Nearly two-thirds of Americans said they purchased personal-care products that are more "special" or "exclusive" than everyday brands in 2003, down slightly from the 71 percent that did the same in 2001. These "special" personal-care products include cosmetics, soaps, lotions, and hair care. This category ranked as the second most frequently purchased personal discretionary product, after only women's clothing and apparel. Purchase incidence in this category rose from 2000 when only half of households bought these products, suggesting that American consumers are looking for more highly specialized personal-care products and turning away from the everyday brands.
According to the Bureau of Economic Analysis, the government agency that charts the U.S. economy for government policy making as well as calculates the gross national product, the total personal-care market, including "mass" and "class" brands, fell to $54.3 billion in 2002, down 1.3 percent from 2000 (see Figure 6.9). But while the macro view is down, the luxury or prestige category of makeup and skincare grew 2.8 and 2.6 percent, respectively, in 2002, according to the NPD Group. Focusing exclusively on the $7.3 billion market for prestige cosmetics, they report the $2.8 billion fragrance category declined 3.5 percent from the previous year, while the $2.5 billion makeup and $1.9 billion skincare categories rose. Anti-aging skincare regimes are expected to continue to grow as baby boomers turn to nonsurgical treatments to halt the inevitable progress of time and gravity. For these boomers, price is no object, with many of the best-selling department store skincare brands, such as Lancome, Estee Lauder, Chanel, Shiseido, and La Prairie, selling at $70 a bottle and up.
% CHG '00–'02
Total Personal Consumptions in millions
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Source: Bureau of Economic Analysis
Destined to bring changes to the prestige cosmetics and skincare business is the recent announcement that department store exclusive brand Estee Lauder is developing a new line of cosmetics for discounter Kohl's. While the new line won't be available until 2005 and it reportedly won't be released under the Estee Lauder brand name, it's an important move by an industry leader as they finally admit that their target customer (i.e., affluent middle-aged women who can afford to pay full price) shop at discount stores.
When they shop for personal-care items—even those that are more "special" than everyday brands—consumers turn first to discount department stores, where 51 percent of shoppers reported buying these items in the past year. Specialty health, personal care, and drug stores are the second most widely used source, with 44 percent of shoppers. With about one-third of shoppers, traditional department stores follow.
The business of cosmetics is the ultimate in experiential marketing. While companies and retailers are in the business of selling cosmetics (i.e., a thing), consumers are actually buying beauty (i.e., an experience). As Charles Revson, founder of Revlon, said, "In our factories we make cosmetics; in our stores, we sell hope." While department stores have dominated the traditional cosmetics business, consumers changing shopping patterns are playing havoc with "business as usual" in the cosmetics world. Direct-sales giant Avon has tried to break in to retail through partnerships with Sears and J.C. Penney, with no success. J.C. Penney is so turned off by the cosmetics business that it has banished all color cosmetics from their stores. While traditional department store retailers reel, new specialty retailers, such as Sephora, Victoria's Secret, Bath and Body Works, and Ulta, get into the premium beauty business with a vengeance.
Nonstore retailers are also finding a willing audience to buy beauty products online. Along with such pioneers as beauty.com and efforts by established brands to gain a toehold in cyberspace, such as Estee Lauder's entire family of brands, including Bobbi Brown, Clinque, Estee Lauder, M.A.C., Aveda, and Origins, San Francisco-based reflect.com has done all the name brands one better over the Internet. Backed by an investment—and the marketing muscle—of Proctor and Gamble, reflect.com offers truly customized beauty care and cosmetics formulations online. Customers answer a series of questions to help the cosmetics mavens at reflect.com determine your skin care needs and color preferences. After the de rigor credit card transmission, you receive your very own personalized cosmetics at your door in a week or two.
Being somewhat of a cosmetics enthusiast myself, I was so intrigued by the concept of customized cosmetics online that I gave reflect.com a trial run for foundation, a particularly problematic cosmetics purchase for me. Even cosmetics sales consultants who have my face right in front of them can't seem to get a satisfactory foundation match with my sun-damaged skin, so I didn't hold too much hope for reflect.com to get it right over the Internet. But we only went through one nearly painless iteration of a poor color match (i.e., you don't send your returns back, you simply throw them away and they send you a new formulation) before they actually did the job. Now I am a religious believer in their system and rely upon reflect.com exclusively for foundation and mascara, another category I am particular about.
Signs are positive for continued growth in this product category as people crave products like cosmetics and lotions and potions that pamper and indulge them. Consumers have a voracious appetite for the latest and most scientifically advanced personal-care and cosmetics products. Among the trends that have propelled growth in the personal-care and cosmetics industry is a search by aging baby boomers for cosmetics and beauty regimens that reverse the ravages of time. Changing fashion in makeup colors for the youthful consumer and the demand for more product lines featuring natural, "healthy" ingredients are other trends that have had a positive impact.
Men are emerging as a strong new market for cosmetics, and skincare and hair care treatments. The popularity of Bravo's reality series Queer Eye for the Straight Guy and the official coining of the term metrosexual as the descriptor of the contemporary man who is concerned about his appearance have given men new justification for taking a little extra time and spending a little more money on their clothes and grooming.
But the personal care category is still mainly a female province. Drawn like a moth to a flame, women cannot seem to get enough of this product category. One consumer explained her passion for perfumes this way: "I could wear a different perfume every day of the year. I have so much perfume, but every time I smell a new fragrance I like, I have to buy it. I am addicted to scents." Another says, "I really go for bath gels and salts. It is a pleasure and a stress reducer. For me this isn't a reward. I am entitled to have the nice 'stuff.' If we don't take care of ourselves, who is going to? Even with taking care of a large family, I have to have my hour in the bath."
The reported purchase incidence of special personal-care products is higher for women (73 percent) than for men (54 percent), but men are beginning to purchase more of these products for their own use. While the youngest consumers are the most active purchasers, consumers through age 54 purchase at a higher incidence than the average. After age 55, purchase incidence drops. People of all racial and ethnic groups purchase special personal-care products. The most active purchasers are consumers living in the most affluent households, $75,000 and above, though consumers living in households at all income levels are still fairly active buying special personal-care products. Household size correlates with increased purchase incidence in the category, with two-or-more person households buying more.
Purchase incidence is highest under age 34, but remains strong through age 54.
Middle-to-upper-income households buy more, with most affluent buying significantly more.
All races and ethnic groups buy equally.
Two-or-more-person households buy more.
Females buy more, but male share is growing.