2013 Beauty Predictions

Positive expectations amidst more challenging times set the tone for the year ahead.

Written by Karen Grant, The NPD Group

Welcome to the New Year! Where are we now, and where are we heading? Things are a bit different than where we were a year ago. As we began 2012, we basked in the exhilaration coming off the wave of 2011, “one of the most robust sales periods in over a decade.” In the 12 months since then, we have definitely had moments of absolute delight, but we have also had sobering moments where sales performance wavered. This mix—great highs along with some modest lows—is the stage set for the new year of 2013.

Will beauty sales continue to be positive in 2013?We have every reason to say a resounding YES!Where will we see the strongest performance? Looking across channels, we expect prestige beauty to continue to lead. Prestige beauty holds sway with growth at rates that outpace the sales of beauty in mass. This trend of prestige beauty outpacing mass beauty has been evident since immediately following the recessionary period of 2009 and will likely continue into 2013. Why the difference? A key differentiator between the channels is the level of consumer engagement and attachment to the beauty category. This dynamic is becoming an increasingly important differentiator—the reason one consumer factors beauty into her budget while the other will cut beauty spending down or out completely. The prestige shopper is most likely to shop for beauty and most likely to shop across channels as well as use products spanning all three beauty [makeup, skin care, and fragrance] categories. Does this mean that everything in prestige will thrive?

Though economic factors are on the mend and forecasted to have further improvements in 2013, consumer confidence continues to waver, fluctuating from pessimism to, at best, cautious optimism.This plays a role in what we saw in 2012 and what we believe we will see in 2013. There is momentum at both ends of the price and product spectrum.

Investment spending on premium priced makeup, skin care, and fragrance led the growth once again.Even in Europe, where the economic environment is more challenging, premium priced beauty was positive and remains one of the brightest spots in beauty. Consumers will continue to trade carefully but meaningfully. In this mindset, premium priced products will continue to carve out market share across categories and geographies. Looking ahead to 2013, we can expect premium products to again be a shining light. In fragrance, eau de parfums are thriving thanks to the strength of designer, jewelry, and limited distribution niche brands. In makeup, designer brands as well as makeup artists are expanding the offerings in high-end foundations. In skin care, there is the high-end innovation in devices such as sonic cleansing, as well as advancements in anti-aging, which is now offered with brightening and complexion solutions. And, while gift sets are often perceived as a value category, the fastest growth in the area is in luxury sets, particularly in skin care, which are ringing up at more than double the average price of the category.

While premium priced products continue to excel, as consumers also look for quick and low investment options, items offering fun and fashion are carving out new ground and opening price point categories; the same is true with brands that are in position to win incremental gains with novelty, innovative packaging, and new applications. On this front, the nail category stands out and has been the fastest growing category in all of beauty—across mass and prestige—with consecutive years of explosive, double-digit growth. In makeup, we also see hybrid lip products and gel applications for the eye as well as nails. In fragrance, roller balls and body sprays are excelling. And, in skin care, though science and seriousness are traditionally the overriding philosophy, color and novelty packaging are emerging and winning with consumers.

As we begin 2013 we are braced for vigorous activity. We are confident in beauty and the inherent opportunities of the category. We stand ready to overcome any uncertainties and potentially challenging times ahead. We look to our successes for the inspiration of what new frontiers beckon, what uncharted territories are primed to be explored and what old ones are now to be rediscovered.This is the stage set for 2013.

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