When it comes to beauty brands, Millennials want value, but not at the expense of quality.
Despite some certain perceptions in the market, this generation likes high-end brands, said Olivia Tong, research analyst and director of U.S. cosmetics, household and personal care at Bank of America Merrill Lynch, who conducted a survey of Millennials to gauge their most favored cosmetics and beauty brands.
“Estée Lauder’s Clinique and MAC were two of the top five most-cited brands, highest in prestige, and many respondents expressed a desire to buy more or plans to increase their purchases of these brands as their disposable income rises, suggesting stronger demand at least for Clinique than we (and likely investors) had anticipated,” Tong said in the report.
“The results of the survey is fascinating in the sense that prestige did so well,” Tong told WWD. “It shows that although Millennials have limited purchasing power, they are willing to spend more on [certain brands].”
Topping the list is Procter & Gamble’s Cover Girl brand and L’Oréal’s Maybelline. Tong’s report includes 160 brands. She noted that Coty Inc.’s OPI was ranked highest in the nail segment. Johnson & Johnson’s Neutrogena was highest in skin care, while Mary Kay was the most favored direct-selling brand.
The survey involved 1,000 Millennial women, aged 18 to 29, and the results included a chance for participants to express the key reasons that inform their purchasing decisions. Eighty percent of those polled said “value” and “product quality” were the most important factors. “When asked to write in other drivers not mentioned, naturals/organics came up most frequently,” Tong said. “Many brands were named, but Burt’s Bees and Origins were the two most cited.”
Regarding where they shop, Tong said 40 percent of the respondents “noted that they frequently or almost always shop at mass merchant stores like Target, Wal-Mart, CVS and Walgreens. Multibrand beauty stores like Sephora, Ulta, Blue Mercury and Sally Beauty ranked second, with 30 percent of respondents noting they frequently or almost always shop in these stores.”
The survey also revealed some behavorial traits of Millennials. Half of the respondents said, for example, that they own more than eight bottles of nail polish and 33 percent said they are DIY polishers and forego salons. When it comes to fragrances, 35 percent said they use perfume every day with 42 percent owning one to two bottles. Tong said it’s a cost thing. She noted that nail polish is cheaper by the bottle compared with fragrances so it is no surprise Millennials own more polish.
Millennials are also big users of antiaging creams and lotions, with 40 percent saying they are either currently using or plan on using these products soon.
Across product segments, color and options were preferred, the survey showed. But the value proposition topped the list. “While we expected value to be particularly important to cash-strapped Millennials, we believe that emphasis on product quality suggests potential for trade-up over time,” Tong said. The notion of trading up as Millennials get older and advance their incomes and careers bodes well for retailers and brands alike. Still, at least one beauty group is already succeeding in wooing these consumers.
“Millennials are fairly limited by price, and by and large do not shop for cosmetics at department stores, particularly those in the luxury channel,” Tong wrote. “Although inherently this should make it more difficult for [Estée Lauder], as its portfolio is 100 percent prestige, the company managed to have four of the top 30 most mentioned brands, and Millennials expressed a desire to trade up with increased purchasing power.”
Tong told WWD that Millennials’ loyalty to Clinique is testimony to Estée Lauder’s efforts to connect with these shoppers. “For these brands to succeed, you have to be in the right channel, and have the right marketing messages and the right price,” Told said. “You really have to work it. You have to be louder and crisper.”