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Karen Grant’s Five Factors

Karen Grant capped off the Summit with five factors she considers most important for firms to successfully adapt to for the future of beauty.

Karen Grant, vice president and global beauty industry analyst at The NPD Group Inc., capped off the Summit with five factors she considers most important for firms to successfully adapt to for the future of beauty.

The first is technology. “What we are anticipating at NPD is that whatever share the Internet has right now…that there will be a threefold increase within the next three years.” On the product side, the impact of technology is already evident: In facial skin care, 37 percent of women are already researching their skin care products online; in fragrance, the number of women who purchase fragrance on the Internet is already equal to half the number of women who are purchasing their scents in mass or in prestige department stores.

The next factor, she said, is natural. “It is a reaction to the dislocation of plastic and synthetics and to a more sensorial engagement, particularly among the younger age group.” Grant pointed to product categories, such as doctor brands in facial skin care, that have fallen off the trend wagon and have been replaced by natural ingredients. In makeup, for example, more than half of women said the second most important reason behind matching their skin tone is using safe ingredients.

A third factor is in blending, or convergence, with brick and mortars and dot-coms becoming just one channel.

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“We’re seeing this blending also across product classifications, where the consumer is driving the demand in how a product is used, and they don’t frankly care what you tell them it is, they are going to use it how they feel it needs to work for them. Like in makeup: There is an evolution of skin-care-infused applications, blurring the definition of what is makeup or skin care.”

Value is a fourth factor, with consumers looking to pay the best price for a product but also buying the best product for the price. Despite the fact that the fragrance industry was recently in decline, Grant said that premium niche fragrances continued to grow. “Today, they capture over one-third of the prestige fragrance market, up from just one-fourth of the fragrance market last year.” In make up, luxury lip color, which has been in double-digit declines, is now selling at three times the average price across prestige brands.

The fifth factor is share. “The most dynamic activity is in the smaller channels,” Grant concludes, such as in dermatologist offices, independent spas, natural chains and beauty supply stores. And, as the ethnic complexion of the country continues to emerge and evolve, alternative channels may become even more important.