Growth in UK premium beauty is fueled by make-up – Part Two

In Part One, Imogen looked at consumer confidence in the UK bouncing back last year​, bringing more people back onto the high street and spending in-store. In Part Two, she looks at online opportunities, as well as the premium make-up, skin care and fragrance.

Online: still an opportunity for growth​

According to NPD Group, online sales of premium beauty have slowed since 2013, but still remain an important contributor to growth, especially in the skincare category.

The days of online representing a threat to retailers have long gone, with most building multi-channel platforms for beauty.

Holly Tomlin, senior marketing manager, Debenhams, comments: “Online is a rapidly growing part of our business mix which we are keen to build on for the future. We want to ensure the online experience is an extension of our in-store offering, so are continually looking to improve functionality and assortment availability.” ​

She notes that the Debenhams online customer is looking for bargains and researches price, so it ensures that offers and promotions reflect this shopping behaviour.

Sue Fabian, general manager, Umbrella Brands, has noted a further shift, with more customers going online to buy from branded websites.

“All retailers need to look at the brand websites versus their own,”​ warns Fabian. “Beauty brand websites by and large offer samples, gift wrap and special online only offers.” ​

Delivery is another area that is crucial, if retailers are to hold onto online customers – Selfridges was cited in the media for its poor response to the late delivery of product.

Premium make-up tops category growth​

Over the past three years, premium make-up sales have forged ahead and recorded +12.8% growth in 2014, according to NPD Group.

Amongst premium brands, make-up is now larger than skin care (21% and 26% respectively), while fragrance takes the lion’s share at 53% of total premium sales. Foundations, gift sets (especially make-up palettes from Benefit and Urban Decay) and eye shadows are the main contributors to premium make-up growth.

Benefit consolidated its position as the leading premium make-up brand and moved up to fifth position in the total premium beauty market.

Best-selling lines included They’re Real Mascara and the game-changing They’re Real Liner launch. Beauty services contributed to the brand’s success and there will be 130 Brow Bars by the end of 2015.

“Consumers are loyal to skin care and foundation, but less so when it comes to make-up,”​ affirms Ian Marshall, managing director, Benefit. “It is all about providing the right advice, service and shopping experience in store. It is also imperative to deliver the promise, with products that are easy to use.” ​

Premium skin care under pressure​

Premium skin care was the weakest of the three product categories with growth of just 1.7% in 2014.

Facial cleansers and anti-ageing products accounted for much of this growth, notes NPD Group. Under pressure from masstige skin care, premium brands are treading a fine line between offering the best in technological advances and the convenience of all-in-one multifunctional products.

Brand highlights include the Elemis Ultimate Gift of Pro-Collagen, which brought in £1.3m revenue during the Christmas period. Meanwhile premium skin care brand Murad went from strength to strength with its innovative Murad YouthCam skin diagnostic tool, a department store exclusive, that uses six key markers to quantitatively analyse skin health.

Premium beauty: all about fragrance​

During the last quarter of the year, fragrance sales swing into action, accounting for 64% of premium beauty turnover, and rising even higher to 70% in December alone.

However, modest growth of +3.1% masks a worrying trend: not only were new launches down in 2014, but the average performance per launch declined -12%, suggesting that consumers are becoming immune to the torrent of new brands each Christmas and perhaps are more discerning when making product choices.

Many stuck to tried-and-tested favourites, such as the perennial Chanel No.5, Dior J’Adore and Jean Paul Gaultier. The most successful new women’s fragrance of 2014 was YSL Black Opium.

In men’s fragrance, the number one new launch was Jimmy Choo Man, the first men’s offering from the brand. Meanwhile, Paco Rabanne 1 Million, Boss Bottled and Gucci Guilty topped the best seller lists for many retailers.

In recent years, niche fragrances have been gaining ground as a category, with many retailers devoting areas to more unusual brands.

Aspects Beauty specialises in selling niche brands and saw turnover more than doubling in 2014, with strong performances by Ferragamo, Moschino Toy and D Squared Wild.

Jill Hill, managing director, Aspects Beauty, envisages ongoing stock pressures caused by stores keeping very low levels of product. “The obsession retailers have with colour and skincare reduces budgets, space and expertise in the fragrance areas.”​

Going forward in 2015, UK premium beauty industry looks to be in good shape but will need to adapt to an increasingly promotions-led retail environment and the continued migration of consumers online.