Internet Sole Retail Channel to Post Increase in Beauty Purchases

According to "Emerging Channels Series: Beauty Care Products, Special Focus: The Internet" report from The NPD Group, Inc., the economy has taken a toll on beauty purchases across most retail channels. However, the Internet gained one percentage point and was the only retail channel to experience an increase in the number of women who reported mentions for beauty products.

The Internet, an increasingly dynamic, though comparatively small channel for beauty, has a higher ratio of women saying they spent more, relative to those who said they spent less on beauty in the past year. The average annual beauty spending per woman is $86 for this channel. The ease of shopping online and product availability continues to be what is driving Internet shoppers who spend more via this channel than in the previous year.

Women who spent more on the Internet also told NPD that they purchased more beauty products in general and that they started buying more expensive brands and products than in the previous year. Higher gas prices also had a positive impact on Internet spending. More consumers opted to shop for and buy beauty products online, instead of driving to a store.

In addition, the Internet plays a key role in shopper research. About two in three Internet shoppers who shopped for beauty online, but did not make a purchase, said they use the internet to gather information and make price comparisons through different Web sites, preferably ones that offer various brands or a combination of multibrand and single brand Web sites.

“Consumers are clearly showing us that they value this avenue for beauty. The Internet crosses all channels from traditional brick and mortar stores, to TV, to direct sellers. The opportunity lies in utilizing the best features, across channels in combination with the selling points unique to the Internet,” said Karen Grant, senior global industry analyst and vice president, beauty, NPD. “While there have been major strides made in online beauty retailing, there are still significant opportunities in understanding and overcoming the barriers to purchase beauty on the Internet. There is still room for more Internet shoppers to buy through Web sites instead of going somewhere else to make the actual purchases after they have used the sites to gather information and make price comparisons. This will be the key for future growth: optimizing shopper activity and increasing revenue."

GCI magazine will run a panel discussion on retailing online in its July 2009 issue.