Heading into the 2022 holiday season, the biggest question for the US beauty industry is: can our industry remain insulated from the economic headwinds that surround us? So far this year, prestige beauty is the only industry growing in unit sales among the 14 discretionary retail spending categories tracked by NPD.
Clearly, consumers have been indulging in beauty products, an indulgence that is unique to the prestige side of the beauty market. In fact, year-to-date unit sales are declining for beauty products sold in the mass channel, including grocery stores and drug stores, according to IRI mass-market sales data, while dollar sales and units are growing in double digits for beauty products sold. on the prestige channel.
There are reasons to be optimistic that the high-end beauty market’s sales force will endure through the holiday season, including the following:
1. The Beauty Power Index
The first is by what NPD has coined the “beauty index.” Larger than the lipstick or fragrance indices, the beauty index is tied to the same dynamic, but on a broader scale. Regardless of which company or survey has been measuring it, US consumer confidence has been on a unanimous downward trend all year. The Beauty Index assumes that when sentiment is low, the desire to indulge increases, and NPD has seen the impact of consumer indulgences across all high-end beauty categories throughout 2022. Online With this trend, 28% of consumers plan to buy beauty products this holiday season, which is consistent with previous years, according to findings from NPD’s Holiday Purchasing Intentions Report.
2. A shift back to retail
The second reason for the beauty industry’s positive holiday outlook is that consumers plan to shop more in stores. According to the NPD Christmas report, more consumers will buy Christmas gifts in physical stores. This shift away from online shopping is a boon for beauty sales, with brick-and-mortar stores capturing the lion’s share of revenue across all categories. This channel also has a higher frequency of impulse purchases, and beauty products are the ultimate luxury: they’re quick and easy to pick up as you walk the aisles. Online sales will still be strong, but brick-and-mortar stores will win over the holidays this year.
3. A higher income group
The final, but equally important reason comes from the largest consumer base in the prestigious beauty industry. Nearly half of its buyer base has a household income of more than $100,000 per year. This is in contrast to the mass market buyer, who has a greater diversity of income levels; According to IRI Buyer Panel data, about one-third of the mass-market buyer base earns less than $50,000 per year and these consumers are more likely to cut back on spending this holiday season. In contrast, the NPD holiday study reveals that consumers who earn more than $150,000 are more likely than other income ranges to spend more, shop for themselves and buy beauty products during the holiday season.
NPD forecasts holiday sales growth for the prestigious beauty industry. The expectation is that the dynamics that have driven our industry throughout the year will continue to carry us through the always important fourth quarter. Fragrance sales will grow, albeit more slowly than in previous years, and makeup, skincare and haircare should also shine during the holidays, maintaining the strong sales performance these categories have experienced so far. of the year.
Larissa Jensen is Vice President, Beauty Industry Advisor, The NPD Group and a member of the Beauty Packaging Board of Advisors.
Source: news.google.com