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Well Manicured: Luxury Nail, Nail-Care Markets Show Promise

Innovation is becoming a key differentiator in a sector vying for precious, limited consumer dollars.

Can the nail category make a comeback?

With a dissipating nail art craze and the shift toward gel manicures, brands from the luxury to mass sectors are vying for limited consumer wallet share in a number of ways. A vast color assortment — and one that mirrors fashion and social media trends — has become table stakes, with players turning to over-the-top packaging (hello, 8-inch Louboutin spike) and even the inclusion of superfoods in formulas to stand out. Beyond that, more companies are focusing on the booming nail-care category rather than polish.

While the financial figures are far from rosy, the nail market so far this year is at least declining at a slower rate than in 2016. Overall, the U.S. prestige nail market was down 2 percent between January and the end of May, according to The NPD Group. For 2016, the market was down 7 percent in the same time frame.

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Base and top coats, as well as nail care, are showing signs of growth, however. Nail care was up 4 percent to $6 million between January and May, according to NPD, and base and top coats were up 11 percent, to $6.2 million. Color enamel is where the problems lie — falling percent dip in the time period, to $30.3 million in sales. (Color however, remains the largest category with 71 percent of prestige sales.)

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The story is similar in mass, where declines are affecting almost every nail category, according to data from IRI for the 52-week period ended June 11. Artificial nails and accessories saw an uptick to $203.6 million in sales, up 6.2 percent, and nail polish accessories also saw an uptick, up 2.3 percent to $565,591. But as a category, nail was down 9.9 percent, bringing in $1.36 billion in the mass channels.

The category as a whole was racking up gains for a handful of years, until mid-2013, when sales started slipping. Even Sephora bet big on the sector, launching its Kendo-created Formula X nail line in fall 2013 with 200 stockkeeping units priced between $10.50 and $15. At the time, industry sources projected the line would do $30 million in sales in year one. But a few years later, Kendo has shuttered the brand, and is selling remaining inventory for $2.

“After four years of high-impact colors and nail treatments, Formula X, a division of Kendo Holdings Inc., ceased production in early 2017,” a Kendo spokeswoman confirmed in a statement. “The brand will continue to be sold through Sephora until the current inventory has been depleted.”

Outside of its own brand, Sephora has narrowed its space dedicated to the nail category. The store used to carry nail polish from Ciate (it still carries color from the brand, but no polish in the U.S.) and Butter London (which also has diversified into color, and moved out of Sephora and into Kohl’s and Ulta Beauty in the U.S.).

“They’ve been putting much more of their effort around color and skin care,” said Wendy Liebmann, chief executive officer of WSL Strategic Research, of Sephora. “They’ve made some choices about where the growth is really going to come from for them.”

And the brands once known for just nail have moved away from that focus, as well. Butter London, for example, now does about 70 percent of its sales in color cosmetics and 30 percent in nail, according to brand president Sarina Godin.

“The brand actually intended to go into other categories in 2013, right at the onset of the nail decline — primarily the reason was because it was hard to sustain a brand on one product category,” Godin said. “The brand launched color in fall 2013 — it was extremely unsuccessful.”

But Butter tried again, and relaunched a color line (now carried at Ulta Beauty, Kohl’s and online with Nordstrom) in 2015.

“Our nail business is definitely down, but we’ve also reduced the number of stockkeeping units — on a per-sku basis, we’ve seen it level off because we launched Patent Shine 10x [and] it helped regain some of our lost sales,” Godin said.

Patent Shine 10x, a gel-like product Butter launched post nail recession, is one example of the brand’s dedication to innovation in the nail category. This September, the company is plotting the launch of an at-home gel-like nail system, according to Godin. The system works similarly to gel nail polish, requiring LED light between layers, but can be soaked off with warm water instead of acetone.

“People still want to care for their nails,” Godin said. As of now, Butter’s best-selling nail products are its four treatments, she noted.

The same goes for the Deborah Lippmann business, where a substantial amount of sales is driven through care, according to Jude Severin, president of Deborah Lippman (and Deborah Lippmann’s husband). He noted that of the top 20 stockkeeping units, about half of them are care-related (the bestseller is the Gel Lab Pro Base and Top Coat).

“It’s pretty conservative right now,” Severin said. “Chromes and colors like that are starting to make a slight dent, but it’s a lot of nudes and reds that are selling the most.”

Severin contended that doubling down on the category is what worked for their brand.

“Not only are brands disappearing, but there are a lot of brands that are not primarily nail brands that are shrinking their offerings,” Severin said, noting that Deborah Lippmann is growing. “We didn’t lose our focus.”

Innovation — like the brand’s Gel Lab Pro formula — is also key, as is staying on a “healthy nail” message, Severin noted.

“The gel thing.…One of the reasons we didn’t go into it is because…the brand has positioned itself as a healthy nail [company] this whole time,” Severin said. “What we came up with is the healthy alternative to that, our Gel Lab Pro.”

Emily Saunders, beauty buyer at Selfridges, believes nails have become as prioritized as hair removal. She declined to comment on the retailer’s nail-polish business, but said there will always be a demand for the nail market, especially after the rise in popularity of manicure bars, quick dry polish and do-it-yourself kits.

The retailer’s roster of nail brands includes The Hand and Foot Spa; Nails Inc.; Nailberry; Smith and Cult; OPI; Essie and Deborah Lippmann (in addition to main beauty hall brands like YSL, Tom Ford, Dior, Chanel, Christian Dior and more).

But rather than the polish itself, Selfridges has homed in on creating an immersive in-store experience centered around nails.

Because of better formulas and tools that facilitate at-home manicures at ease, the retailer encourages nail services in-store to “step up and give the customers an experience which they cannot re-create at home,” Saunders explained.

Among the services offered is nail art and the “perfect chrome finish nails that are all the trend” at the Daniel Galvin salon at Selfridges London; a clinical manicure experience, where all tools are prepackaged in sterile pouches at The Hand and Foot Spa, and the Nails Inc. Paint Shop, which recently got a facelift and now offers add-ons from back massages to prosecco.

But as the middle and mass ends are struggling, the higher end of the market is where growth is expected to come.

According to Euromonitor, the U.S. prestige polish market is expected to grow 7.1 percent by 2021, to $255.4 million, and the mass polish business is projected to shrink by 32.1 percent, to $422 million.

Nail trends have shifted toward a more minimalist look, presenting an opportunity for care to take center stage.

“When you see older people wearing greens and whatever, then all of a sudden you say, ‘OK, outrageous color is not really on the leading edge anymore,’” Liebmann said of the industry veering into neutrals.

And challenges persist, according to Liebmann.

“If you go more natural, then issues like cuticles and the color of your hand and spots and freckles become much more noticeable,” she added. “That’s where the opportunity is.”

She believes the growth will continue to come more from the treatment side, with potential for expansion in nail-salon-based treatments. She compared this to what’s going on in brows or skin, suggesting that the market needs to take the “decorative side” of nail and look at it as a wellness opportunity. Nobody has tapped into that yet, she said, noting there’s equal opportunity from the luxury end to an “affordable street-corner spa.”

“We’ve seen the middle somewhat weakened by the fact that you have brands like Essie that moved into more mass retailers,” Liebmann continued. “On the other hand, you have somebody like [Christian] Louboutin.…Yes it’s nail, but it’s really this amazing package.…It’s very special, very precious — it’s a status more than it is nail.”

That is exactly what Louboutin had in mind when he launched Christian Louboutin Beauté almost three years ago, starting with $50 nail polish.

Catherine Roggero, general manager of Christian Louboutin Beauté, maintained that the brand is an “anomaly” when it comes to nails, despite an overall challenging climate in the category.

The range is growing at low double digits, Roggero said, due to a convergence of factors. They include: a heavy investment in development, a bottle that doubles as an object, packaging and a creative designer that’s “directly involved with the product and shades.”

“We have a very small distribution; You can’t compare the volume to Chanel or Dior.…The other thing is that we don’t have as many categories. Therefore, we animate the ones we have more often,” Roggero said.

Fewer beauty categories, as well as not being tied to the “constraints of what fashion is doing” has allowed for Louboutin to infuse its nail offerings with iridescent, glitter and bold shades anywhere from three to four time a year — all packaged in a signature bottle with a giant spike. Beyond product, there’s an emphasis on packaging, too, Roggero said, including limited-edition secondary packaging to accompany new offerings such as the three-color Metalinudes range that was released in the spring.

For Roggero, the difference in the luxury arena is that what’s expected from brands is less technical and more driven by originality and what’s fashionable. And this could be challenging.

“I’m not only talking about Louboutin. If you’re Chanel, Dior or Tom Ford, you’re not expected to have the latest stamping or gel formula — that’s not what they’re going for.…It’s fantastic pigment or wear or whatever finish [is desired], but also something that’s on-trend, avant-garde and something that is on brand,” Roggero said. “Nail products aren’t cheap, they have a long lead time and there are technically challenges to achieve a certain finish.…Therefore, the tie-in with fashion is very important, but to have colors constantly on brand and on trend isn’t easy.”

Louboutin isn’t the only brand growing in the category, however. U.K.-based Nails Inc. is also seeing double-digit increases.

Thea Green, the company’s founder, said the brand is seeing “great growth” in the U.K. and the U.S. and expanding into new markets. She called out its U.S. business in particular, which is seeing high double-digit growth. She credited strength in the category to innovations that include spray-on nail polish, a kale-infused “superfood” base coat and most recently, a “Sparkle Like a Unicorn” nail polish kit to “capture the consumers’ love for all things unicorn.”

“Three years ago we saw a huge amount of ‘me too’ nail brands entering the market, many of which failed and have since gone away. The key retailers have rationalized their assortments and this is facilitating very positive results,” Green said. “Nail and lip markets have always trended in cycles, this is the nature of their respective businesses. Mintel and other consumer insights state 2018 will have a further spike in nails as we enter the next nail boom.”

Nails Inc. captures customer data via the brand’s nail bars (i.e., The Paint Shop by Nails Inc. at Selfridges) and social media channels, which Green said enables the brand to react quickly to consumer demand or respond to a relevant trend (i.e., unicorns and kale).

Rather than focusing on elaborate boxes or incorporating kale into its product, Essie is looking to the fashion industry and social media to up its profile and lift sales in the face of a soft mass category.

Ikdeep Singh, president of Maybelline, Garnier and Essie, said sales are up year over year, and e-commerce sales have grown significantly year to date through May. He attributed this to salon heritage, innovations in the Gel Couture range and a vast shade offering spanning classic to those with tie-ins to relevant fashion and accessories trends.

In February 2015, the L’Oreal-owned brand named Rebecca Minkoff as its first-ever global color designer to help conceptualize and design seasonal collections inspired by fashion, travel and experiences. While the designer had been working with Essie since 2011, it wasn’t until two years ago that she joined the brand in an official capacity.

“To me, bringing me in gave a fresh perspective of, ‘Here’s what’s happening in accessories or shoes and clothes, rather than a collection just coming out of nowhere having nothing to do with annoying,” Minkoff said. She ties color stories to what’s happening globally in fashion, events that are happening or “meaningful things that this generation has interest in.” In 2015, she developed a neon collection based on Coachella and music festival culture with shades like “Coacha’bella” and “Make Some Noise.”

The names of Essie’s polishes have been “classic forever,” she continued, a parallel to her handbag range where all bags are named after experiences a woman has had.

Minkoff has designed the collections through fall 2018, with the fall 2017 nail range set to debut on her runway show in September. The summer offering that bowed in May was inspired by summer in Paris and the colors of macarons — the latter being, no surprise, a popular Instagram theme.

“Now more than ever, having a soul or a face of a brand is obviously a lot more valuable than no soul or no face. I think that attaching a relevant face keeps the conversation going, versus, ‘Who is Sally Hansen?’ I don’t [even] know,” Minkoff said.

In addition to its link to the fashion world, Minkoff called Essie “nimble” in a changing digital landscape. The brand, which has 2.2 million Instagram followers, has figured out a way to execute a social media strategy that “cultivates that customer obsession.” For instance, a group of 10 nail enthusiasts who are active on social media coined themselves The Essie Club Collab — and the brand took notice. In an effort to foster a relationship with these young women, the company brought them to New York and did three-day nail immersion with them, which resulted in the group generating a high volume of impressions, likes and engagements.

“Now they have these crazy die-hard ambassadors,” Minkoff said.

Jin Soon Choi, founder of four namesake nail salons in New York and an almost five-year-old lacquer line, also looks to what’s going on in fashion to build her product range.

Amidst a dying nail-art craze at retail, Choi — who built her career on strong relationships in the fashion industry and editorial photo shoots — has differentiated herself with trends from runway shows. She’s also influenced by beauty trends, as evidenced by her two-month-old Sheer Gloss polishes that are inspired by lip gloss. Her next collection, called Art Nouveau, bows in August.

Choi’s trend-driven polish range is sold at Bloomingdale’s, Space NK, Barneys New York,,, Liberty London and Mecca in Australia and select doors in Japan and Singapore. She hopes the nail boom of five years ago makes a comeback, but in the meantime she’s working to make her company more desirable globally and no longer rely solely on the U.S. market.

“People were crazy about nail art, mostly more garish nail art, the 3-D and bling [stuff]. Everyone got into all that bling-bling nail art and then they got tired of it,” Choi said, admitting that this resulted in an oversaturated market. “People are looking for more modern, simple and chic [colors] that go with their fashion style.”