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Gains for Beauty in Mass and Prestige Retail

The NPD Group, Inc. and SymphonyIRI Group announced the first quarter 2011 (January through March) results of their partnered product, the Beauty Cross Channel Monitor, the organizations’ collaboration on point-of-sale tracking that looks at sales performance in department stores (prestige) and the food, drug, and mass market, excluding Walmart. Total U.S. beauty sales in the prestige and food/drug/mass channels are trending similarly in first quarter 2011, up 5% and 4%, respectively. Makeup sales, while also trending similarly, tell a slightly different story, with the food/drug/mass channel faring better than prestige due in part to the double-digit sales in the $127 million nail segment.

"Despite the current economic situation, the beauty industry continues to trend upward, showing growth for the fourth consecutive quarter in both the food/drug/mass and prestige channels," said Diane Nicholson, president, beauty, The NPD Group. "After a positive, yet cautious 2010, it's encouraging to see consumers continue to embrace newness and innovation in the beauty space."

According to NPD's Economy Tracker, 35% of consumers planned to maintain or increase their spending in cosmetics and fragrances for first quarter 2011, up two percentage points from last year. This is despite the fact that consumers are also dedicating a larger percentage of their wallets to gas and groceries, as prices of these categories rise.

In fragrance, the prestige market (roughly five times larger than the food/drug/mass market) grew by 6% during the first quarter of 2011 versus flat sales in the food/drug/mass channel. The increase in prestige fragrance is due to the positive performance in top existing fragrance juice brands, as well as strong sales from 2010 fragrance introductions.

Conversely in skin care, the food/drug/mass channel is triple the size of the prestige channel, yet prestige is trending better, up 6% versus 3% in food/drug/mass. The face, sun care and gift set segments were key drivers in the growth of prestige skin care.

Victoria Gustafson, vice president, beauty vertical, SymphonyIRI Group, noted, "Capitalizing on the dynamics between these [prestige and mass] channels is a critical component to maximizing brand strategies."

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