U.S. prestige beauty sales keep gaining momentum. For the growth to keep going, The NPD Group reports brick-and-mortar stores play a crucial role. The firm recommends brands and retailers must continue enhancing in-store interaction by devising new and alternative ways to engage customers through popups and other experiences.
As beauty brands and retailers look to understand ‘what’s next’ to keep the momentum going, their focus should be on developing new and alternative ways to engage with consumers. It’s important to remember that brick-and-mortar is a critical component to driving growth. Popup, pop-in, and other experience stores are expected to accelerate this year.
So, how big is beauty? The U.S. prestige beauty industry reached $17.7 billion in 2017, a 6% increase over 2016, according The NPD Group / U.S. Prestige Beauty Total Measured Market, January-December 2017.
At the forefront, the skincare category grew its sales by 9% and contributed 45% of the industry’s total gains; makeup followed with a 6% increase in sales, and fragrance closed the year up 4%.
“Change was the theme of the beauty industry in 2017, from the shifts in trends and category performance, to the wave of mergers and acquisitions which show no signs of abating in the near future,” says Larissa Jensen, executive director and beauty industry analyst at The NPD Group. “The industry has not only adapted to this change, but has continued to achieve strong and consistent growth, as it has seen for the last few years. We can expect change to continue to be the catalyst of growth for the industry in 2018.”
Putting on a great face
After several years of soft performance, skincare was revitalized in 2017. Reaching $5.6 billion in sales, growth has stemmed from smaller segments including masks (+32%), facial exfoliators (+12%) and cleansers (+6%), and other face products (+39%) which, among other items, includes emerging formats, essences, and facial sprays.
Larger segments such as facial moisturizers (+7%), skincare’s largest by dollar volume, and age specialists (+7%) also fared well in 2017. The body, sun, and hair care segments of skincare all experienced growth as well.
Though makeup’s growth rate slowed in 2017, it remains beauty’s largest category, bringing the most dollar volume to the industry and $8.1 billion in 2017. Growth was driven by high volume segments including foundation (+7%) and eye shadow (+13%), as well as other face products such as bronzers, highlighters, and glow products.
Sales were also positive for other key segments like face primers (+17%), concealer (+10%), eye brow makeup (+7%), and lip color (+2%).
In fragrance, where sales totaled $4.0 billion in 2017, juices grew by 4%. Niche areas of the market including natural and artisanal fragrances grew their sales by 32% and 14%, respectively.
Beyond the body, the home scents market is booming. It has added $44.4 million in sales since 2014. Sales reached $80.4 million in 2017, up 59%. This is building off of 18% growth the segment saw in 2016. Growth drivers for the market in 2017 included candles (+56%) and the smaller segment of home ancillary gift sets (+165%), which include candle and reed diffuser gift sets.
Developing more engagement
The prestige beauty industry also had a good fourth quarter in 2017, with sales consistently strong throughout the holiday season. Across the industries tracked weekly by NPD throughout the season, beauty was the growth leader during various weeks including Thanksgiving/Black Friday week. Some of its hottest holiday sellers were false eyelashes, lip gloss, skincare sets and kits, and home ancillary gift sets.
Overall, fragrance juices brought in the most dollars for the entire holiday season driven entirely by Christmas week, followed by makeup and skincare face products, which showed consistent growth throughout the holiday season.
“As beauty brands and retailers look to understand ‘what’s next’ to keep the momentum going, their focus should be on developing new and alternative ways to engage with consumers,” Jensen explains.
Amidst the news headlines around store closures and challenges facing traditional department stores, it’s important to remember that brick-and-mortar is a critical component to driving growth, she says.
“We’re seeing more brands enhance their in-store interaction with consumers through pop-up, pop-in, and other experience stores, and we expect this will accelerate in this new year,” Jensen adds.