For the second year running TABS, a consumer analytics firm based in Shelton, Connecticut, has published a US Cosmetic Study, an industry report on what’s driving growth in the beauty market and current consumer buying trends.
The firm specializes in CPG industries and prides itself on providing clients around the globe with technology-enabled sales and marketing data. Contextualizing the opportunity in the cosmetics market, TABS points out that “Overall, the category showed an estimated 5 percent growth to $13 billion in 2015.”
Specialty channels
Retailers dedicated to beauty are doing big business now. This is a feature of the cosmetics and personal care market that is reverberating into real estate, discount retail, department stores, and beyond.
“Specialty retail saw significant growth with chains such as Ulta and Sephora logging double-digit…buying rates in 2015,” reports TABS in the newly available US Cosmetics Study. The firm’s data shows that the specialty channel contributes 51% of category sales, a statistic the firm attributes to the fact that experiential beauty stores have higher price points and consistently larger transactions than other retailers.
And in making that 51% contribution, the channel is outperforming its own 46% share of the market, according to TABS data.
All things online
Consumers bought less beauty online in 2015 than in 2014, reports TABS. Amazon saw a drop! That site had a 6% decline in regular cosmetics purchases and a 5% drop in consumer buying last year.
Even specialty store sites saw a decline in sales. “Cosmetics specialty websites had a sharp 33 percent drop in [consumer buying] and a 10 percent drop in regular purchases,” according to the US Cosmetics Study from TABS. Though that could well have been strategic, as beauty is such a high-touch business and many savvy retailers are striving to bring online shoppers in store for treatments, samples, and education they simply can’t get anywhere else.
The firm estimates that online cosmetic sales account for about 10% of the overall dollar spend in the industry and are 8.3% of transactions.
Why buy beauty
Deals sell cosmetics, as TABS sees it. Though deals entail much more than simple price reductions and discounts. “The TABS study analyzed survey participants’ use of the following deal tactics: shop for deals, circulars, FSI, loyalty cards, online, rebate, EDLP, private label purchase, large sizes, bonus and gift packages, and no deals,” explains the report.
Loyalty cards are popular among beauty consumers. 35% of shoppers used them in 2015, a 17% increase over the previous year’s figure—a finding that suggests Ulta with its forthcoming branded credit card / loyalty card is on the right track.
An interesting aside in the TABS data: only 20% of shoppers “preferred to buy at stores with a beauty advisor.” This fact is lumped in with the ‘deals’ data. And perhaps survey respondents were thinking about cost cutting when this question came up and answered cynically, thinking that more helpful professional store staff could mean higher prices. Maybe next year’s data will bear out a different truth.