The Tale of Two Markets in Prestige Beauty

NPD Reports Strong Start to 2013 for US and U.K. While Others in Europe Decline 

Port Washington, NY, August 14, 2013 – The NPD Group, Inc., a global information company, reports the global prestige beauty market experienced mixed results in the first half of 2013. The US prestige beauty* industry posted an 8 percent gain, generating $5 billion in the first six months of the year. In Europe, the U.K. gained 6 percent, generating £803 million in prestige beauty sales, while France, Italy, and Spain continued to face challenges in this industry.

“Our expectation for 2013 was that the global prestige beauty industry would look similar to 2012, and the results thus far are proving this to be true, as economic uncertainties continue to weigh heavily on the European markets,” said Karen Grant, vice president and senior global industry analyst, The NPD Group, Inc.

Skincare and makeup were the primary drivers behind US growth in the first half of 2013, with $1.8 billion, and $2 billion in sales respectively. Fragrance performance was positive as well (+4%), at $1.1 billion, but at a slower pace than seen in the first six months of 2012 (+8%). In all three categories, premium-priced products contributed to increases in sales so far this year.

Despite declines in many countries, fragrance continues to account for the largest share of prestige beauty sales in Europe (U.K: 43%, France: 62%, Italy: 40%, Spain: 51%). However, makeup was the star performer, with strong gains in the U.K., and a slight uptick in Spain. In terms of market share, Italy is the most level playing field, with each category representing close to a third of sales in the first half of the year.

“The similarities in retail distribution, brand assortment, and product mix in the US and U.K. continue to help both markets capitalize on positive trends.  Though the results for these countries, compared to those in the Euro zone, look like ‘the tale of two markets’, there is one common thread: investment spending continues. The markets in the Euro zone face greater challenges but, with the exception of Spain, most markets are continuing to show increases in average selling price across all categories.  This tells us that while consumers may be cutting back in spending they are continuing to invest in value, even when that may be at higher prices,” said Grant. 

*Prestige Beauty: Products sold mainly in US Department Stores.

Important Note:  January 2013 Is A Five-Week Rather Than Four-Week Reporting Period. The 4-5-4 Week Retail Calendar utilized by NPD in North America measures out 12 reporting periods of four or five weeks, covering 364 days per year.  That is one day short of the calendar year of 365 days.  The consequence is that the reporting periods drift backwards on the monthly calendar by one day per year (accelerated by an additional day each Leap Year). This requires the addition of a “Leap Week” every five to six years in order to preserve the seasonal integrity of the months.  The January 2013 reporting period will include the required “Leap Week” and will, therefore, be a five-week period.  If we did not add the additional week, the January reporting period would eventually include Christmas/holiday shopping.  This adjustment was last made in January 2007.  The adjustment is consistent with the U.S.-based National Retail Federation’s (NRF) published Retailer Calendar, which most retailers and NPD follow.

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Janine Marshall

The NPD Group, Inc.
900 West Shore Road
Port Washington, NY 11050

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