Study: As prestige dwindles, drug, mass ‘makeup’ dollars

9/28/2009

A recent study by market research firm the NPD Group indicated that the U.S. prestige beauty market took a beating during the first half of 2009. The silver lining, however, were separate reports suggesting that the drug and mass market could be the beneficiary of the prestige market’s plight.

According to the findings, released Sept. 1, sales of U.S. prestige beauty dropped 7% to $3.7 billion during the first half of 2009, with June marking the 11th consecutive month of negative prestige beauty performance.

Prestige fragrance took a major hit during the first half of the year, with sales declining 10% to $1 billion compared with the year-ago period. Both women’s and men’s prestige fragrances posted 10% declines from a year-ago, NPD stated. Even U.S. prestige skin care suffered. According to NPD, it was the worst first half for skin care in the past three years, but it still had the softest losses of all beauty categories in terms of both dollars and units. Sales of U.S. prestige skin care dropped 6% to $1.2 billion.

U.S. prestige beauty sales (first half of 2009)* In billionsSource: The NPD Group/Beauty Trends 2009
 DOLLARS*% CHG 2009 v. 2008
Makeup$1.5-7.0%
Skin care1.2-6.0
Fragrance1.0-10.0
TOTAL BEAUTY$3.7-7.0%

The news may be grim for the prestige segment, but a separate NPD report released in July found that specialty stores were among the three most cited channels shopped for beauty products in the past year, surpassed only by mass merchants (53%) and drug stores (41%).

Echoing the sentiment, consulting and research firm Kline & Co. issued a report earlier this year that indicated that consumers are showing a preference for competitively priced products from the mass and direct trade classes in light of the economy. “The new frugal mind-set imposed by the recession has altered spending and product consumption habits, some of which will probably continue into the foreseeable future,” stated Nancy Mills, Kline industry manager of consumer products practice.

“Many people have traded down on certain products, and as they get accustomed to buying some lower-priced or private-label products, and shop more in the lower-priced channels, they might well continue with those habits after the tough times have subsided,” Mills continued. “To be successful, companies will likely continue to infuse the mass segment with more sophisticated products to compete with luxury products.”

Kline also noted that some brands that did very well in the previous years, such as Bare Escentuals, had slower growth in 2008, whereas such mass brands as Garnier skin care and Neutrogena sun care showed very strong growth.

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