With the beginning of the holiday crunch only a week away, prestige beauty retailers are looking for modest gains in the fourth quarter, following spotty business in October.
“December will be strong, with growth from both fragrance and color categories,” said Stacie Borteck, vice president of fragrances and cosmetics at Bloomingdale’s.
During the third quarter, Bloomingdale’s logged “disproportionate growth in luxury resources, such as Creed, Bond and Jo Malone, and we are expecting continued success in the fourth quarter in the high-end luxury part of the business,” she said.
She continued,“Our new launches will continue to pace the business into the fourth quarter — notably our exclusives Kenzo World and Missoni. Chanel No. 5 L’eau, YSL Mon Paris and Prada Masterbrand have also been standouts.”
Brooke Banwart, Sephora’s vice president, merchandising, fragrance, said the niche fragrance business continues to strengthen. Consumers are willing to experiment, mixing and layering to achieve something different.
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During the holiday season, though, Banwart maintained that luxury brands continue to be a “bright spot” at the retailer, and early sales indicate that new fragrances such as Chanel No. 5 L’eau, Miss Dior, YSL Mon Paris and Black Opium and Tom Ford Black Orchid are going to be “hot gifts.”
She’s noticed an uptick in both jumbo and travel-size items for clients looking for either a high value or a way to test a fragrance at an entry-level price point. Specifically, she said rollerball, travel sprays and discovery sets have “worked hard for us in this area” and help attract new clients all year-round, including holiday.
“Consumer buying habits continue to evolve, but the basic tenets remain. Value continues to be important to the client. Behavior has shifted from a sole focus on value gift sets to value received through jumbo sizing,” Banwart said.
At Hudson’s Bay, chief beauty adventurer Shelley Rozenwald was optimistic about fragrance gift sets, forecasting a 12 to 15 percent sales increase for fragrance gift sets. “You’ve got a great price point and something that’s attractive — it’s got curb appeal,” said Rozenwald of the fragrance gift set, a category not always known to incite sales growth.
Rozenwald ticked off brands such as Narciso Rodriguez, Thierry Mugler and Chanel as the company’s current growth-drivers in fragrance.
Rozenwald also called out Estée Lauder, citing an “overall growth within the brand” at Hudson’s Bay stores this past launch season. “Their treatments are doing phenomenal,” Rozenwald said.
At Holt Renfrew, year-to-date fragrance sales are experiencing single-digit growth, according to Mario Grauso, president and chief merchant, who expects holiday fragrance sales to deliver a double-digit increase this season.
He identified Diptyque, Creed, By Kilian, Byredo, Frédéric Malle, Hermès, Jo Malone and Tom Ford fragrances as the brands driving overall sales. Also, additional assortments and gift sets from Creed, Hermès and Jo Malone are perennial gift go-to’s for customers, he said.
“The season has continued to be strong and we’ve had some very exciting launches. One in particular is House of Creed’s Aventus for Her that we launched exclusively in Canada,” Grauso said.
“Artisanal fragrances continue to be a top category for us…. The customer experience and storytelling of these brands are key to this success,” Grauso said, noting that a realignment in the product assortment over the past two years has resulted in “considerable gains.”
Fragrance makes up just over 20 percent of Holt Renfrew’s beauty business, but Grauso is hopeful that this number will grow this holiday season. Skin care is the leading sector within beauty — driving 45 percent of all beauty sales — and color “continues to hold its own.”
The NPD Group global beauty industry analyst Karen Grant is projecting a third consecutive year of sales gains for beauty this holiday season. Grant predicted 3 to 5 percent growth year-over-year, driven primarily by color cosmetics — a shift in power from the typically predominant fragrance category. Despite “pre-election jitters” that may have attributed to a sluggish October, “consumers still seem to be positive in shopping for beauty,” Grant said. Better yet, consumers this year are more interested in shopping for beauty during the holiday season than they were last year. A total of 33 percent of consumers plan to buy holiday gifts in the beauty category this year, up from 27 percent last year, according to NPD data. Interest in specialty beauty stores in particular has gone up — 18 percent of consumers plan to shop in specialty beauty stores, compared to 13 percent last year. Grant noted that as color cosmetics continues to be beauty’s fastest-growing category, that excitement will translate into holiday season sales. “A lot of the newness has been invested in makeup this year,” Grant said. “There’s a new treat every day.” She still expects fragrance to be a comparatively strong performer, though Grant predicts the category won’t generate nearly as much excitement as color, due to fewer launches and more available options across beauty, especially in color, this year. “We’re more reliant on the makeup category,” Grant said.
Wendy Liebmann, chief executive officer of WSL Strategic Research, said, “leading up to this, there was a level of dissatisfaction in general in the part of shoppers about the lack of what they called ‘good choices’ and there’s mediocrity across lots of categories, and beauty was one. The reason is a lack of distinctiveness,” Liebmann continued. “The one saving grace, and why we’ve seen strength in color cosmetics for example, is that it’s pretty easy to do newness in color, and those brands that do that use color. That creates some sense of differentiation. That way you have a chance to keep shoppers engaged.”
“Across holiday, we’re expecting about 3.1 percent growth in consumer retail spending, which is not bad,” said Neil Saunders, chief executive officer at Conlumino, speaking broadly about retail spending. “It’s certainly better than the last few years, it’s a respectable rate of growth.
“There are a number of dynamics that are just making stores still very strong, and we still have those strong store performances from places like Ulta Beauty and Sephora…part of it is because they have very good multichannel propositions, people are still lured into stores even when they buy things online.
“With beauty, there’s much more experience in store. Ulta, Sephora, Sally Beauty [have] invested into rejiggering their store formats,” Saunders said. “You discover things, including things you can gift. When you look at fashion, a lot of the fashion players are not that good at doing that…. I don’t need to go into a store because it’s not pleasant to shop. The beauty players have actually put in a lot more effort.”
Jilian Firestone, buyer for cosmetics, fragrances and sunglasses at Bergdorf Goodman, said, “It’s anything exclusive, anything superluxe. People are just looking for something different, we’re still seeing that. We have a lot of really beautiful holiday candles and beautiful travel sprays — travel sprays for us are something that have become huge. Our client wants everything and anything that’s limited edition,” she said, elaborating that she expects travel spray gift sets with body creams, as well as color sets like Tom Ford’s Lips & Boys, to do well.
It was a strong fall launch season for fragrance at Barneys New York, said vice president and divisional merchandise manager of cosmetics Jennifer Miles, and that momentum is expected to continue through the holiday season.
Miles ticked off a series of brands and items the retailer launched exclusively within the niche fragrance category — Phuong Dang perfumes, Atelier Bloom, Heretic, Byredo Unnamed and new Replica scents from Maison Martin Margiela — driving customers into the store.
Though Miles expects the season to be driven mainly by niche fragrance, home fragrance, a “big sales-driver” for the retailer, is not to be forgotten. “Our Diptyque business is great,” Miles said.
For Millennials who may be more strapped for cash than a typical Barneys customer, Miles noted that makeup brands like By Terry and Hourglass are coming out with value-driven sets for holiday. “An opening price point for Barneys holiday would be well over $100, but this season we’re having items under $100 to attract that [Millennial customer],” Miles said.
Nordstrom’s national beauty director Mary Nell Maddox emphasized the retailer’s home scents business as a key sales driver during holiday.
“Over the past five or six years, the home fragrance category keeps growing,” said Maddox, listing Antica Farmastica, Nest, Diptyque and Jo Malone as top-selling brands.
Though the retailer is banking on a host of fragrance and makeup gift sets to drive holiday sales, skin care is the dark horse category. “Skin care and especially skin-care tools are trending especially well for us,” Maddox said. Tools such as the antiaging facial cleansing brush Foreo Luna and NuFace microcurrent toning device are proving flashier items than the Clarisonic brush. “All the tools that really have corrective benefits are a hit,” Maddox said. Nordstrom is offering a host of skin-care gift sets for holiday, including the Foreo Iris Illuminating Eye Massager set for $139, which comes with a Kate Somerville retinol treatment.
Some beauty retailers on the West Coast jumped on the holiday bandwagon early. Beauty Encounter, an e-tailer with a deep fragrance selection, launched a holiday guide on its web site right after Halloween this year, versus the week after Thanksgiving last year. “I feel consumer confidence will be a little higher this year,” said Jacquelyn Lang, chief executive officer of Beauty Encounter. Planet Beauty, a 37-unit beauty specialty chain based in Costa Mesa, Calif., had the majority of its holiday merchandise on store floors by Oct. 1, 15 days earlier than last year. John Dick, director of store operations, predicted Planet Beauty’s holiday sales would rise 6 percent this year, roughly the same bump as last year. He added, “cosmetics has been showing double-digit growth, and Millennials are driving it.” He highlighted beauty tools and color cosmetics products as standouts this holiday season, including the mascara set BareMinerals Holiday Make Mine a Double, GHD Platinum Styler and Clarisonic Mia Fit.
At Credo, the natural beauty retailer with locations in New York and San Francisco, color cosmetics and skin-care categories are forecast to be strong for the holidays. Annie Jackson, vice president of merchandise and planning for Credo, indicated palettes are business drivers, notably Lily Lolo’s Pedal to the Metal Palette and Filthy Rich Eye Palette, and Vapour’s Soiree Eye Palette. Other products expected to be robust holiday performers are One Love Organics’ 3-2-1 Fantastic Facial Kit, Juara’s Escape to Bali Limited Edition Set, Pour le Monde’s Envision Eau de Parfum, Lake + Skye’s Epic Love Essential Oil Blend, RMS’ Vixen Nail Polish Set, Olio E Osso Pre-Shave Oil, and MCMC’s Dude No. 1 Candle, Beard Oil and Cologne.“What our customer is looking for from us is single items or maybe a couple of items in a gift box that is very universal,” Jackson said. “No one in our store is looking to buy antiaging value sets.”
Catherine Moellering, general merchandise manager for beauty at Anthropologie, pointed to scented merchandise like soaps, lotions and fragrances as popular for gifting at the retailer, adding she anticipated shoppers will buy items for themselves during the holiday season as well, particularly detoxifying bath soaks, teas and aromatherapy items. More explicitly, she spotlighted Artist Atelier Lip Balm, Pursoma Minerals De Mer Body Soak, Edible Beauty Tea, Uma Wellness Oil and Fictions Eau De Parfum as potential brisk holiday sellers at the Urban Outfitters-owned chain.
“Our customer is also loving our smaller beauty products or beauty bites as we like to call them this holiday season,” Moellering said. “We worked with brands to create special and exclusive smaller sets that are an easy and fun purchase for her to try such as lip tints and mini fragrances. They can easily fit in her purse during a festive night out.”
An Amazon spokeswoman espoused the e-tailer’s beauty gift sets, saying it’s “offering beauty shoppers more value than ever before.” She mentioned customers can shop Amazon’s beauty gift guide by price and singled out Clarisonic’s Mia Fit, Butter London’s Most Wonderful of All Color Set, T3 styling tools and R+Co Shampoo and Conditioner sets as new items in Amazon’s beauty selection for the holiday season. “We continue to see customers looking for a wide range of giftable selection,” the spokeswoman said.
Some beauty retailers believe shoppers want to avoid mall stores this holiday season, both to steer clear of crowds and buy with a greater sense of purpose. “We all are very aware that traffic is definitely down in the malls. People are tending to be a little bit more community-driven and shopping locally,” said Jackson from Credo. “The customer mind-set is about being very connected to the community they live in and maybe stepping away from the homogeneity of malls.”