Cosmetics, Beauty Supply & Perfume Retail Industry Trends

Growing Prestige Brand Market

Sales of prestige brands in the makeup, skin care, and fragrance categories increased 4 percent between 2004 and 2005, according to NPD Group. Artist (professional-type) and niche brands drove growth in the prestige makeup market. Anti-aging facial products, particularly super-premium brands priced at $150 or more, were key in the high-end skin care market. New products and celebrity endorsements helped drive growth for fragrances.

Offering Salon Services

Beauty stores combining retail and true salon services are becoming more popular. Historically, some companies have installed a single hair stylist chair in the back of a store to meet the minimum requirements for selling salon-only products. Beauty superstores offering huge selections of merchandise and a full array of salon services have plans to expand. Sally Beauty Supply, a predominantly retail-only operation, is experimenting with providing salon services instore in the UK.

Advent of Hybrid Mass/Prestige Brands

To capitalize on growth in the high-end beauty segment, yet still appeal to the average consumer, some retailers are creating or carrying products that bridge the prestige and mass markets. “Masstige” products are high-quality products, sometimes with a professional endorsement, at mass market prices. Target’s Sonia Kashuk brand, Ulta’s private-label cosmetics, and Cristophe Beverly Hills hair care line are examples of masstige products.

Increased Availability of Professional Products

A growing number of retail outlets are carrying professional beauty products previously sold through limited distribution channels. Driven by competitive pressure, some manufacturers are ending exclusive distribution relationships with specific retailers in favor of non-exclusive rights, increasing the distribution of some professional products through new retail venues. In addition, some distributors are ignoring manufacturer restrictions regarding salon-only products, and selling to retail-only operations.