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Report Shows Prestige Beauty Products Hit By Economy

Posted: September 2, 2009

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Makeup sales in U.S. department stores during the first six months of 2009 were $1.5 billion, down 7% in dollars versus first half 2008. Overall segment performance was disappointing in the first six months of 2009. All segments—face, eye, lip, gift sets, other color and nail—posted declines ranging from 3–20%. Perhaps even more disappointing was that 25 in 26 sub-segments in makeup, with the exception of the other eye category, also posted declines in the first half of the year.

Despite the enormous challenges in prestige makeup, new launch activity in a number of categories and premium price face and eye products posted healthy gains. While overall new launch makeup dollar volume dipped 7%, new makeup face product sales grew in both dollar and unit volume, led by double-digit increases (ranging from 11–59%) in foundation, blush, concealer and other face. In the eye segment, new mascara sales posted an increase of 4%, and a positive note for the lip segment, new lip color sales rocketed up 47%.

Relatively small but growing segments of the prestige makeup market are premium price face and eye products. Still niche in size, premium price face products (priced at $50 and above) have almost doubled in volume duringthe past four years and grew 5% in dollars and 2% in units in first half 2009.

“The results in first half 2009 are in many ways a continuation, and perhaps, an escalation of the trends we have been seeing since the start of the 2008 recessionary period,” said Karen Grant, vice president and global industry analyst with The NPD Group. “As consumers continue to hold tight onto their wallets, the criteria of what products they choose to spend on is increasingly driven by those that they find personally meaningful and worthy of investment. In this challenging retail environment, it can not be overstated how increasingly important it is for manufacturers and retailers to take careful note that there are items that are resonating well with consumers. They need to understand what those products are and see how they can potentially leverage that learning into winning with other beauty categories,” ended Grant.

About The NPD Group, Inc.