Prestige Beauty Grows 6 Percent in 2017; Skin Care Segment Leads

There's great news for prestige beauty retailers. New findings from global information firm The NPD Group reported that the U.S. prestige beauty industry reached $17.7 billion in 2017—a 6 percent increase over 2016. Surprisingly, for the first time in four years, the skincare category led with a 9 percent sales increase and a 45 percent contribution to the industry’s total gains. Makeup followed with a 6 percent increase and sales—and fragrance experienced a 4 percent increase for the year.

“Change was the theme of the beauty industry in 2017, from the shifts in trends and category performance, to the wave of mergers and acquisitions which show no signs of abating in the near future,” said Larissa Jensen, executive director and beauty industry analyst at The NPD Group. “The industry has not only adapted to this change, but has continued to achieve strong and consistent growth, as it has seen for the last few years. We can expect change to continue to be the catalyst of growth for the industry in 2018.”

The skin care segment took in $5.6 billion in sales. Growth is attributed to smaller segments including masks (more than 32 percent), facial exfoliators (more than12 percent) and cleansers (more than 6 percent), and other face products (more than 39 percent), which includes essences, facial sprays, other items and emerging formats. Skin care’s largest segment by volume, facial moisturizers had an increase of more than 7 percent and age specialists also fared well in 2017 with more than 7 percent growth. The body, sun, and haircare segments of skincare also experience growth.

While as predicted, makeup’s growth rate slowed in 2017, it still remains beauty’s largest category, bringing the most dollar volume to the industry and $8.1 billion in 2017. Growth was attributed to high volume segments including foundation (more than 7 percent) and eye shadow (more than 13 percent), as well as other face products such as bronzers, highlighters and glow products. Sales were also positive for other key segments like face primers ( more than 17 percent), concealer (more than 10 percent), eye brow makeup (more than 7 percent) and lip color (more than 2 percent).

Fragrance sales totaled $4.0 billion in 2017, with juices growing by 4 percent. Natural and artisanal fragrances grew their sales by 32 percent and 14 percent, respectively. The home scents market is booming, adding $44.4 million in sales since 2014. Sales reached $80.4 million in 2017, which is up 59 percent over 18 percent growth the segment saw in 2016. Growth drivers included candles (more than 56 percent) and the smaller segment of home ancillary gift sets (more than 165 percent), which include candle and reed diffuser gift sets.

“As beauty brands and retailers look to understand ‘what’s next’ to keep the momentum going, their focus should be on developing new and alternative ways to engage with consumers. Amidst the news headlines around store closures and challenges facing traditional department stores, it’s important to remember that brick-and-mortar is a critical component to driving growth,” said Jensen. “We’re seeing more brands enhance their in-store interaction with consumers through pop-up, pop-in, and other experience stores, and we expect this will accelerate in this new year.”