Consumers are changing shopping patterns when purchasing lipsticks and perfume, slowing sales for department stores and foods stores in particular while boosting sales at other retail outlets.
The shift has had the greatest effect on food stores, which have seen a 3% average annual decline in sales of cosmetics and toiletries over the past five years, according to a new study, Beauty Retailing USA 2004, by Kline & Co., an international business consulting and market research firm.
“While food stores could once count on one-stop shoppers to buy their beauty products along with the groceries, they’re now conceding these sales to big-box stores like Wal-Mart and Target,” said Lenka Contreras, VP and head of the consumer products practice for Kline’s research division.
Shoppers are looking for bargains, buying more cosmetics and toiletries at dollar stores and, on a smaller scale, at big-box retailers like Costco and BJ’s, weakening sales at drug stores and department stores, the study said.
“The sheer number of dollar stores opened over the last five years is a major factor, but the bargain-hunting mentality in a slower economy is driving consumers to try to find their favorite products at lower prices,” Contreras said.
For example, the sale of luxury fragrance brands through mass outlets has grown dramatically over the past decade, the study found.
And while department stores have been experiencing an extended slump in beauty product sales, one saving grace has been high-end facial treatments. Sales of professional skin care brands like N.V. Perricone MD, Dr. Brandt and DDF, have helped stave off an overall loss in cosmetic and toiletry sales.
“Especially with slow overall market growth, and with consumers increasingly shopping across channels, the opportunity for marketers is to diversify the distribution channels for their beauty products,” said David Vladyka, head of Kline’s consumer products consulting service. “Rather than trying to lure customers back to the traditional channels that worked for them in the past, they should be looking to reach them in the channels that are showing the most promise for the near term.”