“The world is crazy, I want to feel good.”
That’s the voice of today’s consumer, according to The NPD Group’s global beauty industry analyst Karen Grant. Because beauty is one thing that makes her (and him) feel good on their journeys to self-actualization, sales in the category keep rising — by about $1 billion per year, according to NPD.
Grant revealed her insights for 2017 with a piece of advice — “restructure” — at a CEW event in New York on Jan. 31. Jordan Rost, vice president of consumer insights at Nielsen, and Sarah Jindal, senior innovation and insight analyst for beauty and personal care at Mintel, also highlighted trends turned white spaces, including today’s consumer’s wellness and fitness orientations and the industry’s potential to make body-care products that play into those habits.
All three shined a spotlight on the shift in the industry caused by the rise of indie beauty.
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“Recognize that an A-List brand that you used to think was one of the big guys is now these indie brands,” Grant said. “These little ones are becoming the A-List ones.”
From a sales standpoint, beauty remains a growing category, with prestige up 6 percent and mass market up 2 percent for 2016, according to NPD. For the holiday period in 2016, beauty sales were up 4 percent in December, compared with 8 percent in 2015 and 9 percent in 2014. For the October to December time period, 2016 sales were up 5 percent, versus 7 percent in 2015 and 9 percent in 2015, according to NPD.
Makeup was still the clear winner, making up 76 percent of beauty gains across all markets, Grant said, with prestige cosmetics up 12 percent for the year. “Part of what’s driving makeup right now is the fact that there are so many new shiny objects out there to play with,” she noted. The category has far more launches than prestige skin care, which grew 2 percent, and prestige fragrance, up 1 percent, according to Grant.
While the overall holiday shopping season was overshadowed by previous years, 2016 sales were boosted significantly in one channel — online. According to Grant, makeup was up 36 percent, skin care was up 24 percent and fragrance was up 23 percent. Fragrance has a big opportunity online, Grant added, noting that even though the category didn’t fare well in brick-and-mortar retail, it added $91 million online. “Eighty percent of December’s gains came from the online space,” she said.
The channel plays a role in the rise of indie beauty players, who often connect directly to consumers through digital means.
“At the same time that some of the largest brands in the world in aggregate are not growing, we’re seeing the growth of smaller brands that maybe are a bit more nimble, maybe are a bit more responsive to demands of consumers, certainly are more able to meet consumers where they are,” Rost said. “If we think about these two different worlds — online and offline — separate from one another, we’re really missing the shift where consumers are living online…we’re moving to a world where Alexa decides what we’re going to buy.”
Grant also called out Amazon — noting that while many businesses push back against the idea of Amazon as a prestige beauty business — as the place where consumers are. For shoppers between 18 and 34 years old looking for beauty in the fourth quarter, “Amazon was the winner in bodies,” Grant said.
While online and specialty retailers are the talk of the beauty town, Grant noted the rise of another channel — beauty supply stores — that she noted is also experiencing growth.
Trend-wise, products that fit into the personal identity, healthy-ish lifestyle and past rediscovery, or heritage buckets, will win, according to Grant.
The healthy lifestyle trend in particular gives beauty companies a chance to innovate and drive sales, noted Mintel’s Jindal.
“Athleisure — it’s official, it’s in the dictionary,” Jindal said. “Consumers are out there seeking particular products that really do fit into whatever their lifestyle is that they’re living, rather than trying to shoehorn things in that don’t really make sense for them…pre- and post-workout is another area where we see some great opportunities to create some differentiated products for the active consumer.”
NPD also called out a slew of top 2016 launches at the presentation, including YSL Mon Paris, Chanel No.5 L’Eau and Coach the Fragrance in fragrance. In skin care, Estée Lauder’s Revitalizing Supreme Plus 1.7 Cream was the top launch, and in hair, NPD called out Living Proof Full Dry Volume Blast 7.5 Spray and Rita Hazan Root Concealer Touch Up 2 Spray as successes. In the makeup category, Anastasia Beverly Hills’ Modern Renaissance Eye Shadow Palette was the top seller, followed by Anastasia’s Glow Kit in Ultimate Glow, Urban Decay’s Vice Lipstick, Benefit’s Gimme Brow, Too Faced’s Born This Way Naturally Radiant Concealer and Tarte’s Grav3yardGirl Swamp Queen Eye & Cheek Palette, according to NPD.