More on Subject
Most Recent Articles In Marketing and Trends
Latest Marketing and Trends Articles
- Happy National Coffee Day
- Retailers Meet Needs of Multi-Cultural Market
- European Commission Limits Paraben Usage in Cosmetics
More Articles By
In a tough economy, knowledge will become more powerful than ever, said Karen Grant, vice president of The NPD Group, and James Russo, vice president of marketing for the Nielsen Co.
“The opportunities are in the granularities,” said Russo of the U.S.’s $43.2 billion beauty market. “It’s not enough to say, let’s look at a macro view.”
What consumers will always spring for? Innovation, emphasized both Grant and Russo, who were speaking during a panel discussion led by WWD BeautyBiz editor Jenny B. Fine. “If customers are finding something new, something different, something that catches their attention, they will buy,” said Grant, pointing to vibrating mascaras launched by Estée Lauder and Lancôme. “Prestige is becoming somewhat masstige — such as Sonia Kashuk’s new upscale line in the Space NK boutiques at Bloomingdale’s, and Burt’s Bees in Macy’s. “People are cross-shopping to a huge degree, and department stores are starting to offer these brands. One of the reasons that MAC does so well is that it is priced so attractively and yet is such a trend leader,” she added.
“Value is not just related to price — each channel has its own definition of value,” said Russo, adding that consumers are looking for “the lowest price per serving” — not necessarily the lowest ticket price.
That’s particularly important to realize in the face of shrinking sales across the board, both said. The loss in beauty sales was not necessarily a shift to another channel, such as from class to mass — all of the beauty distribution channels shrank, including mass market, department stores and direct selling, said Grant.
It is a particularly harsh realization for marketers who 24 months ago were posting gains. “In 2009, people were stunned to see declines in prestige beauty,” said Grant, noting that in 2007 the prestige market had been up 2 percent; by yearend 2008, it was down 3 percent. But, she noted, it certainly isn’t the only luxury category to suffer losses: “the handbags category was down 9 percent, digital cameras down 7 percent and small appliances down 8 percent,” she said. “We have a loyal base of consumers 35 and up buying antiaging products, but we are also seeing those in their 20s buying video games and electronics for fun, rather than cosmetics.”
Grant said that while beauty items priced at $40 and below had declined, those retailing from $60 to $99 had actually posted double-digit gains. “Going into the December holidays, 40 percent of those polled said they planned to defer beauty spending; in January, 33 percent said they actually had deferred and 54 percent plan to,” continued Grant.
In fact, noted Grant, 55 percent of women have said that they are shopping less, but buying the same brands in the same stores in which they have always shopped. “Consumption will not stop. It will become more selective, more meaningful and more careful,” noted Russo. “We’re seeing smaller transactions and less shopping trips.”
And when it will be over is anyone’s guess.
“Let’s say that in the fourth quarter of 2009 we are skimming the surface of the bottom — then we may see moderate growth in 2010,” said Russo.
But the market is in for some rough sledding in the meantime. “This won’t be a U-shaped recovery,” said Russo. “Growth will be slower, and there will be opportunities — but we will have to dig for them.”
Grant counseled a pragmatic view. “What’s most important is not living by a number — it’s focusing on what you need to be doing to survive,” she said.