In its ‘Fall Preview’ the market researcher highlights the fact that the market will grow at a higher pace than last year, with sales in 2011 expected to increase in the region of 3.1 - 3.6 percent, compared to growth of 2.4 percent in 2010 when the market value was $36.5bn.
The market for luxury cosmetics is likely to account for a significant proportion of this growth, with the researcher predicting that sales in 2011 should rise by 8 to 10 percent, compared to the figure in 2010.
Holiday season bodes well for luxury
With the all-important holiday season still ahead, Kline underlines that the month of September has already proved to be very encouraging, with shoppers returning to upscale department stores with a ‘vengeance’.
According to its data, Nordstrom reported store sales up 10.7 percent in the month, when it was predicted that sales would increase by 5.2 percent, while Saks posted a 9.3 percent rise, compared to forecasts of 6.5 percent.
Gains in the mass market are expected to be more modest, with Kline predicting that sales of cosmetics for the full year 2011 should rise by between 2 - 3 percent.
Mass continues to look challenging in the US
Although all the major global players, including Procter & Gamble, Unilever and L’Oreal have all reported respectable group results for the year-to-date, the breakdown of these results reveals more challenging conditions in the US market, where the mass market remains slow.
In contrast, the emerging markets, particularly in Latin America and the Asia Pacific markets, are continuing to power ahead, helping to prop up the more stagnant performances in the developed markets.
With regards other channels, direct sales is expected to grow by an average of 2 - 3 percent in 2011, whereas specialty brands, which includes stores such as L’Occitane, is expected to see a continued recovery, with sales forecast to increase by 4 and 5 percent in the year.
Professional skin care looks good
In the professional category, professional brands are expected to be boosted by skin care sales, while consumers are expected to stay away from hair salons, which will hit professional hair care sales. Overall the professional category is expected to increase by 1 - 2 percent.
Finally, US consumer confidence, tracked by Conference Board, has continued to show a steep decline in August, and has continued to tumble in October, when it stood at 39.8, compared to a high of 100 in 1985.
Kline believes that this failing consumer confidence points to greater challenges for cosmetic and personal care companies in the second half of 2011, when compared to the first half.