NPD Group: Sales decline in U.S. prestige beauty category

NEW YORK Findings from market research firm The NPD Group that U.S. prestige beauty sales took a beating during the first half of 2009 may not be the most upbeat news, but it does make you wonder where those dollars are instead being spent. Well, a separate NPD report suggested that drug and mass might be the answer.

As the article stated, U.S. prestige beauty sales dropped 7% during the first half of the year, and June marked the 11th consecutive month of negative prestige beauty performance. Even prestige skin care suffered a loss, with sales dropping 6%.

The silver lining, however, might be the NPD report released in July that found that specialty stores are among the three most cited channels shopped for beauty products in the past year, surpassed only by mass merchants (53%) and drug stores (41%).

Echoing the sentiment, consulting and research firm Kline & Co. issued a report earlier this year indicating that consumers are showing a preference for competitively priced products from the mass and direct trade classes in light of the economy. “The new frugal mindset imposed by the recession has altered spending and product consumption habits, some of which will probably continue into the foreseeable future,” stated Nancy Mills, Kline industry manager, consumer products practice, in a statement issued in May. “Many people have traded down on certain products, and as they get accustomed to buying some lower-priced or private-label products, and shop more in the lower-priced channels, they might well continue with those habits after the tough times have subsided. To be successful, companies will likely continue to infuse the mass segment with more sophisticated products to compete with luxury products.”

Kline also noted in the release that some brands that did very well in the previous years, i.e., Bare Escentuals, had slower growth in 2008, whereas such mass brands as Garnier skin care and Neutrogena sun care showed very strong growth.