According to a market report, British Lifestyles: 2007, by Mintel, overall British consumer spending in 2006 was higher than ever before, with expenditure reaching £1.9trillion and up 9 per cent, compared to a 6 per cent growth between 2004 and 2005.
Neil Mason, senior retail analyst at Mintel, said in the report, "Rising disposable income has led to higher expectations about the quality of life, and as a result we are increasingly trading up and spending more on better quality, premium products and services".
Consumers, who increasingly have been spending on self-indulgence, are now buying premium cosmetics as a 'treat'. And with the more notable mass market brands such as L'Oreal and Olay creating added performance ranges for the premium market, consumers are being enticed by the more affordable price tag these products carry.
However, Mintel has suggested that despite current consumer spending mentality boding well for the higher end cosmetics market at present, in the long-term consumers may start to feel the consequences of their frivolous spending.
"Rising interest rates and mixed messages about the housing market have, as yet, failed to dampen consumer spending in the high street." Mason states.
"But a degree of caution is creeping into the consumer economy, which means we are likely to see a slower rate of growth in the medium term".
The Mintel report suggested that the way forward in the premium cosmetics market is for manufacturers to put further effort into new product development, mainly in skin care but also in colour cosmetics.
This is predicted to not only encourage consumers to 'buy two or three different products instead of just one', but also to help persuade shoppers to continue 'trading up' to added-value ranges.
