Consumer spend freeze finally hits recession proof premium beauty sector
The study from NPD Group, which looked at the sales figures for May, found that the skincare and fragrance segments of the UK’s prestige beauty market saw a decline in unit sales compared to the same period last year, with sales down by 0.8% and 6.4% respectively.
After a solid performance in 2011 and in the first quarter of 2012, the UK prestige beauty market saw the total volume of unit sales decline by 0.6% year-on-year which NPD said was partly due to retailers offering fewer promotions in 2012 compared to the same period last year. Despite this, the market managed to increase in value by 2.5% to £106 million compared to 2011.
Of the two beauty market categories that experienced a drop in units sales over the last year, skincare was the worst hit with sales falling by 3.9% in value and 6.4% in volume. The data also shows that despite a good start to the year, premium skincare brands with an average selling price above £100 are currently experiencing the strongest decline.
In addition, the prestige fragrance market is growing in value but sales units are diminishing slightly which NPD attributes in part to a decline in gift set sales. This is due to the fact that many beauty brands that had developed special offers around Valentine’s and Mother’s Day in 2011 still had the gift sets left by May 2011 and so decided not to repeat this initiative in 2012.
The make-up segment, where the average selling price is 21% lower than the average selling price of the total prestige beauty market, was the only category to record a strong 9% increase in value compared to last year in the same period.
June Jensen, director for NPD Group Beauty UK, said: "While the prestige beauty market had been relatively spared by the challenging economic situation, the data ending May 2012 shows a different picture. Our recent research shows the less expensive brands within the prestige beauty market are performing better. In May we saw a new trend emerging - the prestige beauty landscape beginning to shift towards lower price points. It also appears that brands are taking new measures to be more creative and innovative in their product promotions, and also to increase further engagement with the customers.
"This year’s bonanza of once-in-a-lifetime events including The Diamond Jubilee and The Olympics will give beauty brands further opportunities to make their own mark to maximise such special and memorable events."
NPD said the skincare and make-up segments were particularly creative around the Diamond Jubilee with multiple launches of products in limited editions while the fragrance brands are banking on the Olympics by launching men sport fragrances or using famous athletes to promote their products.
Jensen added: "The UK is set to enjoy a £750 million consumer spending boost in the weeks leading up to the London 2012 Olympic Games. As every market sector will fight to get a bit of that extra consumer spend, beauty prestige brands should do their utmost to ensure they are well prepared for the excitement of residents and tourists alike, and to make sure they also benefit from that spending boost."
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