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Stats: The Euro Effect on Prestige Beauty

While U.S. prestige sales outpaced Europe in 2012, the slowdown abroad has implications here.

Appeared In
Special Issue
Beauty Inc issue 04/12/2013

Prestige beauty turned in a stellar performance in the U.S. in 2012, increasing 7 percent to $10.2 billion. Elsewhere, though, as figures provided by The NPD Group show, the picture wasn’t quite as rosy.

This story first appeared in the April 12, 2013 issue of WWD.  Subscribe Today.

“There are two realities,” says NPD’s vice president and global industry analyst, Karen Grant. “The U.S. reality and everyone else.” Although the U.K. had positive results, posting growth of 5 percent, sales in France, Italy and Spain were down. Of course, such figures make sense in light of the economic woes of each country, but their portent hits closer to home. “While we talk about the U.S. doing well, it is a cautionary tale to watch, because we’re beginning to see some slowdown here,” says Grant. “We saw it in the second half and heading into 2013. We’re still positive, but the results in Europe indicate that we might start to feel some of that headwind coming our way. We are going to have to work hard to keep this growth going.”

A category that is particularly challenging in Europe is prestige skin care. While it continues to be vibrant in the U.S., the retail dynamic abroad is very different, where shoppers are opting more for mass market, pharmacy and monobrands such as Caudalie at one end of the spectrum or superluxe at the other, leaving traditional prestige department-store brands challenged. “Prestige brands have a great positioning in the U.S. and the mass market is very different,” says Grant, “but similar dynamics can happen here. Think about the merger between Walgreens and Boots,” she continues. “We can’t think that what happens in Europe can’t happen here. You have to keep fine tuning and recognizing that the competition may be very different going forward.”

Consequently, says Grant, marketers have to be more proactive than ever before if they hope to win in the future. “We have to fight for everything we can get,” says Grant. “We can’t just accept things are challenging and take it lying down. You have to look for opportunity.”