2012 Predictions

2012 Poised on a Platform of Unprecedented Growth Contrary to consumer sentiment, all signs point to another prosperous year for prestige beauty sales.

Written by Karen Grant, The NPD Group

Exhilarating! That word perhaps best describes the beauty experience over the past 12 months and the feeling we look to sustain in 2012. We enter this new year in beauty after having enjoyed one of the most robust sales periods in over a decade. And, while both the mass and prestige channels have been positive, it is prestige beauty that is reigning supreme. From the stellar increases in prestige skin care, to the continued gains in makeup, to the double-digit rebound of fragrance, prestige beauty is experiencing a time of unprecedented growth.

What is most intriguing about the acceleration in prestige beauty performance is the degree to which it stands in stark contrast to the overridingly lackluster consumer outlook. Historically, prestige beauty performance followed the trend of consumer sentiments. That is not the case today. Though consumer confidence has inched back to the 2008 pre-recession levels, it remains quite shaky and is actually among the lowest levels the nation has experienced in the past 30 years. And yet, prestige beauty thrives.And, while prestige beauty growth continues at both ends of the price spectrum, it is the high-end, premium price points that are experiencing the strongest gains.

Recognizing the reality that the current economic uncertainties may persist for some time, it appears that consumers are further reassessing their values and what really matters over the short as well as long term. The value of saving is recalibrated with the value of what adds a measure of joy to life. The return on investment (new value equation) is emotional as well as financial.

As consumers make enhanced quality of life choices, choosing “pragmatic luxuries” may mean getting just one thing, but it is one thing you (or someone you love) truly love. In fragrance, along with a reawakening of celebrity scents, high-end designer brands dominate new and have helped drive the double-digit growth in juice and ancillary sales. In makeup, with new products experiencing double-digit increases in dollars and units, the joy of color was seen with more than half of the top 25 new products (and 7 of the top 10) being from an eye or lip category. In skin care, with launches almost doubling in sales in 2011 compared to 2008, the drivers of growth were items featuring new technologies and unique benefits, particularly complexion specialist products which offer an enhanced, broader based approach to skin care.

Underlying the positive sales results, across these categories we saw a shift emerging for greater depth:richer olfactive notes in fragrance, playful indulgences in makeup, moving beyond just lines and wrinkles in facial skin care. With these emerging trends, the door opens to further expand our appeal to consumers across ages and ethnicities with new features, benefits and categories. At this moment in time, when consumer sentiments are so low, it is the leveraging of these opportunities that will help beauty to sustain its ride on high.

The successes of 2011 leave us poised for a robust 2012. We gain further confidence that we are in an industry that has surmounted any legacy issues from the crisis of 2009 and will surmount any challenges that may emerge in the months to come. We are reassured that the consumer loves beauty, wants beauty, and feels a need for beauty. At its core, that love is the fundamental of our industry. As we couple that love with dynamic products, engaging environments and relevant conversation, we will ensure that our future remains vibrant.

About the Author

Karen Grant is vice president of beauty/senior global analyst, The NPD Group—and a member of Beauty Packaging’s Board of Advisors.