Despite US consumer sentiment hitting an all-time low in May, according to one closely-watched report, a niche retail sector is expanding in and around New York City: candy stores. US retail sales still grew 4.9% in April from the same month last year, reported BBC Business, but the candy category is outpacing broader trends by tapping into the so-called lipstick effect.
The Lipstick Effect in Confectionery
Mitchell Cohen, third-generation owner of Economy Candy on Manhattan's Lower East Side, has a theory rooted in history. "The dollar isn't going as far these days," he told BBC Business. "Inflation, uncertainty, all that, but there's always candy." Economy Candy, the oldest sweet shop in New York, opened in 1937 near the end of the Great Depression as a hat and shoe repair store that sold candies from a cart out front. When repairs dried up, Cohen's grandfather pivoted entirely to sweets. That strategy is still working 89 years later.
Kate Bolger, a former movie producer, is opening The Village Confectionery next month in Sleepy Hollow, New York, 28 miles north of the city. "Everyone can partake," she said, noting candy's low price point. Bolger explicitly cited the lipstick effect theory popularised in the early 2000s, in which consumers who cannot afford big-ticket items buy small luxuries instead.
International Expansion: Swedish Candy Chains Enter US Market
Two Swedish confectionery chains are betting on the same trend. BonBon, founded in 2018 by three Swedish expats, now operates five shops across Manhattan and Brooklyn, plus a Hamptons location that opened last summer. BonBon imports its product range from Sweden, where strict rules mandate all-natural ingredients—a factor that has boosted global popularity via social media.
Co-founder Leo Schaltz said the company deliberately avoids main avenues. "You wouldn't want to be on Broadway," he explained. Instead, BonBon chooses side streets with lower rents and small units: "You don't want to overpay for rent, and it's easier to make a space feel cozy when it's smaller." Another differentiator is staff uniforms inspired by a Stockholm restaurant. This summer, BonBon is due to open a branch in Greenwich, Connecticut.
Candy King, a Swedish sweet shop chain, opened its first US outlet in Manhattan last December, further increasing competition.
Upcoming Openings and Local Entrepreneurship
In Brooklyn, Cat Cirino launched her sweet shop Candor Candy's, adding another local player to the mix. The expansion is not limited to urban centres: Bolger's Village Confectionery targets the Hudson Valley town of Sleepy Hollow, known as the setting of The Legend of Sleepy Hollow.
| Store | Location(s) | Key Feature |
|---|---|---|
| Economy Candy | Lower East Side, Manhattan | Oldest sweet shop, opened 1937, family-run |
| BonBon | Manhattan, Brooklyn, Hamptons; Greenwich opening summer 2026 | Swedish imports, all-natural, side-street locations |
| Candy King | Manhattan (first US outlet) | Swedish chain, opened Dec 2025 |
| The Village Confectionery | Sleepy Hollow, NY | Opens June 2026, former movie producer owner |
| Candor Candy's | Brooklyn | Local entrepreneur |
Strategic Implications for Retail Investors
The candy-store expansion highlights a counter-cyclical opportunity in retail. With consumer sentiment at historic lows, operators are betting that small indulgences remain resilient. For investors and corporate strategists, the trend shows that niche retail with low price points can thrive even as broader discretionary spending weakens. The lipstick effect, often observed in cosmetics, may be extending to confectionery, suggesting that affordable luxury goods are a defensive subsector within consumer staples.
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