2016-07-11 10:19:46

What’s Driving Sales of U.S. Beauty Brands?

2016-07-11 10:19:46

The evolution of technology and social media will continue to power the U.S. beauty market, according to Kline’s recently published Cosmetics & Toiletries USA report. Driven by high-growth brands and particular product categories, sales of cosmetics and toiletries increased by 3.8% in 2015. 

Technological advancements allow personalized beauty solutions on various levels. High double- to triple-digit growth is seen among brands that managed to capitalize on personalized approaches in 2015. 

Personalization starts at the product level when brands like Skin Inc., Lancôme, or Mix-o-logie offer their custom beauty regimens or scents, and continues through personalized products suggestions offered by beauty apps or targeted marketing messages through various social media platforms.
 
Both large and niche brands utilize the power of social media to connect with target consumers. Large brands like Neutrogena, Clinique, or Estée Lauder have become key social influencers as they turned to beauty social media celebrities to appeal to millennials. Smaller brands, such as Tarte, Too Faced, E.L.F. Cosmetics, Anastasia Beverly Hills, and IT Cosmetics, among others, often choose to make relationships by appealing to their target audience through the girl-next-door type of social stars.
 
Smaller brands have a distinct advantage as they are very nimble and can listen more closely and adapt to consumers’ demands quickly. The fact that smaller brands, particularly in the makeup products class, grow the strongest, confirms the power of social media leveling the playing field among large players with hefty advertising budgets, and small, niche brands that do not have the larger marketing budgets. It also demonstrates the power these companies have in terms of sales.
 
Recognizing the efficiency of direct engagement with consumers, large brands are also shrinking their traditional marketing and advertising budgets, indicating a move toward digital and social campaigns.
 
Mobile devices play a crucial role in personalizing a consumer’s beauty routine. Sephora launches its online Pocket Contour class, a mobile-only experience that helps beauty newbies gain knowledge of how to properly contour. Apps like Beautiful Me or Plum Perfect can digitally identify the shoppper’s skin tone and suggest the ideal makeup match from the user’s social media photos. Moreover, “selfie approved” products like Covergirl’s Outlast Stay Luminous foundation, along with various bold lipsticks, are introduced due to the high impact of social media on consumers.
 
Resonating with the selfie generation desiring bold lips and driven by innovative products, lipsticks and lipglosses is the fastest-growing product category, recording over 8% growth in 2015. The key drivers are multi-functional/hybrid products like liquid lipsticks, which provide skin care benefits, as well as bold, long-lasting lip color. 
 
With more men paying more attention to their personal appearance, skin care products for men record the highest growth of 9.5% in 2015. While skin care is driven by a gender focus, the fragrances category moves away from being gender-specific, especially niche scents.
 
M&A activity in the U.S. cosmetics and toiletries industry continues to change the beauty industry landscape with the 37% increase in deals in 2015. Most notably, Coty’s acquisition of 41 of Procter & Gamble’s beauty brands places Coty among the top five players. Unilever’s acquisition of the prestige skin care brands gives the company a foothold in the prestige skin care category. Last week, Revlon announced its acquisition of prestige beauty companyElizabeth Arden. This deal will be watched closely to see how each company enhances the other in terms of distribution and portfolio offerings.

ABOUT THE AUTHOR
Naira Aslanian is the research project manager at Kline.

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