The U.S. prestige beauty industry reached USD 17.7 billion in 2017, a 6 percent increase over 2016, according to market research firm The NPD Group. At the forefront, the skincare category grew its sales by 9 percent and contributed 45 percent of the industry’s total gains; makeup followed with a 6 percent increase in sales, and fragrance closed the year up 4 percent. [1]
Skincare products drive sales
After several years of soft performance, skincare was revitalized in 2017. Reaching USD 5.6 billion in sales, growth has stemmed from smaller segments including masks (+32 percent), facial exfoliators (+12 percent) and cleansers (+6 percent), and other face products (+39 percent) which, among other items, includes emerging formats, essences, and facial sprays. Larger segments such as facial moisturizers (+7 percent), skincare’s largest by dollar volume, and age specialists (+7 percent) also fared well in 2017. The body, sun, and hair care segments of skincare all experienced growth as well.
Though makeup’s growth rate slowed in 2017, it remains beauty’s largest category, bringing the most dollar volume to the industry and USD 8.1 billion in 2017. Growth was driven by high volume segments including foundation (+7 percent) and eye shadow (+13 percent), as well as other face products such as bronzers, highlighters, and glow products. Sales were also positive for other key segments like face primers (+17 percent), concealer (+10 percent), eye brow makeup (+7 percent), and lip colour (+2 percent).
In fragrance, where sales totalled USD 4.0 billion in 2017, juices grew by 4 percent. Niche areas of the market including natural and artisanal fragrances grew their sales by 32 percent and 14 percent, respectively. Beyond the body, the home scents market is booming. It has added USD 44.4 million in sales since 2014. Sales reached $80.4 million in 2017, up 59 percent. This is building off of 18 percent growth the segment saw in 2016. Growth drivers for the market in 2017 included candles (+56 percent) and the smaller segment of home ancillary gift sets (+165 percent) which include candle and reed diffuser gift sets.
A beauty-full holiday
The prestige beauty industry had a good fourth quarter in 2017, with sales consistently strong throughout the holiday season. Across the industries tracked weekly by NPD throughout the season, beauty was the growth leader during various weeks including Thanksgiving/Black Friday week. Some of its hottest holiday sellers were false eyelashes, lip gloss, skincare sets and kits, and home ancillary gift sets. Overall, fragrance juices brought in the most dollars for the entire holiday season driven entirely by Christmas week, followed by makeup and skincare face products, which showed consistent growth throughout the holiday season.
“As beauty brands and retailers look to understand ‘what’s next’ to keep the momentum going, their focus should be on developing new and alternative ways to engage with consumers. Amidst the news headlines around store closures and challenges facing traditional department stores, it’s important to remember that brick-and-mortar is a critical component to driving growth,” said Larissa Jensen, executive director and beauty industry analyst at The NPD Group. “We’re seeing more brands enhance their in-store interaction with consumers through pop-up, pop-in, and other experience stores, and we expect this will accelerate in this new year.”
