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Nail Brands Evolve as Growth Slows

Whether it is a natural evolution or a way to boost sales, one can only wonder: What happened to the once fast-growing aggressive nail category that was the darling of the industry?

A bevy of nail brands are transforming themselves into color cosmetics players. Whether it is a natural evolution or a way to boost sales, one can only wonder: What happened to the once fast-growing aggressive nail category that was the darling of the industry?

While beauty philosophers are asking whether nail can ever get back to where it was, brands like Ciaté, Smith & Cult and Butter London are staying ahead of the curve and have launched color cosmetics.

“The potential for nail to be a much greater business isn’t really there,” said Sarina Godin, the newly appointed president at Butter London. “It’s still such a small percentage of the total industry. As a nail-only brand, there will be a ceiling that will be hit.”

Although it’s the smallest segment within total cosmetics, prestige nail was the fastest-growing market in the first half of 2012, increasing 68 percent, according to The NPD Group. Sales of color enamel grew 70 percent, nail care grew 36 percent and base and topcoats grew more than 100 percent.

Today is a different story. The total prestige nail market is down 5 percent in the 12 months ending February, driven by a decline in nail color enamel. The NPD Group reported that nail color enamel reached $29.8 million in sales in that period, a 7 percent decline.

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Mintel stated that sales of trend-driven categories such as nail products tend to be cyclical. Teen girls are some of the most involved and experimental nail product users, but they are also highly influenced by trends. Therefore, as nails are no longer the “hot” beauty trend, interest has correspondingly faltered.

Additionally, women are less involved in the category when compared to a year ago. Mintel’s consumer research shows that 22 percent of respondents are spending less time shopping for nail products compared to a year ago.

“When the nail category was still up, back in 2013, the brand launched what we’re calling Color 1.0,” said Godin. “We knew back then, if you were only nail, you were only going to get so far, so we needed to develop other categories within color cosmetics to help balance the portfolio.”

Butter London’s color collection consists of 80 stockkeeping units priced from $18 to $24 and Godin claims that the range is doing very well. The company recently launched a new assortment of products at Ulta and the first three weeks exceeded sales targets by more than 40 percent.


Best known for its caviar manicure and innovative effects, Ciaté unveiled a range of mascaras in July and recently rolled out additional color items like blush and lip gloss.

“It was always my strategy to launch into color cosmetics, hence why we have always shot much of our imagery and campaigns showing a full look and not just focusing on nails,” said Charlotte Knight, creative director and founder of Ciaté.

Ciaté is currently beating its sales plan by 45 percent in the early stages of the launch.

In terms of nail polish, Ciaté’s sales for 2014 versus 2013 were up by 5 percent due to the opening of new markets and the launch of the company’s “Pick & Mix” concept in Sephora, which allowed the customer to cocreate and own the process of styling their own nail look. So far in 2015, Ciaté is showing positive comp growth versus last year. “It’s not the triple digits we had experienced in previous years,” noted Knight, “but still a great sign that she is still investing in the category.”

“When nail brands stay within the color category and show a sense of authority, that is something the consumer can understand,” said Karen Grant, global beauty industry analyst at The NPD Group. “That might help boost nail up.”

To that end, Julep capitalized on color cosmetics way before nail went downhill. But according to Jane Park, chief executive officer and founder of Julep, the company has experienced strong growth in nail, particularly in unique finishes like holographics and treatments, during the category’s decline. Park feels that the growth stems from investing in research and development and nail care. Currently, though, lip is the brand’s fastest-growing category and the company is taking all the expertise and innovation that it brought to nail care and translating it into lips.

“There was a period of time in the past five years where everybody wanted to get into nail color and the product wasn’t differentiated,” said Park. “Every designer and every beauty brand was extending into nail color just because. One of the things we’ll see is less of that.”

Deborah Lippmann, who launched lip in 2012, but hasn’t branched outside of that, feels as if brands don’t have to enter another category to succeed.

“After the recent nail explosion the market was due to reset itself,” said Lippmann. “With the category being cyclical, there’s always the opportunity for it to come back around with the next big innovation.”

Sephora agrees. “[The nail category is] very cyclical and it’s fashion oriented,” said Artemis Patrick, senior vice president of merchandising at the retailer. “Nail can get back to where it was based on what’s in fashion.”

Patrick plugged Sephora’s exclusive nail line Formula X as a brand that continues to do well without entering another category. “A brand should enter categories where they can offer uniqueness and differentiation,” said Patrick. “If a nail brand can provide that in other categories than they should definitely go for it. However, there are still a lot of ways a nail brand can win, it just needs to make sense to what is true to a brand’s DNA.”

In its own efforts to grow sales, Smith & Cult, which is owned by Luxury Brand Partners, is tackling the salon channel, historically ruled by Essie and OPI. In the last year, the company has entered around 400 salons and industry sources estimate that it has generated $2.4 million at retail.

In July, Smith & Cult will unveil a range of eight lip glosses priced at $22, called The Shining, which will be sold at Neiman Marcus and about 600 salons. Even though they are entering a new category, Tevya Finger, cofounder and president of LBP, agreed with Lippmann that it isn’t necessary for nail brands to expand into other categories in order to grow.

“Nail brands have to grow by being innovative and speaking to the customer,” said Finger. “However, if the heritage of the brand makes sense to be in other categories then of course it can offer more things for their loyal customers.”

Finger is right on some level, but a brand won’t grow its demographic if it’s stuck on one category.

“At Hard Candy, it was crucial [that we enter another category], said Dineh Mohajer, cofounder and creative director of Smith & Cult and founder of Hard Candy, who is looking to further evolve her current brand. “First we started nail. If we would have just stayed in that category and not launched the glitter eye liner, it would have just been a one-hit wonder.”

Industry sources estimate that the Smith & Cult lip glosses could do $4 million in their first year at retail.

Prestige isn’t the only market declining in nail. Mass has taken a hit and, according to IRI, the overall nail-care business is down 2.4 percent for the 52-week period ended March 22 in all mass outlets.

In drug, it’s a different story. The nail-care business has increased by 3 percent for the 52-week period ended March 22.

To that end, Shannon Curtin, group vice president and general merchandise manager of beauty and personal care at Walgreens, has seen growth in nail in the last 12 weeks at the chain.

“Nail brands don’t need to enter new categories to succeed,” said Curtin. “They just need innovation that customers are looking for. Really some of the healthiest nail-care brands are those that are purest in the space, like Sally Hansen and Essie. They haven’t branched off into more robust product portfolios.”

Although nail is going through a rocky patch, the hot spot is within treatment in both mass and prestige. Mintel reported that women are also concerned about nail health, and more broadly about product ingredients, paving the way for naturally positioned and gentle nail color and care products.

IRI reported that nail treatment is up 8.7 percent to $238 million for the 52-week period ended March 22 in all mass outlets.

“At this time in the market, across the board in all of our retailers, our treatment products are most in demand,” said Lippmann.

But the question remains: Can the market get back to where it was?

Mintel recounted that while the category is currently in a “down” cycle, it expects sales to be moderate in 2016, with a stronger return to growth in 2019.

“All brands need to integrate vertical revenue streams,” said Mohajer. “If you just stay in one place, you die. Much like humans, you have to change and you have to evolve. A brand needs to have a life of its own and needs to grow.”