Beauty 2017-2018, Part 1: 4 Ways Industry Paradigms Are Breaking Down

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From left: Karen Grant (NPD), Jordan Rost (Nielsen) and Sarah Jindal (Mintel) at CEW's forecast event (credit: JF Productions).

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Cosmetic Executive Women’s recent Global Trend Report event in New York provided a look at the trends that are reshaping the beauty industry, with expert insights provided by NPD, Mintel and Nielsen. Read the full series here: The Makeup Money Machine, Beauty Gets Well, Where Consumers Shop, Fragrance – Good News/Bad News and What’s Working in Skin Care & Hair Care.

In 2016, U.S. beauty sales totaled $24.03 billion, according to Jordan Rost, VP, consumer insights, Nielsen.

Karen Grant, SVP, global beauty industry analyst, NPD, tagged the prestige category at $17 billion, noting that the segment had grown at a steady $1 billion dollar rate since 2012. She added that South America’s prestige beauty segment grew 14%, while North America and Europe grew by 7%* and 2%, respectively. Notably, France was the only European market to drop in 2016.

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Digging deeper into the data, Rost and Grant unearthed several insights into beauty’s changing paradigm.

The top 20 beauty brands declined 0.3% in 2016, compared to 2015.

1. Prestige is King

Grant noted that prestige beauty grew 6% in 2016 (2015: 7%), while mass gained 2% (2015: 2%).

2. December Isn’t What It Used To Be

While beauty growth is strong, the dynamics are shifting. In the United States, December prestige beauty sales comprised just 4% of 2016 sales, compared to 9% of total sales in 2014, according to figures provided by Grant. More surprising: December 2016 sales were half of those in 2015.

3. Small Brands on the Rise

Small brands are having a moment. As Grant noted, social media-driven brands are converting consumers far faster than legacy brands.

Rost explained that smaller beauty players are reaching scale faster than ever before, achieving $100 million in sales in record time. Today’s indie is tomorrow’s multinational disruptor.

Rost added that the top 20 beauty brands declined 0.3% in 2016, compared to 2015, while the top 100 and 200 brands collectively rose 3.2% and 4.5%, respectively.

4. Why They Buy

Grant noted that confidence is less of a beauty purchasing motivator in 2017, compared to previous years. Per NPD research, the top purchase reasons cited by U.S. women are:

  • 78% to look and feel their best
  • 62% to treat themselves
  • 53% to feel confident

*Grant explained that prestige beauty’s 7% year-over-year growth in 2016 was faster than other coveted categories such as video games and footwear.

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