The University of Michigan’s consumer sentiment index registered 49.8 in May, a record low for the closely watched measure of household confidence. At the same time, official data show retail sales grew 4.9% in April from a year earlier, a sign that consumers are still spending – but on smaller, more affordable items.
Mitchell Cohen, the third-generation owner of Economy Candy on Manhattan’s Lower East Side, has a theory about the apparent disconnect. “The dollar isn’t going as far these days,” he said. “Inflation, uncertainty, all that, but there’s always candy.”
Economy Candy, which claims to be the oldest sweet shop in New York, first opened in 1937, near the end of the Great Depression. According to Cohen, the business began as a hat and shoe repair store with candies sold from a cart out front as an extra earning stream. When people could not afford repairs, his grandfather shifted entirely to the affordable treats. Eighty-nine years later, the store is still running.
Kate Bolger, a former movie producer, is set to open The Village Confectionery next month in Sleepy Hollow, a Hudson Valley town 28 miles north of New York City. “Everyone can partake,” she said, noting that candy’s low price point makes it accessible even when households feel the economic pinch. She described the trend as an extension of the “lipstick effect” – the economic theory popularized in the early 2000s in which consumers unable to afford big-ticket items buy small luxuries instead.
BonBon, an upmarket candy company founded in 2018 by three Swedish expats, now operates five shops across Manhattan and Brooklyn, plus a location in the Hamptons that opened last summer. Co-founder Leo Schaltz said the company avoids main avenues like Broadway to keep rents low. “You wouldn’t want to be on Broadway,” he said. “You don’t want to overpay for rent, and it’s easier to make a space feel cozy when it’s smaller.” BonBon focuses on small, quirky details, including staff uniforms inspired by a Stockholm restaurant. This summer it plans to open a branch in Greenwich, Connecticut.
Swedish sweet shop chain Candy King opened its first US outlet in Manhattan last December, further expanding the niche.
In Brooklyn’s Fort Greene neighborhood, Cat Cirino launched Candor Candy’s in March. To boost revenues, she also sells pantry items such as granola, rice, soft drinks, and beef jerky from independent producers. She cited the advantages of candy as a product: long shelf life, no refrigeration needed, and a pick-and-mix model that shifts labor to the customer.
Despite the rosy picture for retailers, wholesale costs are rising. Cohen said that tariffs imposed by President Trump on numerous countries and higher global transport costs – driven by fuel price increases tied to the US-Israeli conflict with Iran – have pushed up his wholesale prices. He noted that a Hershey chocolate bar that cost his shop about 62 cents before the pandemic now costs more than a dollar. One of his UK suppliers, he added, simply stopped shipping to the US after losing too much money in customs.
Cohen said he has absorbed most of the cost increases, and his sales are up. “A little candy goes a long way,” he said.