Beauty trips to mass channels increase
Beauty. It’s a $48 billion mega category that is battling only moderate growth — especially within the mass channel — because of a shift in consumer attitudes, increased competition and a lack of effective advertising. The question then becomes, “How can suppliers overcome such challenges and break through the clutter?”
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While the scale remains within the mass market, coming in at about $22.1 billion, sales growth was relatively flat at 0.4% for the 52 weeks ended Jan. 5. Meanwhile, prestige and department beauty sales, which total only $11.2 billion, climbed 3.4% during that period, according to Nielsen during its recent webinar, “The Beauty of Creativity.”
Looking to take a deeper dive to better understand the mass channel, Nielsen examined shopper beauty trips and found that consumers are taking less trips to stores — a dynamic playing out across the CPG landscape for such reasons as online growth.
“But what I don’t want to dismiss here is the growth that we are seeing within mass [merchandisers] and grocery — the two mainstream mass channels that are actually showing growth in shopper trips for beauty, which represents a very significant opportunity for retailers in that space, who are trying to drive growth in to store and increase transaction size,” James Russo, SVP global consumer insights at Nielsen, told webinar attendees.
The good news is that, according to Russo, there are steps that suppliers can take to help reverse the slowdown.
- Align to the larger consumer trends of health-and-wellness, multicultural and men to drive sales growth. “Health-and-wellness … does matter within beauty. Sometimes you don’t think it does, but it does. Multicultural consumers, specifically Hispanic consumers, you need to win with Hispanics. … And the importance of men — that men are becoming increasingly focused on beauty,” Russo said
- Reverse industrywide underperforming ad effectiveness by developing ads that have a strong storyline and appeal to key sub-demographics. “Do not treat all millennials the same, … female empowerment being a role. This is a roadmap to creativity to address this sea of sameness,” Russo said.
- Shift online campaigns to those generating higher brand lift, which are search and entertainment sites. “When you think about your online play, … where are we getting the greatest bang for our buck? … It’s in areas such as search and entertainment, which are generating the highest lifts and are also reaching very important consumer segments,” Russo said.
- Breakthrough on shelf with package designs and terminology, which not only resonate with consumers but generate strong sales. “This is a balance strategy of in-store and online. When we talk about in-store we want to make sure that our packaging communicates the personality that is important not only to the brand but is important to consumers,” Russo told webinar attendees.
Cosmetics see shift in market performance
For the past 52 weeks, cosmetics were a $7.1 billion industry, and the eye, facial and lip subcategories accounted for $4.7 billion of those sales. Within the drug store channel alone, cosmetics experienced $2.7 billion in sales, and the eye, face and lip subcategories saw $1.8 billion. DSN has partnered with Competitive Promotion Report (CPR) and IRI to create a series of exclusive reports, and this article examines the market performance of top brands within those subcategories for the past 27 months. The top four brands overall in the cosmetics category were L’Oréal, Maybelline, CoverGirl and Revlon.
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With $759 million in sales for the drug channel, the eye category experienced the highest dollar sales in cosmetics during the last 27 months. The top two subcategories for sales were mascara and eye liner with $330 million and $245 million, respectively. For the mascara market, Revlon was not a significant player, though Almay performed much better. However, eye liner saw high amounts of sales for all of the four top brands. For eye liners, the Revlon ColorStay and CoverGirl Perfect Point brands decreased the average percentage of discount for the past year compared with the previous year, while L’Oréal Infallible and Maybelline Unstoppable increased the average percentage of discount. CoverGirl Perfect Point Eye Liner remained the most discounted brand of the four, and Revlon ColorStay Eye Liner had the highest share of the eye liner market.
In the cosmetics facial category, the foundations subcategory experienced the highest dollar sales ($362 million) for the past 27 months. In this category, the retail margin percentages remained fairly constant for the past two years, with CoverGirl TruBlend seeing the highest change with a nearly 6% increase. Maybelline Dream Liquid consistently saw the highest retail margin percentages for both years, and L’Oréal True Match had the highest share of the foundation market.
With $245 million, lipsticks had the highest dollar sales by far in the cosmetic lip category. Despite the fact that Revlon’s Super Lustrous and Maybelline’s Color Sensational lipsticks had very similar retail and list prices, Revlon maintained the highest average share of the lipstick market. Maybelline did have a high average retail margin percentage of 45.9% for the two-year period, while Revlon saw a much lower, 35.3%, average retail margin.
Winning over the Hispanic beauty shopper
When it comes to beauty, you can’t win without the Hispanic shopper.
In sheer numbers, Hispanics will experience the most growth among multicultural consumers, growing from 17% of the total population in 2013 to 29% by 2060. According to census projections, by 2020 Hispanics will account for more than half of all U.S. population growth and nearly 85% by 2050.
But it isn’t simply the sheer growth of the Hispanic population that makes these consumers a must-have in beauty. It goes deeper — much deeper.
To take a closer look at this critical beauty shopper and help uncover the growth opportunities that beauty brands are not adequately courting, Nielsen recently released its “Beauty Care and Hispanics” report.
The Hispanic market posted more growth across all beauty segments than did the general population. While sales coming from non-Hispanics are declining in cosmetics, hair care accessories, personal care appliances and shaving needs, all of those categories are actually growing among Hispanics. Cosmetics, for example, were down 1.2% in 2014 from 2013 among non-Hispanics, but were up 7.4% among Hispanics during that same time frame, according to Nielsen. In fact, half of the top 20 categories where Hispanics over-index — or spend more than the general population — are in the health and beauty segment.
“You can’t win without Hispanic consumers,” said Monica Gil, SVP, GM, multicultural growth and strategy at Nielsen. “Beauty is a mega category with moderate growth. The Hispanic beauty consumer opportunity has not been fully realized by retailers, manufacturers and marketers.”
According to Gil, the factors driving growth among Hispanic beauty shoppers include:
- Cultural factors about outside beauty being a great equalizer among people and a reflection of inner beauty;
- Hispanics have larger households with more children (also more multigenerational households) than the general population, so they spend more and also share and explore more products;
- Improving incomes;
- 60% of Hispanic women in the United States are younger than the age of 35 years, which means they are in acquisition mode for an array of products and services; and
- 64% of the total Hispanic population were U.S. born and more likely to be bilingual and receive messages for products in two languages instead of one.
When looking to reach these shoppers, Gil suggested that more can be done with social media and online in terms of advertising as Hispanic consumers tend to skew younger and be more socially connected than the general population. And when Hispanic women are online, their circle of influence is other Latinas who are similar to them; they love to receive information for Latinas, by Latinas.
It is essential, however, not to treat Hispanic consumers as one monolithic group.
“What doesn’t work as well is taking a mainstream commercial and just translating it into Spanish without also reviewing the content, to use Hispanic talent and to ensure that it resonates with Hispanic consumers,” said Gil. “If growth is being led by Hispanic consumers, company’s marketing plans should reflect that and lead with Hispanic insights on the front end instead of an afterthought. Also, it is important for companies to embrace the cultural and linguistic dexterity, where Hispanics are speaking two languages, three if you count Spanglish.”