Category and Generational Shifts are Altering the Prestige Beauty Landscape, NPD Group Reports

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Today the fragrance category is outperforming skincare, skincare and wellness are becoming more intertwined, anti-aging is becoming less prominent, and the lines are blurring between makeup and skincare

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Over the last decade, skincare led the gains within the prestige beauty industry, fragrance was challenged as consumer usage declined, and Boomers drove demand and influenced innovation within the industry. However, 2015 marked a turning point for the beauty industry, driven largely by shifts taking place within skincare and the heightened importance of Millennials, according to data from global information company The NPD Group.

Today the fragrance category is outperforming skincare, skincare and wellness are becoming more intertwined, anti-aging is becoming less prominent, and the lines are blurring between makeup and skincare.

For the first time, the fragrance category contributed more annual dollar gains than skincare. Add to that the fact that skincare’s growth came from online sales, while brick-and-mortar sales declined*. This shift is being driven by the changing preferences of Millennials, the generation which now outnumbers the Boomers. In 2015, NPD found that young Millennials in particular are using more fragrance** and less of them are using facial skincare products***.

Brands with a natural and/or clinical orientation now represent the largest combined share of prestige skincare sales and accounted for all category gains. This trend coincides with consumers’ interest in facial skincare products with more natural and clinical appeal. In particular, NPD found that Millennial users are most likely to seek products with doctor endorsements and natural/organic ingredients***. Topical products aside, the latest skincare micro-trend is in products that work from the inside out. Walking the line between health routines and skincare regimens, dollar sales of face supplements have grown more than fivefold over the past two years, becoming a $4.1 million market in 2015.

Anti-aging skincare sales are dwindling as consumers’ skincare focus has shifted from correction and prevention, to where it is today: preparation. For the first time in two years, age specialist products experienced a decline in dollar sales. While primary care categories including facial cleansers and exfoliators, oil/shine control, toners/clarifyers, and masks saw growth in 2015, the biggest growth areas were in products with an emphasis on complexion preparation. Adding millions of dollars to both the skincare and makeup markets, CC creams and makeup primers alone contributed over $490 million to the industry in 2015, growing 58 percent over two years.

Though they are two distinct categories, skincare and makeup now share common goals among consumers, and benefits sought for one category can be applied to the other. NPD’s facial skincare study found that 72 percent of product users report they “use skincare products to look the best I can for my age***,” while almost the same percentage, 76 percent, of makeup product users report they “use makeup products to look the best I can for my age****.” While the top appearance benefits skincare users seek include evening skin tone, lightening spots/discoloration, and brightening complexion***, makeup products offering these ‘skincare’ benefits are among the category’s best performers, in the form of contouring makeup – one of the hottest beauty trends of 2015.

“The prestige beauty industry has reached a new milestone and a moment of potentially fundamental change,” said Karen Grant, global beauty industry analyst, The NPD Group. “Across beauty, the categories, brands, and products that appeal younger have become the leaders of growth. New or once overlooked product types are at the forefront, as are new or smaller brands once thought of as less significant. The impact of the Internet has further changed the way brands engage with and reach consumers. In this environment, major brands are looking inward and outward to build their presence and equity in ways that resonate with younger consumers, who are not only fresh to the market, but more multigenerational in influence, multinational, and multicultural.”

*Source: The NPD Group, Inc. / U.S. Prestige Beauty Total Measured Market, Annual 2015
**Source: The NPD Group, Inc. / FragranceTrack 2015
*** Source: The NPD Group, Inc. / Women’s Facial Skincare Consumer Report 2015
****Source: The NPD Group, Inc. / Makeup In-Depth Consumer Report 2014

About The NPD Group, Inc.
The NPD Group provides market information and business solutions that drive better decision-making and better results. The world’s leading brands rely on us to help them get the right products in the right places for the right people. Practice areas include apparel, appliances, automotive, beauty, consumer electronics, diamonds, e-commerce, entertainment, fashion accessories, food consumption, foodservice, footwear, home, mobile, office supplies, retail, sports, technology, toys, video games, and watches / jewelry. For more information, visit npd.com and npdgroupblog.com. Follow us on Twitter: @npdgroup

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Marissa Cox
The NPD Group
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