TABS Group 2015 U.S. Cosmetics Study Finds Millennial Women Buyers Reign in $13 Billion Dollar Cosmetics Market

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Mac, Urban Decay closing in on Estee Lauder and Clinique; Target gaining; sales shifting to Ulta and Sephora in specialty channel; online losing share

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Cosmetics Buyer Trends

Not only are millennial women the heaviest buyers in the category, but their habits are transforming the industry in brand preferences, outlet preferences and methods for gathering information.

TABS Group announced today that the company’s second annual U.S. Cosmetics Study found that millennial women (ages 18 to 34) are the heaviest buyers of beauty products in the $13 billion dollar cosmetics market (market size excludes skin care and hair care products). Millennials are twice as likely to be heavy buyers (defined as purchasing more than 10 types of products a year) and account for 47 percent of all heavy buyers. The study also found that higher income correlated to likelihood of being a heavy cosmetics buyer. Within the 13 percent of the population with income of $125,000 or more per year, 39 percent of millennial women are heavy buyers, compared to 29 percent of the population buying cosmetics.

“Unlike the majority of consumer packaged goods, where women 35 to 54 years old are the core target market, millennials really do matter in cosmetics,” said Kurt Jetta, CEO and founder of the TABS Group. “Not only are millennial women the heaviest buyers in the category, but their habits are transforming the industry in the areas of brand preferences, outlet preferences and methods for gathering information.”

The cosmetics industry study was conducted in November 2015 to determine what types of products consumers are buying, where cosmetics are purchased, how much do they buy and how often. The study analyzed the importance of shopping channels, including department stores, specialty cosmetic and beauty stores, Internet and in-home sales versus traditional mass-market retailers, drug and grocery stores. TABS Group also analyzed year-over-year trends in behavior and attitudes. One thousand geographically and demographically dispersed female consumers between the ages of 18 to 75 participated in the survey.

Sales Shifting to Specialty Channel, Online Losing Share
Although mass retailers Walmart and Target remain the most popular outlets for cosmetic buyers overall (59 percent), the survey found that the fastest-growing cosmetics retail channel is specialty beauty outlets, which showed a 19 percent increase in regular buyer purchases since 2014. Specifically, Ulta had a 41 percent increase in buyer penetration and regular buyer purchases compared to 2014. Sephora also saw sharp gains, with a 25 percent increase in buyer penetration and a 32 percent increase in regular buyer purchases over 2014.

While specialty beauty outlets account for just under 50 percent of transactions, they account for more than 50 percent of purchase dollars due to much higher transaction sizes. The overall category growth is driven by higher average pricing versus more units per transaction. There is also a very high interest in premium and super premium brands.

Online sales lost share compared to 2014. The entire online channel regular purchases decreased by 5 percent and penetration decreased by 2 percent. Amazon had a drop of 5 percent for buyer penetration and a 6 percent decrease in regular purchases. Online sales are 8.3 percent of all transactions and approximately 9 to 10 percent of total dollars spent on cosmetics. This is the third consecutive TABS study where online sales in consumer products goods have been flat or actually decreased from the previous year (TABS 2015 Vitamin and Sports Nutrition Study, TABS 2015 Consumer Value Study – Consumables).

Within the general market – Food, Drug, Mass, Club and Dollar stores (FDMCD) – there were modest gains in penetration above (households buying at least one time per year) and regular purchases (households buying at least twice a year), with Target being the primary recipient. Target’s penetration increased 11 percent over 2014 and “purchased regularly” frequency increased by 23 percent. Walmart, grocery and dollar stores all experienced declines in the number of buyers.

Mac, Urban Decay on the Rise, Overall Cosmetics Transactions Flat
The top four mainstream brands – Maybelline, Cover Girl, Revlon and L’Oréal – are still the most predominant brands on key awareness, penetration and favorability metrics. The newer specialty brands, including Mac and Urban Decay, reported increased awareness, penetration and favorability levels in the study and are closing in on the traditional super brands, such as Estee Lauder and Clinique.

Out of the 19 cosmetic products surveyed, only six products increased in market penetration (households buying at least one time per year) more than 3 percent, and of those six, only two products – color control creams and cosmetics gift sets – increased in penetration by double digits. Overall, eye, lip and gift set penetration increased by 30 percent over 2014. While 55 percent of those surveyed had professional manicures and pedicures in 2015, that was a significant drop of 13 percent compared to 2014.

“The flat trends in total purchase occasions are consistent with the overall malaise in our industry,” explained Jetta. “What is quite meaningful is the dramatic shift that heavy category buyers are having towards purchasing more expensive products and their move to other channel options. This shift has delivered strong gains in retail dollars, overall.”

No Brand Loyalty in Cosmetics
For the second consecutive year, the cosmetics study found that there is no true loyalty in cosmetics. Loyalty levels are consistent for all of the premium and super premium brands. Both new super premium buyers and older super premium buyers have almost identical stated brand loyalty at 42 percent and 41 percent, respectively. The average buyer purchases more than five brands per year.

Beauty Blogs and YouTube Engaging Buyers
Beauty blogs and YouTube are proving to be a significant consumer communication vehicle for heavy cosmetic buyers. Twenty-nine percent of heavy buyers report that blogs are very important in helping to determine which cosmetics to buy. YouTube is very important to 28 percent of heavy buyers in determining which cosmetics to buy. However, when looking at all buyers, the importance of blogs and YouTube when determining which cosmetics to buy drops to 16 percent.

About TABS Group, Inc.
Operating since 1998, TABS Group, based in Shelton, Conn., is a technology-enabled analytics firm. Its mission is to simplify and improve the way analytics are conducted in the consumer products industry. Primary services are TABS CatMan Advantage™, an outsourced category management solution, TABS WorldView®, a global business intelligence tool, and TABS Promo Insight™, a cloud-based software and consulting service that helps companies measure, plan and optimize trade spending. Please visit http://www.TABSGroup.com .

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Theresa Smith
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