These are the lessons of Christmas past from prestige beauty retailers: The cosmetics category is king, boosted by social-media-driven trends and a boundary-blurring of makeup and skin care. Fragrance continued to be a top-selling category over the holiday and is expected to keep rising. Online sales are a crucial growth driver.
“Color and fragrance, including home fragrance, continue to be our strongest categories throughout the holiday season,” said Patricia Saxby, vice president and divisional merchandise manager for the beauty division of Bergdorf Goodman.
Makeup had a particularly strong 2015, with sales increasing 13 percent year-over-year, a surge that contributed to a 7 percent overall sales increase in the prestige beauty industry, which reached $16 billion according to data from The NPD Group.
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Growth was fueled by strong sales in face makeup. “We saw greater strength in core products carry through to the holiday,” said Artemis Patrick, senior vice president of merchandising for Sephora, adding that overall holiday business was up versus 2014. “In addition to gift-giving, our clients love to shop Sephora for self-purchase, and we saw this reflected in key categories such as foundation, which is traditionally a self-purchase item. Overall, we see this trend continuing.”
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Face makeup is a rapidly advancing segment within color cosmetics, fueled by peaked interest in Instagram-driven trends like highlighting, contouring, strobing and sculpting. The NPD Group’s Karen Grant noted that as consumers reach for makeup-touting skin-care benefits like “lifting,” “radiance-enhancing” or “tone-correcting,” the lines dividing skin care and makeup are becoming blurred.
“The questions, ‘How do you use skin care?’ and ‘How do you wear makeup?’ got the exact same result. The answers were, ‘I use these products to look the best I can for my age.’ It’s about fluidity,” said Grant of the increasing makeup sales amidst decreasing skin-care sales.
With only a 3 percent increase in sales from 2014, prestige skin care is lagging behind makeup in the consumer category of choice. According to NPD, strobing products alone generated more than 30 million additional dollars in the marketplace in 2015.
Further emphasizing skin care’s dragging sales, fragrance — a category that is down more often than not — managed a 4 percent increase.
Kelly St. John, senior vice president and dmm of beauty for Neiman Marcus, noted that one of the year’s standout categories was fragrances and bath. The category was also a top seller at Bergdorf’s, Sephora and the Estée Lauder Cos. Inc.
In 2015, 18- to 24-year-old Millennials, considered to be “heavy users,” were the key category drivers.
“Remember that trend in terms of this new [generation] — it will impact our categories going forward,” said Grant.
Designer scents were up 8 percent last year, while the artisanal segment, which includes brands like Le Labo and Creed, shot up 22 percent.“This group is most likely to wear a fragrance that makes a statement,” said Grant.
This data was echoed by retailers. “Our Sephora Favorites Perfume Sampler was a big hit as well, and included coveted brands like Tory Burch, YSL, Atelier Cologne, Chloé, Stella McCartney, Nest, Marc Jacobs and Tom Ford,” said Patrick.
Online sales were another key component of holiday growth. NPD reported that the online space generated 45 percent of the dollars that were added to the prestige beauty marketplace in 2015.
“Online continued to be terrific. Cyber Monday was our biggest digital day in our history,” said Thia Breen, group president of North America for Estée Lauder.
Discovery is another factor that keeps online business booming.
“Our 25 days of mini samples ‘advent calendar’ on sephora.com was a fun, engaging way to keep clients coming back for new samples every day during the holidays, and our Beauty Shake Up game, where clients could win exciting samples and points, was developed as mobile-first and received great response,” said Patrick.
“We are seeing [that younger consumers] are more likely to try new things and we see that reflected in the growth trends,” said Grant, adding that the new generations of consumers like to sample new products and aren’t brand-loyal.
“It’s not about a brand I trust — it’s about a product I trust, a benefit I trust,” said Grant.