Premium beauty experienced a sparkling year in 2013*, culminating in Christmas, the high sales point of the year.
So what’s in store for 2014?
It would be easy to predict more of the same, and to some extent that will be true, but I see some changes on the horizon that will shape premium beauty over the next 12 months and beyond.
1. Increase in M&A Activity
The UK economy is forecast to pick up in 2014 and this will give the multinationals the confidence to start going on a shopping spree. Many have large stashes of cash ready to snap up attractive niche brands. 2014 could see acquisitions from P&G, L’Oreal, Coty, Estee Lauder Companies.
Takeover targets: Burberry, the fashion retailer and House of Fraser, currently in discussions with Galeries Lafayette.
2. Online Traders Head for the High Street
Yes, really. Online sales of premium beauty are a long way from peaking, but I predict that some pure etailers will go from clicks to bricks.
The high street is ripe for development with large swathes of vacant property due to the retail failures over the past 7 years.
Online may be where many people like to shop, but many more prefer to go out shopping, where they can touch, feel and try on products and ask for advice from a human being.
2014 will see the start of the high street revival, which will be part of a longer term trend.
3. Retailers will Reduce Portfolios and Choice
Maybe this is more for the wish list than a reality, but retailers will be looking hard at the economics of stocking brands and ranges that do not pull their weight. Not only does it make economic sense, but consumers will be more inclined to purchase in a less cluttered environment.
Fewer brands, less clutter = higher turnover.
4. Less Discounting Next Christmas
Consumers got savvy last Christmas and refused to spend, prompting a flurry of panicked promotions by Debenhams and Marks & Spencer. It didn’t work and they were the losers, while John Lewis, and others who did not play the discounting game, were the retail winners.
Discounting won’t go away, because it’s proven to be effective in increasing footfall, but by next Christmas it will be more measured. Premium beauty will still play around the margins, where it must stay if it is to retain credibility with the consumer.
5. Men’s Grooming – Set to Grow
The British Fashion Council and Mintel are seeing strong growth in the UK menswear market, which is indicative of men’s spending power and growing sense of style. Role models include actor Benedict Cumberbatch, comedian Jack Whitehall and current teen fave Harry Styles. It’s not just about the clothes they wear but their groomed appearance.
18-34 year old men are the biggest spenders and will drive growth in men’s skincare, haircare and fragrance.
6. Life After BB Creams
BB creams have peaked and the industry is looking around for the next big thing. Unfortunately, nothing will be as big as BB creams. As brands desperately trawl through the alphabet in search of something new, the novelty has worn off.
Products claiming multiple functionality will feature strongly for many skincare brands. It is conceivable that tinted versions will edge out foundations.
On the horizon are tinted serums, a clever way of capitalising on the above average growth of facial serums.
We’d love to know what your predictions are for the beauty industry in 2014. Please share them in the comment box below.
*Details to follow in the forthcoming Premium Market Report 2014