Most Recent Articles In Financial
Latest Financial Articles
- Stocks Fall Ahead of Earnings Results
- Retail Shares in Red at Midday Trading
- Shiseido FY Profit Rises 28.8%
More Articles By
The overall prestige beauty category in U.S. department stores and online, which generated $799 million in sales in February, rose 3 percent for the month, according to the NPD Group. As compared with 2012, skin care, which represents 35 percent of prestige, beauty, grew 4 percent in sales but decreased in overall unit volume. Cosmetics, which accounts for 40 percent of the prestige beauty industry, grew 4 percent, and fragrance, representing 25 percent of the category, showed no change for the month.
“When you have strong [fragrance] launches at the end of the year, you see a lift in [sales in] the beginning of the next year,” said Karen Grant, NPD vice president and global industry analyst. “There wasn’t anything that was so ‘have to have it’ [in Q4], so we aren’t seeing that lift. Designer scents were good, but nothing blew it out of the water.” Grant also said fragrance gift-set sales are down from last year and that individual juices are actually outperforming value kits.
According to Grant, the stage is set for a new fragrance blockbuster. She said that consumers will most likely respond to “high-trust brands,” as well as in-depth marketing and a targeted, multitiered advertising strategy. Generating excitement with a younger clientele, namely a woman in her twenties, is another way to drive sales, she said. “There are so many elements that have to be played with to have a megalaunch,” said Grant. “It’s about hitting at the right time, a certain olfactive trend, or something that people have been reminiscing about. And on the woman’s side it’s a little harder because there are so many options and so many offerings. There is no easy win.”
NPD also reported that year-to-date sales for the year were $1.5 billion, up 15 percent from 2012. Because January 2013 had an extra week, NPD estimated the adjustment as 4 percent growth from the same time last year. “This year we have 53 weeks, and 52 weeks is the [standard] retailer year,” said Grant. “It can make the trends look a little high.”
When it comes to individual categories’ year-to-date sales, skin care grew 16 percent, or 5 percent when adjusted; color cosmetics increased 17 percent, or 5 percent, and fragrance climbed 11 percent, or 1 percent.
“What we are seeing with skin care and color is that sales are being driven by high-priced offerings,” said Grant, naming classics like La Mer, Chanel, Guerlain, Estée Lauder and Lancôme as top performers. “People are choosing to buy the more expensive item, maybe less frequently, but they are making more of an investment, going to the item with a higher price point. This is a trend we have been seeing for years.”
Although not as popular in the fragrance world at the moment, skin-care sets are “the biggest driver in the skin-care area right now,” said Grant, naming the Clarisonic Sonic Skin Care System as a popular multiproduct offering.
Sets are also popular for makeup, Grant said, adding that the business is also being driven by the face, eye and lip categories. “The lip category is the fastest driver, especially with hybrid products which infuse color and another element like a moisturizer,” said Grant. Touching on the alphabet cream trend (namely BB and CC creams), Grant said the segment is growing about 50 percent faster than in 2012 but that the category is still in its infancy. “There are great brands playing in this space and a lot of room for growth,” she said.
When asked her forecast for 2013, Grant is optimistic. “All the economic and outside indictors say we have positive momentum, so why shouldn’t we do better [this year]?” she said. “Hopefully there are now less concerns to weigh us down. The only challenge is when people feel good they want to spend money on other things. We have to make sure they keep spending it in beauty.”