4 Recession Busting Strategies for the Premium Beauty Industry
In compiling research, quotes and analysis for the forthcoming Premium Market Report 2013, it struck me that perhaps the premium beauty markets are not as resilient as we all first thought.
NPD Group’s latest data for 2012 records a dramatic slowdown in growth for the UK premium beauty category: from +10% in 2011 vs 2010 down to +5% for 2012 vs 2011.
Beauty industry brand and retail guru, Sue Fabian, now general manager for Umbrellabrand, maintains that this downturn is different to others, when sales of lipsticks and other affordable treats kept growing. “Like for like brands at best are flat. It is new launches through the fourth quarter and increased distribution that have allowed the overall beauty sector to continue to grow.
“Most premium companies quote their fragrance figures in their overall numbers, so a new fragrance launch can really sway the figures brand by brand,” Sue affirms.
There is no end in sight for the current downturn and the premium sector cannot sustain 2009-11 levels of growth. The reality is that people’s incomes are below their 2007 peak and are expected to stay there for the foreseeable future. Higher than expected inflation coupled with weak pay growth is slowly eroding Britain’s wealth. So even today’s affluent consumers will be looking hard at what they spend and premium beauty is likely to come under their increased scrutiny.
So what should premium beauty brands and retailers do?Sue has developed some interesting strategies to help premium brands and retailers maintain the buoyant position many have enjoyed for so many years.
1) All the major brands used to launch colour collections so effectively, but they are barely noticeable on counters these days. This valuable marketing tool is proven to bring customers back time and again to the counter.
2) Savvy consumers are looking for added value and will shop around to get it. Brands need to look at how the smaller and entry priced premium brands have got better in terms of advertising, marketing and R&D- and look at developing their own point of difference.
3) Department stores need to develop new ways to bring cosmetics to a new audience. The John Lewis “at home” store in Swindon has space for premium toiletries and skincare brands, such as Molton Brown and L’Occitane.
4) Premium beauty retailers need to look at what worked well in the past. When was the last truly big launch of a fragrance or skincare product across all stores with windows, light boxes, outdoor and press etc? Not everyone buys because their friend on Facebook gave a product a smiley face, or cares about twitter.
Sue advises: “Launch less, but do it bigger and better”.
Further recommendations on how the premium beauty industry can prepare for future growth can be found in the Premium Market Report 2013, coming soon.