Women these days may be passing up a new lipstick in favor of buying a new phone, or dinner with the girls.
This story first appeared in the September 20, 2013 issue of WWD. Subscribe Today.
“The consumer hasn’t stopped spending, there’s just more in her consideration,” said Karen Grant, vice president of The NPD Group. “Prestige [beauty] is just one of her options, there are really exciting things outside of prestige — the mass market is creating more noise — and even outside beauty.”
According to a new NPD prestige beauty report, released Wednesday, overall sales have increased 6 percent in the past 12 months. While this may seem like good news for the beauty industry, Grant said it is actually part of a steady decline in prestige gains since 2011.
“What we have is cross-channel, cross-industry competition,” said Grant, underscoring a caveat in times of economic stability. “When people feel better, they feel better about spending on a lot of things, not just beauty.”
According to Grant, the prestige beauty consumer is being courted by not only by the mass market “upping its game” with more specialized multitasking products, but also by “experience” purchases, including personal electronics, vacations and dining out.
“Customers are spending money on the ‘me-we’ dynamic, which is something for themselves, like an accessory, then something for an experience with friends and family,” said Grant. “Those things are becoming more important to her, they are bringing her joy.”
Based on NPD’s findings, U.S. sales of prestige department-store beauty products — both online and through brick-and-mortar — have grown 6 percent in the 12 months ending August 2013, compared to an increase of 11 percent in the 12 months ending August 2012.
“We had a really robust 2011, a little less growth in 2012 and less in 2013,” said Grant. “The monthly trend has been varied, but overall compared to last year it’s been somewhat of a deceleration, and a steady deceleration from the year before.”
While the prestige beauty industry is still showing gains — led by makeup, a $4 billion market, up 7 percent, and skin care, a $3.6 billion market, up 8 percent for the past year — Grant warns that the pace of growth is declining. To wit, for the prior 12-month period ending August 2012, makeup was up 9 percent, while skin care showed gains of 14 percent, nearly double this year’s number.
When it comes to digital versus in-store sales, Grant said online purchases are clearly the lion’s share. “When we look at the direct-to-consumer — digital and television — that market is far outpacing the overall sales in brick-and-mortar, and we see that continuing through this year,” she said.
Grant said a common thread among the products that are helping to move the needle is innovation, namely offering multiple benefits, as with BB and CC creams.
“There’s a multifunctional component to a lot of these products, whether it’s the alphabet creams — they’ve been called tinted moisturizers on steroids,” said Grant, who also named hydrating lip color and other cosmetics with priming or antiaging properties. Grant also said that both skin care and color cosmetics sets have been driving sales as well, and not only because of value. “The interesting thing about sets, whether its skin care or makeup, is that it’s become about getting a whole look, a smoky eye or something more natural,” she said, naming Urban Decay’s Naked Palette as a top seller. Also, because of a trend toward a simplified, healthy complexion, Grant said products that define the eye are also showing sell-through. “Faces are more perfected, more natural, so an enhanced eye can make your overall look,” said Grant, naming mascara, eye liner, eye shadow and brow products as items helping to drive the color category.
Brands that have been performing, according to Grant, are mostly “artistry brands,” like MAC and Illamasqua, as well as classic names like YSL, Dior and Chanel.
NPD reports that Clinique Chubby sticks continue to be at the top of the color cosmetics list, while the top five skin-care products include Clinique Dramatically Different moisturizer, Clinique Moisture Surge Superdefense CC Cream, Estée Lauder Advanced Night Repair Synchronized Recovery Complex II, Lancôme Renergie Lift Multi Action Reviva Concentrate and La Mer Crème de La Mer World Ocean Day Moisturizer.]
“One product that we are watching is the new Lancôme Dreamtone Ultimate Dark Spot Corrector. It’s a new direction on brightening,” said Grant.
On the fragrance front, Grant said the category, which is a market worth nearly $3 million, is up 3 percent from the same time last year, as compared to 10 percent in 2012. “Fragrance is doing well, just not as [well] as skin care and color,” said Grant, who said she was keeping her eyes on the new One Direction scent, which has just begun rolling out.
According to NPD, four out of five of the top fragrance launches for 2013 were for men. They include Gucci Guilty Black Pour Homme, Polo Red, Chloé See, Givenchy’s Gentleman Only and Dolce & Gabbana The One.
“This spring there was not a lot [of action with] women’s fragrances, it was a little more for men, so there’s not a lot of strong activity yet. We are waiting on the big fall launches. It’s a wait-and-see game for fragrance right now.”