Diving summary:
Consumers with an annual household income of more than $100,000 spent nearly $9 billion on beauty products in the first half of 2022, according to a report by The NPD Group.
That marks a 14% year-over-year increase, with Gen Xers and millennials leading spending.
The double-digit growth is due to a combination of more shoppers in the market and consumers spending more compared to 2021, according to the report.
Diving information:
Even though many households have cut back on discretionary spending during a time of high inflation, the beauty category is showing signs of resilience.
Eighty-five percent of consumers have indicated a change in their buying behaviors, according to a recent Morning Consult survey. However, higher-income shoppers are more insulated from inflation and less likely to change their buying behavior.
Additionally, high-income American households account for more than 40% of revenue from beauty product sales, according to NPD research.
“During this critical time when the retail recovery is forced to coexist with mounting economic pressures, it is imperative that beauty brands and retailers understand which consumers are most engaged and willing to spend,” said Larissa Jensen, advisor to the beauty industry at NPD, in a statement. statement. “These behaviors can vary by beauty category, but getting it right and acting on it can provide the competitive edge needed to be successful.”
Ulta, which sells a mix of mass and prestige beauty, challenged the profits of most other retailers by reporting last week that net sales grew by almost 17%. The company said its ongoing expansion of Mac and Chanel Beauty in more stores contributed to a strong performance for Prestige, which saw double-digit growth in both skincare and beauty.
The beauty market is stronger than other discretionary retail categories, explained Neil Sanders, managing director of GlobalData, regarding Ulta’s gains.
“Indulgences aside, it’s also the case that many skincare and beauty routines are so integrated into people’s lives that there is a great reluctance to cut back on any of the products associated with them,” Saunders said in a statement. note sent by email.
coty too reported growth in its latest earnings, with sales up 10% year over year. Prestige in particular grew by 20%.
“The beauty category shows no signs of slowing down, specifically when it comes to prestige,” said Coty chief executive Sue Nabi. said in a call with analysts.
But Ulta CEO Dave Kimbell warned that the retail segment is not immune to market conditions.
“We recognize that beauty is not immune to macroeconomic challenges, but the category’s deep emotional connection has historically resulted in stronger resilience compared to other discretionary categories,” Kimbell said on a call with analysts Thursday, adding that the popularity of wellness and personal care has increased. she encouraged this even more. “As we look ahead, we know there will be challenges, particularly with the broad impact of rising inflation, both on our business and our guests. But we remain confident in the resilience of the beauty category and our ability to lead the beauty category and drive long-term profitable growth.”
Source: www.retaildive.com