HBC Market Declines

Beauty sales are looking much less attractive this year as U.S. consumers continue to put their beauty regimes aside to focus on priority purchases. According to NPD research released Tuesday, the prestige beauty industry’s year-over-year dollar loss of 7 percent during the first half of 2009 marked the 11th month of consecutive market decline.

Fragrance sales in both men’s and women’s categories experienced the greatest decline at -10 percent. New product sales activity dropped 17 percent, which can be accredited to a 31 percent slump in women’s launch sales. New men’s fragrances grew by 23 percent.

Premium price fragrance products (those costing more than $100) faired comparatively well in the department. Dollar sales were up 9 percent and unit sales grew 6 percent. Dollar (2 percent) and unit (1 percent) sales for fragrance products priced from $75 to $99 also showed slight growth.

Overall prestige makeup dollars dipped 7 percent, with a loss of $1.5 billion. Face, eye, lip, nail, gift sets and “other color” segments all reported drops of 3 percent to 20 percent. Out of 26 total segments, 25 experienced decline, with the exception of “other” for the eye makeup category.

New makeup launches declined 7 percent, but saw an uptick in several categories. New face products grew in dollar and unit sales, with increases of 11 percent to 59 percent. Mascara launch sales grew 4 percent, and new lip colors were up by 47 percent. Premium products, those priced at $50 or more, also fared well, with 5 percent dollar growth and 2 percent unit growth.

Skin care dollar sales experienced the least loss, at 6 percent. But the $1.2 billion decline was the worst half-year timeframe for skin care in the last three years.

While product launch sales dropped by 4 percent overall, some growth was reported. New facial moisturizer sales increased by 2 percent, and gains in sets and kits (8 percent) and hair (1 percent) were mirrored by comparable unit sales increases of 8 percent and 4 percent, respectively.

The data reflects a continuing trend of budgeting and meaningful buying since the 2008 economic meltdown, said Karen Grant, VP and global industry analyst for The NPD Group, which is based in Port Washington, N.Y.

“In this challenging retail environment, it cannot be overstated how increasingly important it is for manufacturers and retailers to take careful note that there are items that are resonating well with consumers. They need to understand what those products are and see how they can potentially leverage that learning into winning with other beauty categories,” Grant said.

Nielsen’s year-over-year dollar sales data for the 52 weeks ending Aug 8, 2009, established similar declines. Men’s toiletries dipped most, at -6.6 percent. Children’s cologne, women’s fragrances, grooming aids, hair care and ethnic products also reported declines ranging from -2.2 to -7.9 percent. Total cosmetics (2.2 percent), skin care preparations (1.8 percent) and shaving needs grew moderately.

According to Nielsen’s consumer panel, 21.5 percent of U.S. households purchased from the women’s fragrance category from June 27, 2008-’09, spending an average of $22.66 in 1.6 shopping trips. Over half (58.3 percent) purchased cosmetics with an average of $26.73 in 3.7 trips, and almost three-quarters (72 percent) purchased skin care products at an average of $34.01 in four trips.
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