NPD, IRI study: Channel switching could present opportunities for growth in mass-market beauty

PORT WASHINGTON, N.Y. Beauty shoppers are tightening the grip on their wallets as a result of the current economy, but they are switching channels in such key categories as facial skin care, which could spell opportunities in today’s challenging marketplace, according to findings by The NPD Group and Information Resources Inc.

This is the first year the two groups have partnered to develop a product, the Beauty Cross Channel Monitor, and it is the U.S. beauty industry’s first and only point-of-sale tracking product that looks at sales performance in department stores and food, drug and mass (excluding Walmart).

“For the first time we have the ability to take a broader view of the U.S. beauty industry,” stated Diane Nicholson, president of beauty at The NPD Group. “When looking across total channels — department stores and food, drug and mass channels, excluding Walmart — we can size the market at $19.1 billion, representing approximately 60% of the U.S. beauty industry.”

In looking at the data, The NPD Group and IRI found that while the beauty industry suffered the same fate as most industries and posted declines in 2008, there were some pockets of growth and opportunity driven by some channel shifting.

While department store sales of makeup declined in 2008 versus 2007, makeup posted a slight increase (1%) in the food, drug and mass channel.

Conversely, the hair care segment grew by 6% in department stores compared with a 4% decline in mass, where hair represents a larger portion of the overall business.

Skin care remained steady across all channels but a bright spot was facial skin care. This segment rose by 1% across all channels, driven by a more health performance in mass, with 2.1% growth in 2008.

“In this ever-changing and challenging environment, the ability to understand the market dynamics across channels is more crucial than ever,” stated John Deputato, SVP client solutions for IRI. “Our clients are very interested in how consumers are changing their shopping patterns.”