“Disruption is something our industry knows quite a lot about, I’ve been speaking about it for several years, even before the pandemic,” said Larissa Jensen, The NPD Group’s vice president of beauty, at the Beauty CEO Summit.
“The difference today is that disruptors are now constant: supply chain, employee retention, economic uncertainties, things that all used to be speed bumps are now permanent fixtures,” she said.
Jensen said the pendulum was swinging back to physical retail, with roughly 70 percent of prestige beauty sales globally happening in a physical store. “Consumers have an emotional attachment to what they’re putting on their face and body,” she said. “Depending on which age and whatever country, there’s a greater share of sales to the brick-and-mortar space.”
Beauty is also outperforming other industries in retail, growing at “two to three times the rate” of other categories, Jensen said.
Europe’s growth is driven largely by Spain, while lockdowns hampered growth in larger economies such as Germany, the U.K. and France. China’s growth has also slowed down. “The consumer base purchasing prestige beauty in China tends to have higher income, but we are starting to see a slowdown in the economy there,” Jensen said.
From a category perspective, makeup is on the rebound, while hair care and fragrance are also posting strong numbers. “Last year, designer brands, which have a 75 percent higher price point, were the fastest-growing brand type within makeup,” Jensen said, noting that skin care was softening in the U.S. and U.K.
Skin care in China paints a different story, though. “For China, three words: it’s about skin care, it’s about digital and it’s about travel retail,” Jensen said. “Skin care is the dominant category, but it’s also growing share and getting even more important.
“A lot of this is driven by functional beauty,” Jensen continued. “It’s ingredients, benefit-driven ingredient stories within skin care, and then digital, as well as live streaming.”
The top three benefits for Chinese consumers are moisturizing, brightening and antiaging, Jensen said.
In the U.S., economic uncertainties have yet to hinder growth in prestige. Jensen predicted that sales would grow 8 percent in 2022. “We have not felt the economic pressures in the market yet. A large part of that is because our consumer, the higher income consumer, makes up a bigger portion of our shopper base,” she said.
Makeup sales haven’t shot up in the U.K., Jensen said, noting the market’s growth would likely reach midsingle digits in 2022. Store closures also played a role.
The trend toward wellness will also drive growth across categories, Jensen said. “We’re seeing a rise in what we’re calling the Beauty Index. We all know the lipstick index, but the beauty index allows business to be driven by this redefinition of wellness. Wellness used to be very much so about physical wellness, and now it’s about mental wellness,” she continued. “There’s very few industries other than ours that you really see consumers’ emotional need for our products.”
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