Earlier this year, consumer intelligence company NIQ released a report detailing its data insights into the beauty and personal care fast moving consumer goods (FMCG) and retail markets for in-store and online sales.
Following the impact of COVID-19 restrictions and the consumer return to cosmetic and personal care product consumption more aligned with pre-COVID levels, the report details several key takeaways across these industry spaces including Q4 online verses offline purchasing behaviors, market dynamics, and category winners and losers.
Now halfway through 2023, looking back at last year’s Q4 data can reveal new understanding about this year’s trend behavior so far, as well as anticipating what is still to come. To learn more about the insights contained in the report and their impact on the beauty and personal care product industry, we spoke with Anna Mayo, VP of Beauty & Personal Care Thought Leadership at NIQ for her input.
Beauty & personal care omnichannel overview
Overall, shared Mayo, “beauty remained a refuge for many in the 2022 holiday season, with sales continuing to perform strongly in Q4 of 2022, with financial growth both in store and online.” This is reflected in the report’s analysis, which details that in the year’s final business quarter, “both in-store and online [sales] contributed to overall Beauty and Personal Care growth by 7%.”
Following purchasing behavior trends exhibited during the COVID-19 pandemic, online sales continue to outpace in-store gains at 13% growth. Further, overall Q4 Beauty & Personal Care performance outpaced the previous year’s 52-week period with an increase of 9%, “surpassing the growth of previous quarters in 2022,” the report stated.
Over the course of 2022, the data reflects that Q4 of 2022 was the strongest business quarter of the year comparatively at $26.3 billion in overall sales in the Beauty & Personal Care product categories. This demonstrates that “despite consumers cutting back in many other categories, beauty remained a bright spot and consumers continued to show that they were willing to treat themselves even in the face of rising prices,” Mayo explained.
Regarding 2022 Q4 verses 2021 Q4 category volume decomposition for the Beauty & Personal Care product categories, the report reflects a year end increase from $24,105.05 for 2021 Q4 to $26,273.27 in Q4 2022, reflecting that consumers are spending slightly more overall in these product categories.
Online verses offline Q4 buying patterns
As detailed in the NIQ report, “except for Bath & Shower, all other Beauty & Personal Care categories continues to experience growth, and online sales continued to drive overall sales growth for all categories.” Further, the report reveals that specifically, “Fragrances, Deodorant, and Sun Care continued to post strong growth,” with total US omnichannel sales increasing by 15%, 15%, and 11% respectively.
Additionally, the Cosmetics & Nails category showed a total US omnichannel sales increase of 9%, Facial Skin Care showed an increase of 7%, and Hair Care showed a 6% increase. While the Hair Removal category stagnated and showed no improvement in total omnichannel US sales and a 2% decline in in-store sales, the category still reflected a 5% increase in online sales.
The Bath & Shower category was the only one to reflect decline in both total US omnichannel and in-store sales of .4% and 2% respectively, as noted in the report, the 6% “the online growth for Bath & Shower was not enough to offset overall declines driven by in-store.”
2022 Q4 market dynamics
The NIQ report notes that “Beauty & Personal Care continued to experience the effects of inflation, with the gap between Dollar and Unit Sales further widening.” This may be explained, shared Mayo, by the fact that “we do continue to see that units remain a watch out, with unit sales soft vs the prior year.”
Further, she added, “consumers have told us that they may be delaying purchases or using substitutes to save money where they can and stretch their budgets further,” which may be contributing to the insight that “Dollar sales continues to grow and outpace Unit Sales which further declined in Q4 2022,” Mayo explained.
As reflected in the report, an additional contributor to the widening of the gap between Dollar and Unit Sales in 2022 could be the rise in average unit price, which grew from $6.03 in 2022 Q1 to $6.31 in 2022 Q2, $6.38 in 2022 Q3, and ended at $6.57 in 2022 Q4, representing a $0.49 increase over the course of the fiscal year.
2022 Q4 category winners & losers
Across individual categories, the 2022 holiday season saw significant growth in the specific stand outs of cosmetics and facial skin care, which was to be expected based on their performance in previous years, the NIQ report noted. Lip and Face Cosmetic categories increased by a combined 46%.
Additionally, the report stated, “we also see Cosmetics Appliances and Gift Sets increased in Dollar sales this quarter, which may be driven by holiday purchasing behaviors.” These categories grew by 18% and 15% respectively, with further growth reflected in Facial Moisturizers at 13%.
Notably, the “Electric Razor experienced declines this quarter, which could be driven by the reduced need to repeat purchase.” As shared in the report, this category declined by 15%. Additionally, “Hair Color Remover, and Shampoo also experienced declines this quarter” with decreases of 5% and 3% reported respectively. The category reflecting the greatest decline in Q4 2022 was Hand Sanitizer at 27%, which can be at least partially attributed to roll backs and reductions in COVID-19 protocol enforcement over the course of the year.
Regarding manufacturer performance, the report noted that “the top 20 manufacturers contributed 43.8% of the Dollar share, while smaller manufacturers outpaced Total FMCG, experiencing 13.3% Dollar Share growth this quarter.” This insight reflects that manufacturing production is on pace to experience growth in the coming business year.
2022 purchase dynamics
Overall, the NIQ report concludes that “despite penetration being flat, Beauty & Personal Care continues to experience growth, with purchase size increasing, driven by strong In-Store performance.” Furthermore, as detailed in the report, “purchase frequency continues to experience declines despite strong online growths at +6.2%, and online sales further develops as purchase size increases, despite buyer penetration remaining flat.”
Additionally, “most Beauty & Personal Care categories consumption increased despite penetration remaining flat,” shared the report. This may be due in part to the face that while “Purchase Frequency declined across categories that may have less repeat purchasing behavior due to stock piling and inflation,” like Electric Razors, specific categories like “Fragrances and Sun Care continued to make notable gains, with growth in both purchase size and purchase frequency,” the report said.
Regarding the overall insights contained in the report, Mayo concluded that “2022 was the year of Fragrance, and Q4 carried that trend forward, with Dollar sales up 15%.” Other categories of note included Deodorant, which “continued to boom as well, propelled forward by the natural deodorant trend which consumers are more than willing to pay up for.”
Further, she remarked, “Facial Skin Care continues to show a positive trend even after such strong gains during the prior few years, and on the cosmetics side, lip ended the year with a very strong quarter of growth.”
As we continue into the latter half of the 2023 fiscal year, it will be interesting to see how end of year data compares to the insights of 2022 Beauty and Personal Care product category trends. While consumer behavior is always variable, it can be expected that at least some of these categories will match or exceed their 2022 growth rates despite growing economic pressures as online sales remain steady or continue to grow.