The greatest growth post-Brexit has been in the sale of niche fragrances (£125+) and super premium skincare (£200+), both of which reported double digit growth.
“The growth in prestige beauty sales is impressive,” says Teresa Fisher, Senior Account Manager, NPD UK Beauty. She adds, “Post-Brexit there was much uncertainty in the market, but what these figures show is that the demand for luxury and prestige beauty products has been boosted by Brexit. Why? We know that shopping in the UK became less expensive for overseas tourists due to the drop in the value of the pound and that the largest growth in the market has been in London and online.”
The prestige beauty market in the UK was valued at £2,446 million in 2015.
Niche fragrances and super premium skincare
The post-Brexit sales boom mainly concerns luxury, high-end beauty products with a premium price tag. Reporting double digit growth, super premium skincare sales rose 32% compared to the same period in 2015, and in comparison to pre-Brexit where the sector only grew by 4%. Niche fragrances reported an increase of 59.5% in sales compared to the same period in 2015, growing twice as fast as vs pre-Brexit (at 28% growth in January to June 2016 compared to 2015).
A survey carried out by Dealabs, France leading platform for sharing good deals, shows that average prices of cosmetic products (mass or prestige) are 3% lower on British online sales platforms than in France. Taking into account the exchange and delivery costs, buying on a British website is therefore especially interesting for the most expensive products.
London and online sales drive growth
Most regions in the UK reported growth in sales of prestige beauty products with Midland and the East plus Yorkshire and the North East demonstrating the strongest areas outside London. However, it was in London where the greatest growth was reported and this was mimicked online.
For the three-month period July to September 2016, online sales (although it only represents 9.2% of total prestige beauty market) increased by 34.3% compared to the period July to September 2015 and contributes most (43.7%) to total prestige beauty growth in this period.
The second biggest contributor in the three-month period post Brexit was London, with 37.9% of total growth, increasing sales at by 7.3%. London represents 30.1% in value of the total prestige beauty market in the UK.
The drop of the British currency in the wake of the Brexit vote was followed by moderate inflation, mainly boosted by cost of clothing and footwear, recreation and culture and furnishings. The fact that prices did not grow faster is probably due to the high margins some economic players were able to achieve when the Sterling surged during the euro crisis. However, it is not known how long main players will resist to the temptation to increase prices in particular before the Christmas festive season.
“We have already seen that some manufacturers in the news have increased their pricing so it will be an opportunity to review the future ahead with regards to consumer’s ongoing purchasing habits,” concludes Teresa Fisher.