Retailers Discuss "What's Working" In Galvanized Prestige Beauty Sector

The beauty industry is regaining its rosy glow as the prestige segment picks up momentum, driven by product innovation that is convincing women to crack their pocketbooks and experiment again.

Total prestige beauty sales are up 3 percent year-to-date (January-August), versus the same period last year, according to the NPD Group.

"It is a time of healthy recovery," Karen Grant, NPD vice president and global industry analyst, told attendees of the Cosmetic Executive Women "Retail Experts Reveal What's Working" seminar Oct. 14. "It's very positive overall," she said.

Driving the upswing are products that resonate with consumers as "special."

"Consumers are coming in for innovation, but not scary innovation," said Grant. Delivering something "innovative" can be as simple as combining natural and science-based properties in a product, she said.

Prestige Skin Care, Makeup Both On The Rise

Whereas last year women were holding tight to their money, they are now reinvesting in products at premium price points, the CEW panelists indicated.

NPD says high-end skin care is up 11 percent in 2010, compared with the same period last year, and prestige makeup sales have increased 2 percent, with items for face and nails leading the charge.

Bluemercury founder and CEO Marla Malcolm Beck agreed that innovation and new technologies are driving sales. Currently, skin-care and color cosmetics sales are up for the retailer, she said. "Price doesn't really seem to matter at all."

According to its website, bluemercury "has nearly 30 locations from coast-to-coast, carries over 60 indulgent beauty brands from around the world and operates luxurious skin spas with cutting-edge, results-oriented treatments at each location."

When it comes to skin care, what's selling in bluemercury doors is "active technical skin care," said Malcolm Beck. "It's lightening, brightening, firming - it's not this plain vanilla skin care. Our clients want something with one point of difference and one message," the exec said.

Nancy Schmidt, Macy's group vice president and divisional merchandise manager of cosmetics, trend and prestige, cited Clinique Even Better Clinical Dark Spot Corrector as a launch that has been highly successful for the department store chain.

The Estee Lauder Companies introduced the product earlier this year, and it has filled "a void that wasn't there," according to Schmidt.

Even Better targets women with uneven skin tone, age spots and darkening from acne scars, promising results in four weeks. Its patent-pending technology "helps inhibit the appearance of uneven pigment formation" and "break apart the appearance of existing dark spots and whisk them away through gentle exfoliation," according to the company.

"The newness resonates," said Schmidt. Consumers said "Wow, I don't have anything that does that."

Such products are being adopted for use in addition to consumers' existing regimens, Grant noted. "They say, 'I'll supplement with it.'"

Although correctors represent the smallest segment of facial skin care, "it's been really explosive," the analyst said.

At Sephora, "lashes are on fire" according to Sharon Rothstein, senior vice president of marketing, who also participated in the CEW panel. "There is so much innovation," and brands Dior and Givenchy are at the vanguard, she said.

In an Oct. 19 release from NPD, the market research firm reports that eye and lip segments have both shown positive growth in the first eight months of the year, up 2 percent and 1 percent, respectively, versus the same period in 2009. Eyeliner and lip color are driving gains, having increased 3 percent and 8 percent to date.

Rothstein is seeing "amazing lift in lip stains." She cited new launches from Tarte and Josie Maran Cosmetics.

Tarte'sNatural Lip Stainwith LipSurgence technology is "clinically proven to increase lips' moisture content by 6000%," according to the firm, which bills its offerings as "high-performance naturals." The product is exclusive to Sephora and has earned the specialty retailer's Natural Seal, awarded based on "internal natural-beauty standards," it says.

Generally, brands with the seal have agreed to formulate with antioxidants, botanicals, fruit extracts, marine bioactives, minerals and vitamins while avoiding genetically modified organisms, synthetic fragrances, parabens, sulfates, petrochemicals, synthetic dyes and triclosan.

Hunting For Newness in Hair Care

Retailers at the seminar agreed that the category where novelty and technological advances are lacking is hair care.

"We need innovation," said Malcolm Beck, using the Frederic Fekkai brand as an example. "How are they treating color? They've only had one color-treated shampoo. Why don't they do it by color?" she asked.

Macy's is not yet carrying hair-care items for its Impulse Beauty zones, which could signal opportunity for enterprising brands.

The Impulse Beauty concept was introduced to attract young consumers Macy's has failed to reach with its mass format in the past, featuring such niche brands as Smashbox , Bare Escentuals , Stila and Laura Geller (¹ (Also see "Macy's "Impulse Beauty" Zones Give Shoppers Space, Boutique Brands" - HBW Insight, 20 Sep, 2010.)).

Sephora is hoping its pilot partnership with Bumble and bumble will generate excitement about the hair category and drive traffic to Bumble and bumble salons, in a segment that has lagged due to the recession.

Consumers who purchase two full-sized Bumble & bumble products at Sephora will get a $20 gift card to bring to the brand's salons (² (Also see "Diversion Distress: Pro Hair-Care Stakeholders Dispute Culprit, Solutions" - HBW Insight, 9 Aug, 2010.)). "It's an opportunity that we don't have in our stores," said Rothstein. "It becomes more than hair as a product, but as an experience."

- Suzanne Blecher ( ³ [email protected] )