With the GDP growing by 0.8% in the third quarter of 2013, the fastest pace of expansion in just over three years, the threat to see the UK economy sliding into another recession seems now unlikely. However, uncertainty over the direction of the UK economy remains and is putting pressure on premium beauty marketers who have to address contradictory trends.
On the one hand, the demand for targeted and niche luxury beauty products is growing and, on the other, most British women are becoming more cautious about how they spend their money on premium beauty products. “Consumers are seeking bargains and value by shopping around and Christmas discounting is now the norm,” explains consultant and researcher Imogen Matthews, the author of The Premium Beauty Market Report.
Premium make-up outperform the market
The British premium beauty markets were valued at just under £2bn (about EUR 2.4 bn) by The Premium Beauty Market Report / NPD Group in 2012. Growth slowed to +5% from +10% in 2011, however the category is still growing faster than the retail trade overall.
The “Lipstick Effect” - or maybe the “Nail Varnish Effect” as sales (mass market included) of nail colour cosmetics are expected to overtake that of lip colour cosmetics in value in 2013 - still holds. Actually, premium make-up was the most resilient category, posting +11% growth in 2012. Moreover, according to The Premium Beauty Market Report sales of make-up at Christmas are becoming stronger, accounting for 18% of total premium beauty sales in 2012, a 2% point increase on 2011.
Within premium make-up, the fastest growing sectors are eyebrow make-up (+41%) and make-up sets +21%. Nail polishes continue to outperform market growth, at +15%, followed by foundations +14% in 2012.
Niche fragrances make their way
According to The NPD Group, sales of premium fragrances slowed in 2012 to +3.2% in value. Men’s fragrance slightly outperformed women’s at +4% compared to women’s at +2.5%. Coffrets accounted for a third of all fragrance purchases. However, consumer demand for coffrets is changing in department stores, with a trend towards non-coffrets and discounted lines.
In parallel, the niche luxury movement continues to thrive, with 331 launches in 2012 compared to 276 in 2011, according to The Premium Beauty Market Report. Although mainstream brands continue to account for the bulk of volume of fragrances sold, niche brands appeal to consumers demanding something different. Social media is helping niche brands enormously in gaining awareness through blogs, vlogs and forums. “The extent of growth from a number of these brands is encouraging,” comments fragrance expert Michael Edwards. “Certainly, niche brands are affected less by external market forces such as the state of the economy.”
Anti-ageing drives skin care sales
Sales of premium skincare grew by +4% in 2012 in the UK according to The Premium Beauty Market Report / NPD Group. Anti-ageing skincare is the key driver for skincare, with a trend towards results-driven solutions, especially serums. According to Mintel, sales of targeted prestige facial skincare products increased by 9% between 2011 and 2012.
“The antithesis of the BB Cream is targeted products, which offer consumers a more tailored, personalised skincare alternative,” comments Imogen Matthews. “Skin diagnostics are becoming commonplace at point of sale.”
Retail landscape diversifies
The British premium beauty retail landscape has expanded with the arrival of several newcomers such as M&S Your Beauty, Harvey Nichols Beauty Bazaar in Liverpool ONE, Harvey Nichols BeautyMART and Selfridges The Beauty Workshop. “The growing number of premium niche brands now have more opportunities for distribution, especially amongst new retailers and through new retailing concepts,” says Imogen Matthews.
Another trend is the rise of in-store services such as brow bars, nail bars, blow-dry bars and treatments, now offered in many beauty retailers.
Online beauty sales continue to grow and were valued at £532 million (636 million euros) in 2012 (+13% compared to 2011), by Euromonitor. One in five women buy beauty online, according to YouGov SixthSense, which supplied exclusive research to The Premium Beauty Market Report. Several department stores have launched “click and collect” services, offering consumers increased freedom of choice as to where they purchase products. Dedicated e-tailers have emerged, such has Feelunique, which currently sells 18,000 beauty SKUs.
“Online is a powerful alternative for niche brands which cannot afford the merchandising and promotional investment retailers require to be stocked in a physical store,” adds Imogen Matthews.
For more information on the premium beauty market in the UK see The Premium Beauty Market Report in our e-shop section.
