According to WWD, the financial meltdown on Wall Street is casting a dark pale over the fourth-quarter outlook for the $8.9 billion U.S. prestige beauty industry. Reports of overall department store show sales were down 1.6% for August and behind by 1% for the year-to-date. What happened to buying yourself a little cosmetic pick-me-up when times are tough? Maybe we are going to the drugstore for Wet-n-Wild nailpolish instead.
Cosmetics manufacturers and retailers don’t expect an easy road to the holidays. “I can’t imagine that the beauty industry will be able to pull off any more than flat [through December],” said Terry Darland, general manager of Parfums Christian Dior, North America.
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Referring to fragrance sales, Bob Cankes, president of Coty Prestige North America, declared, “The news just seems to be getting worse.”
“New brands [of six years ago] are established now and we’re post-peak on a lot of trends,” said Karen Grant, vice president and global beauty industry analyst at NPD Global Inc. “We’re not experiencing this period of explosive growth of antiaging [products], doctor brands and makeup artist brands. We have to look at what’s [drawing] consumers to the category today. If it’s just business as usual, we’re not going to win.”
Turning to the numbers, Grant said, “the first quarter was the worst we had seen in more than 10 years of tracking the prestige beauty market, [but] even with consumer confidence lower than it was before the Iraq war and after Sept. 11, we saw positive momentum coming out of the second quarter in beauty,” she added. Still, such ups and downs stand to make second-half projections “anyone’s guess.”
“They don’t want to be tempted so they are cutting back on trips to department stores and specialty stores, and are looking to trade down,” Wendy Liebmann, co-founder and ceo of WSL Strategic Retail. She added consumers are finding ways to stretch their dollars further by shopping in mass retailers and using up products “until the last squeeze” before replenishing. On a bright note, she said some department stores have reported beauty has kept traffic in their stores.
Read "Gloomy Outlook for Beauty Industry"
Source & Photo: WWD