This time last year the world was in lockdown and prestige beauty industry sales were in free fall. As the weather warmed up in 2020, an anxious consumer sentiment was at odds with the cheerfulness of a newly blossoming spring season.
What a difference a year makes. In 2021 as a new spring season emerges, it brings with it a new U.S. consumer, one that is fueled by the optimism of warming temperatures, lower case counts, and widespread vaccinations providing the promise of a return to normalcy. Vacations are being taken; family gatherings are happening; sports are allowing fans back into stadiums; and movie theatres are opening at a rapid clip. This is great news all around, but most especially for the beleaguered prestige beauty industry that depends largely on usage occasions and suffered dramatic declines in a year when such occasions all but disappeared.
So how is the industry looking different in 2021? For one, promotions are slowing down. Of the 13 weeks in the first quarter of the year, around four weeks were free of retailer promotions. This is a departure from 2020 where every week in the year, except one, included a promotion. In addition, according to a recent NPD Price and Discount analysis, the percent of units sold on promotion declined within the key industry segments of skincare face, makeup face and fragrance juice. This is not to say we are in a trend reversal, but certainly the industry is tempering the accelerated number of promotions we saw in 2020.
Second, weekly data in the first quarter of the year shows the beginning of a consumer shift in product preferences. Looking at weekly sales versus a year ago shows triple-digit gains across all categories due to the anniversary of lockdowns, but a weekly analysis versus 2019 shows interesting dynamics taking place. In fragrance, juices are beginning to perform better than home scents. Skincare is still seeing strong growth in body products, but sun is the second fastest-growing segment, driven by face sun protection products. In makeup, we are beginning to see the move from an average of 30% declines to now 20% declines versus 2019 over the last few weeks of the first quarter. This is the first time we’ve seen an overall shift in makeup performance, so it’s a small but significant win. More importantly, in the hair segment, we have begun to see the return to hair styling products. This is noteworthy not because it can move the needle in market growth, but because styling was the only segment to decline in the hair category in 2020 and the return to these products, as well as positive performers in other categories, is indicative of a consumer finally having the occasions to use them.
Another shift we are seeing is in channels. The online channel remains strong, but brick-and-mortar continues to be the critical piece of the puzzle that is key for our industry’s path to recovery. And in fact, it is shining through so far this year, posting growth in the first quarter for the skincare, fragrance, and hair categories. But while brick-and-mortar is on the path to regaining its strength, the online channel will remain important for brands and retailers to watch as consumers will inevitably keep some of the new behavior they adopted during the pandemic – and online beauty shopping is one of them.
The U.S. consumer is resilient. We are hungry for change, and pent-up demand is a real opportunity for the beauty industry. Are we on the cusp of the Roaring 2020s? Time will tell, but while no one could have predicted a global pandemic, there is no question it set us up for a season of celebration once we come through the other side. As an industry, we need to be prepared for it. We must continue to drive innovation across all categories – especially in makeup, a category that has lacked true innovation for some time now. This is our moment. Hope is strong right now, and it springs eternal.