Has Premium Beauty Lost its Glimmer?

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Premium and masstige beauty are far more competitive than appearances might suggest.

No more so than during the recent recession which has made consumers very aware of how much money they have available to spend.

It’s easy to compare a premium and masstige product side by side and think that the cheaper one offers better value for money.

Of course it would be nice to afford the luxury item, but if it doesn’t seem any different, why not trade down?

Trading Down is Now Commonplace

This phenomenon isn’t just happening in the beauty industry. This week, profits at Primark rose by 44 per cent to £514m, a sure indication that many consumers are turning their back on more expensive fashion brands. It’s called the “Primani” effect, or buying cheap designer lookalike merchandise which has the illusion of quality and high class.

In beauty, masstige brands have long benefited from their association with more expensive versions, particularly in skincare. This so-called “trickledown” effect in technology is common practice amongst large corporations with a foot in both the premium and masstige camps.

Think Lancôme Genifique and L’Oreal Paris Youth Code serums –two sides of the same coin at differing prices?

We’ve been monitoring these trends over the past 10 years in The Premium Market reports and observed that when consumers are financially under pressure, they are more likely to trade down to masstige alternatives. When people feel more comfortable about their finances, that is when premium brands come back onto their radar.

How Can Premium Beauty Widen the Gap?

More than ever, it is crucial for premium brands to emphasise their point of difference, the thing that makes them worth paying the extra for. No-one does this better than Chanel, who single-handedly reinvented the nail colour market in 2009 with the launch of Particuliere, a taupe-nude nail colour. Much copied by cheaper brands, it still retains its iconic premium status.

As we emerge from the recession {and the signs are looking very positive right now}, premium beauty needs to establish real distance with masstige brands. {We’ve heard that a leading premium company is focusing on that right now and is commissioning research to find new ways of encouraging consumers to trade up from masstige.}

Here are some thoughts on how premium brands can put distance between themselves and the masstige sector:

  • Keep investing in marketing: many brands slashed their budgets in the recession. Now is time to reinvest in the brand.

  • Maintain premium values. Don’t be too hasty in passing new technologies onto masstige brands.

  • Do things differently. Jo Loves…has just opened a brasserie-style boutique serving “tapas” to customers. An innovative approach to sampling you’d never find in the mass market.

Going forward, the premium beauty industry must worry less about what is happening outside its sector and focus on strengthening its core values. Premium beauty must be seen to have inherent value, not just high prices. It needs to get back to being premium once more.

On November 25th, we are publishing a new 120 page report 10 Years of Premium Beauty.

In this landmark review of the beauty industry, we look at how the gap between premium and masstige has changed over the past 10 years, why the gap has closed and what the premium sector can do to build distance between it and masstige.

For a limited time we are giving you the opportunity to have a sneak peak. You can download your free preview of 10 Years of Premium Beauty here.