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    Columns

    Change Has Arrived

    Here’s what we can expect for Prestige Beauty in 2018.

    Change Has Arrived
    Change Has Arrived
    Change Has Arrived
    Larissa Jensen
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    Larissa Jensen, Executive Director, Beauty Industry Analyst, The NPD Group01.26.18
    The past few years have been quite the ride for the U.S. beauty industry. We have seen strong and consistent growth, outperforming many industries such as technology, apparel, toys and more. We have also seen major shifts and significant changes, whether in beauty category performances or the flurry of M&A activity that shows no visible signs of slowing down anytime soon.

    With all the excitement and energy surrounding our industry today, 2018 is poised to be a year of continued growth and change.

    After several years of soft performance, prestige skincare experienced a renaissance in 2017, and we expect the coming year to bring more of the same. Positive performance will continue to be driven by smaller volume but high growth categories such as masks, cleansers and exfoliators. As the anti-“anti-aging” movement accelerates, moisturizers that promote a healthy complexion over anti-aging benefits will show success, and traditional anti-aging serums will continue to struggle as brands play catch-up on this important consumer conversation.

    The slowdown in prestige makeup was anticipated by NPD as early as 2016, as we predicted a possible deceleration in 2017. This is not to say makeup is down and out by any means. It remains the largest beauty category, bringing in the most volume and generating the most excitement with consumers. Makeup reigns supreme when it comes to social media activity, bringing in the highest earned media value of any other beauty category. Given this, we anticipate stronger growth in 2018. As consumer values permeate their purchase habits and influence brand strategy, we expect to see more expanded shade ranges, crowdsourcing, cross-industry collaborations, and new products offering greater technological functionality to enhance consumer lifestyle.

    In fragrance, excitement will be fueled by the untraditional. Within prestige, expect to see more home scents, natural fragrances and artisanal fragrance success. Outside of prestige, alternative channel distribution will continue to be a change maker. Fragrance brands sold only online are finding ways to personalize product and engage consumers in unexpected ways; fragrances sold in clothing specialty stores are winning on price and consumer perception that they are more unique than brands carried in traditional retail environments.

    In retail, changes have been a challenge for the prestige beauty environment. In addition to store closures, department stores have suffered in consumer engagement as foot traffic and dollar sales experienced a slowdown. This is indicative of a shift for the industry, which is looking to understand the “what’s next?” and to identify innovation and future opportunities for brand positioning. Expect to see brands take back some of that control, as the number of pop-ups, pop-ins (store in store concepts) and experience stores will grow in the new year, especially in high traffic/high sales volume cities like New York.

    All things considered, one thing remains certain: Change will continue. It will accelerate in ways we expect and don’t yet foresee. But the beauty industry has proven itself to be adaptable, and we anticipate growth will continue. This will be easier for some brands and retailers than others, but that’s what change is all about. Sometimes it’s beautiful, sometimes it’s painful, but most of the time it’s both.

    About the author

    Larissa Jensen is an expert in the prestige skincare, makeup, and fragrance categories. She travels globally to lend her knowledge of the U.S. market to the beauty industry, which includes the evaluation of new business opportunities for top beauty manufacturers around the world. Larissa shares her expert insights and analysis on The NPD Group Blog, and has contributed to major media outlets and delivered keynotes and trend presentations at beauty events and conferences.
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