it worthwhile
to come in.
Speaker 3 (33:22):
Amanda, that was awesome. Everyone should check out the article,
but you need to stick around, and we are going
to talk about our underrated stories this week. Okay, listeners,
I have great news for you, which is that we
are trying a new ender this week, which is that
there are going to be two underrated stories instead of one.
Speaker 2 (33:42):
Yes, you can email in to say whose was better.
Speaker 3 (33:46):
Everybody's at Bloomberg got net all right, So I'm going
to tell you mine.
Speaker 1 (33:50):
Stacey, Okay, you can give me yours. But and Amanda,
I want you to weigh in.
Speaker 3 (33:54):
I assume that both of you are familiar with X,
the everything app X Twitter. Yes, you know a lot
of people feel like it has not really been the
same since Elon Musk bought it. Usage has gone down.
I'd say there are a lot of bots, a lot
of bots. The value has gone down except as an
AI thing. But but I want to present a sort
(34:15):
of like a counterpoint, which is that there was an
amazing literary feud playing out on X the everything app
over the weekend that I think is the underrated story.
Speaker 1 (34:26):
A man I think already knows what it is.
Speaker 3 (34:28):
It is Joyce Carol Oates, the one of the great
living American fiction writers, beefing in public with Elon Musk,
the owner of X, and I gotta say it was
so funny.
Speaker 1 (34:42):
You're already laughing, so I think you know.
Speaker 3 (34:43):
But for anyone who doesn't, Joyce Carol Oates wrote kind
of a lengthy message basically suggesting that Musk was not
touching grass enough. So curious that such a wealthy man
never posted that's like it is one, which I I
think is why it kind of cut to the bone
a little bit. What did she write, I'll read a
(35:04):
little excerpt. So curious that such a wealthy man never
posts anything that indicates that he enjoys or is even
aware of what virtually everyone appreciates scenes from nature, pet
dogg or cat, praise for a movie, music, a book,
a preend.
Speaker 1 (35:17):
But doubt he reads.
Speaker 3 (35:19):
Yeah, okay, so here's what makes this funny is that
Musk of course, Musk reads his mentions, as I think
anyone has following for a long time knows, he was
on top of this, and he responded, Oats is a
liar and delights in being mean.
Speaker 1 (35:33):
That's not a good human. And then he wrote, eating
a bag of sawdust.
Speaker 3 (35:37):
Would be vastly more enjoyable than reading the laboriously pretentious
drivell of Ootes. That sounds like Grock helped him.
Speaker 4 (35:43):
With that one, But muriously pretentious Drivell is a laboriously
pretentious sentence.
Speaker 3 (35:48):
Okay, so this would be kind of a lame feud,
I would argue, But what happened next was the best.
Is because he spent the weekend basically talking about his
favorite movies.
Speaker 1 (35:57):
So he likes Man on Fire, he likes the fifth element.
It's like where I am from.
Speaker 2 (36:04):
The phrase for this would be hit Dog's holler.
Speaker 9 (36:09):
Means you know, she clearly got him a little bit
in a way that he had to that clearly evoked
something in him. And I mean Joyce Carol Oates. I
am a fan of her entire posting catalog.
Speaker 3 (36:22):
She is.
Speaker 9 (36:22):
She has put out some incredible bangers on X the
Everything app over the years, but this one was just
like it clearly unnerved him in a way that that
not everything does.
Speaker 2 (36:33):
It's such a simple point to make.
Speaker 4 (36:35):
It's like this, do you like anything, like you're always
like yelling at the moon.
Speaker 2 (36:40):
Go get a n ice cream cone with one of
your thirteen children.
Speaker 9 (36:44):
Yeah, watch Monday night football.
Speaker 2 (36:45):
See how it feels.
Speaker 1 (36:46):
Yes, he does every now and then post some preference.
Speaker 2 (36:50):
But I feel like you watch you watched, like is
this true?
Speaker 1 (36:56):
I'd say She's mostly right.
Speaker 3 (36:57):
He does every now and then express preference, but it
has the quality of Rob Low in the NFL hat
like a kind of a forced I am doing this
because you know, somebody involved in advertising told me or
there's been so much Nazi content this week that I
kind of just like need to balance the scales a
little bit or whatever. So so, Yeah, but I think
(37:18):
it is nice that he took the note to me.
This kind of redeems X a little, like the fact
that we're still getting a high quality like celebrity beef
billionaire v big time ninety five year old eighty seven
year old authors in her ninety spending her twilight years
beefing on X, like you gotta say, like we are he's.
Speaker 2 (37:41):
A little bit changed.
Speaker 4 (37:43):
Mane x is alive, like maybe his life got a
little bit better because of Twitter, And there aren't many
people who can say that.
Speaker 1 (37:51):
All right, what's yours, Stacy?
Speaker 2 (37:52):
Okay? Mine is is sad? It's an ending? Which is this?
I can already tell Max is gonna irritated by this?
This week.
Speaker 4 (38:04):
I'm guessing this week the last penny was minted. Oh no, right,
the pennies like the oldest form of currency that has
been around since the seventeen hundreds, in in its kind
of current form, and that shaped our culture in many ways,
Like I put in my two cents or all this stuff,
(38:24):
and now no more pennies?
Speaker 9 (38:27):
Yeah, what are kids gonna put in those machines and
smash in like the the gift shops at rural tourist attractions?
Yeah exactly, Yeah, yeah, Like I still I'm pretty sure
somewhere in my childhood bedroom at home, mom will have
to weigh in. I probably have like a tallula gorge
like smashed penny that came out of one of those machines.
Are what are the kids gonna smash?
Speaker 3 (38:47):
Now?
Speaker 2 (38:48):
Now it's nickels, which is inflation.
Speaker 3 (38:50):
Well, I am not upset about this daste. I'm not mad,
but I do as someone who is excited about when
our politics get gets weird, I am happy that this
one thing has happened.
Speaker 2 (39:04):
And the penny.
Speaker 3 (39:05):
That period during the early part of the Trump administration
when they were like, we're gonna get rid of the penny,
We're gonna get rid of daylight saving time, we're like
the get weird period of the Trump beginning of the
Trump presidency.
Speaker 1 (39:15):
I don't know, I'm kind of like I'm into it.
Speaker 2 (39:16):
I feel like, okay, you're accomplishing, like.
Speaker 1 (39:18):
Pick, yeah, this is promise, has made promises.
Speaker 2 (39:22):
They're in their bag right now with like this, specifically
with the penny.
Speaker 4 (39:25):
I mean, the penny costs more than a cent to make,
so there's an economic case for it. But the nickel,
and I believe the dime also costs more, which it
just does push the price of things up.
Speaker 3 (39:38):
No one carries around change. It's annoying. It just it
just piles up in your jar. They should get rid
of it.
Speaker 4 (39:43):
I will have you know that I was recently at
the Money Museum in Saint Louis and I purchased They
have a lot of penny jewelry for sale, which is
very reasonably priced, and I purchased a pair of Penny
earrings that are pretty fetching.
Speaker 2 (39:58):
I'll wear them next week.
Speaker 1 (40:00):
Okay, Amanda, you heard the two underrated stories. Which do
you like best?
Speaker 9 (40:04):
You know, as like a longtime fan of belligerent posting,
I have to sign.
Speaker 2 (40:11):
Hundreds of years of history.
Speaker 9 (40:13):
Well, Joyce Carol Oates is like eighty seven years of
history and she's still a national treasure. She's still out
here creating value for the public.
Speaker 3 (40:23):
Listeners, tell us which story you like the best? Team
Penny have a favorite coin that's not the Penny home. Yeah,
let us know which one was best.
Speaker 2 (40:34):
But we I think we Penny for the old guy.
Speaker 1 (40:37):
Amanda Mall, thanks for being here. Thank you so much
for having me.
Speaker 2 (40:45):
This show is produced by Stacy Wong.
Speaker 4 (40:47):
Magnus Hendrickson is our supervising producer, and Amy Kean is
our executive producer. Sam Rogic handle's engineering and Dave Purcell
fact checks, Sage Bawman heads Bloomberg Podcast Special thanks to
Jeff Muscus, Julia Rubin, and Link. If you have a minute,
please rate and review the show. It means a lot
to us. And if you have a story that should
be our business. Send us an email. Everybody's at Bloomberg
dot net. That is, everybody's with an us at Bloomberg
(41:10):
dot net.
Speaker 1 (41:11):
Yeah, you gotta tell us. Video games, perfume?
Speaker 4 (41:15):
What is?
Speaker 7 (41:15):
Yeah?
Speaker 2 (41:15):
Max wants to know, and so do. I thank you
for listening and see you next week.
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