Market Overview

Are You a Perfect 10 or an Ugly 1?

A new survey reveals how many people think they are drop-dead gorgeous.

Mandala Research and LivingSocial recently teamed up to conduct a survey asking how Americans rate their looks. Of the more than 4,000 respondents, Mandala Research found that, on a scale of 1 to 10, roughly one in three (32%) rated themselves as being an 8, 9 or 10. More than half of the respondents (56%) said that they deserve at least a 7.

If you're laughing at these results, wait till you hear what these self-loving respondents thought of the people around them. Half of the respondents said that people in their city are overweight. Only 46% of the respondents said that the women in their city are beautiful, and just over one-third (36%) said that the men in their city are handsome.

Amy Wolf, a local trends expert at LivingSocial, was quite clever in her summation of the results:

“Beauty is in the eye of the beholder, apparently, as long as the beholder is looking in a mirror at the time,” Wolf said in today's company release. “When most Americans look at the people around them, however, they are less generous in their assessments. Little surprise that cosmetic procedures and spa treatments have become a personal oasis to escape from the looks-driven arms race around them.”

Indeed, more and more Americans are turning to plastic surgery to improve their looks. These medical procedures are in addition to the buckets of Avon (NYSE: AVP) makeup, the truckloads of Crest Whitestrips from Procter & Gamble Co. (NYSE: PG), and the endless supply of push-up bras from Victoria's Secret (NYSE: LTD) that are sold every year, all in an effort to improve their appearance. (Or, if nothing else, to draw attention to more appealing parts of the human body.)

Men are becoming increasingly concerned with their appearance as well, though women still lead the charge in boosting the bottom line of Inter Parfums (NASDAQ: IPAR) and other fragrance companies.

Going forward, the trend in appearance improvement is sure to continue. But with fast food companies like McDonald's (NYSE: MCD) as big as ever, will the gap between beauty and obesity continue to widen?

Statistically, local and national news agencies love to tell us about the top 10 fattest states and cities each year. They love to paint America – and so many other nations – as a bastion of overeating slobs.

These reports are not wrong, per se. Part of what they say is true: as a nation, we consume too many fatty foods. While companies like Chipotle (NYSE: CMG) promote healthier options, there are many people who don't seem to care. At the same time, Wendy's (NYSE: WEN) might think that its “You Know When It's Real” slogan is an effective way to distance itself from the supposedly “fake” food that other fast food companies produce. But at the end of the day, people are most intrigued by how food looks, not where it comes from or how it actually tastes.

For a little history on how easy it is to skew human perceptions, you don't need to look any further than this stellar piece from the Wall Street Journal. In the story, the Journal discusses how Coca-Cola's (NYSE: KO) white Christmas cans caused a flurry of taste bud problems.

Appearances are a funny thing, however. The “look” of tasty food is as skewed as the aesthetics of other humans. And as we are all aware, beauty is in the eye of the beholder.

But beauty can be even more complex than that. Bob (a guy I'm making up for this story) could be in a room with several hundred people that he does not find attractive. But if you add a few beautiful women to the mix, their memory will outweigh the memory of those who were, um, overweight. When Bob recalls the moment, he is less likely to tell his friend about the room full of uglies and will (presumably) talk about the women who caught his attention. He might even go as far as to say that the room was full of beautiful women, completely disregarding the depressing fact that it wasn't.

The same could be true for the college girl who noticed a group of jocks at a bar, which made it easier for her to ignore the dozens of nerds talking about how Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) are going to take over the world.

If this scenario were displayed in a movie (or Cosmopolitan Magazine), it would be great for any corporation in the business of making people look better. No one wants to be viewed as the ugly or nerdy person in the crowd. And while most people may indeed think of themselves as a 7, 8, 9 or 10 when questioned in a poll, sales of cosmetics and other beauty-enhancing items prove that people aren't as confident as they appear. After all – it's not as if people shop at American Eagle (NYSE: AEO) and Abercrombie & Fitch (NYSE: ANF) because they love the clothing. They shop at those retailers because their clothes are perceived to be cool. According to human logic, wearing cool clothes can make you cool.

Thus, humans will continue to follow trends, regardless of how silly it actually makes them look.

Follow me @LouisBedigian


ACTION-ITEMS:

Bullish:


People might think they look good, but to ensure that they actually look good, they will continue to spend their money on the following:

  • Cosmetics companies like Estee Lauder (NYSE: EL) and Avon could provide an interesting opportunity to cash in on consumers who want to ensure they really are a 10.
  • Conglomerates like Procter & Gamble (which owns the skin care line Olay, among other vanity companies) could provide further value.
  • People don't shop at American Eagle, Abercrombie & Fitch, Ralph Lauren (NYSE: RL), and Aeropostale (NYSE: ARO) because the clothes are comfortable. (That's what the Gap-owned (NYSE: GPS) Old Navy is for.) They shop at those stores – and pay their high prices – because consumers will do anything to look good.
  • They will also do anything to feel good. If you're a meat lover, what could feel better than devouring a couple of McRib sandwiches from McDonald's? A dozen Dunkin' Donuts (NASDAQ: DNKN), perhaps? Maybe you'd prefer a grilled cheese sandwich made with real American Kraft (NYSE: KFT) cheese?
Bearish:

Fast food and vanity products seem to be at odds with each other, but there are a few alternative options for those looking to sway entirely in the direction of feel-good food:

  • Yum! Brands (NYSE: YUM) may not be “feel-good” food (not if you're ordering Taco Bell, at least), but people love the taste of Yum!'s cheap restaurant chains, which include KFC and Pizza Hut.
  • If you're interested in Yum! Brands, you might want to take a look at Kimberly-Clark (NYSE: KMB), which manufactures Depend adult diapers and Cottonelle toilet paper.
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