Beauty Category Struggles, Some Bright Spots

Posted on by Chief Marketer Staff

The beauty industry has suffered along with the rest trying to pitch products to weary consumers in a trouble economy.

A new report finds that 2008 was the first year that each beauty category truly struggled. Total prestige beauty sales—defined as fragrance, makeup and skincare products sold mainly in U.S. department stores—dropped 3% to $8.38 billion last year compared with 2007, according to market research company The NPD Group.

When broken down by category, makeup sales fell 3% to $3.2 billion, fragrance sales took the biggest hit, dropping 6% to $2.68 billion and sales of skincare products were flat at $2.4 billion.

The decline in fragrance sales dropped for both genders, down 5% in women’s and 8% in men’s fragrances, NPD found.

A silver lining, however, could be found in fragrance gift sets priced from $60 to under $100. These sets have become the largest part of the gift set market—representing 65% of gift set sales in 2008, compared to 40% in 2005. In addition, this sweet spot has also grown in both dollars (+12%) and units (+11%) and posted double-digit growth in 2008, NPD said.

The introduction of new fragrances was pulled down overall by a 20% drop in new launches for men, however, new products for women posted a 9% gain in 2008 thanks to new brands like Viva La Juicy, Estee Lauder Sensuous, Ed Hardy, and the Harajuku Lovers collection.

NPD reported that the top five fragrance brands are:

  1. Acqua Di Gio Pour Homme
  2. Beautiful
  3. Coco Mademoiselle
  4. Light Blue
  5. Chanel No. 5

All segments in the makeup category showed declines including face, eye, and lip. The bright spot here was natural products.

Meanwhile, skincare held its own capturing 29% dollar share, an additional share point over 2007, of total prestige beauty sales. Skincare products include face, body, sun, and hair.

Of note, are products that showed strong performances: anti-aging and specialization, premium price and natural brands.

Lastly, natural/spa/wellness skincare brands showed the strongest dollar growth of the distinctive brand types, up 6% versus year prior to $304 million.

“The economic realities of 2008 have created fundamental shifts in the behavior of our consumers and the way they approach beauty, said Karen Grant, senior global industry analyst and vice president, Beauty at NPD[], in a release. “In 2009, we recognize that while consumption will not stop for prestige beauty, it has changed. It has become and will become more careful, more selective, and more meaningful. Moving forward, we must continue to look for opportunities, find new ways to reach our consumers, and build our relationship and communication with them.”


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