Dive Brief:
- As makeup makes a recovery, more than a quarter of U.S. shoppers this holiday season are planning to buy a beauty product, according to a Nov. 16 report from the NPD Group that was emailed to Retail Dive.
- Larissa Jensen, vice president and industry adviser of Beauty for the NPD Group, said the category is poised for a good holiday season all around, with "strong" year-to-date sales in prestige makeup, skincare, fragrance and haircare categories.
- NPD predicts that fragrance in particular will be a growth driver this holiday season, as 40% of annual fragrance sales are made in Q4 and the category has seen particularly high sales all year.
Dive Insight:
During a holiday season that's predicted to see high sales growth, beauty could be one of the winners of consumers' wallet share. According to the NPD Group, the U.S. beauty industry is expected to continue its strong sales performance and close out 2021 with double-digit revenue growth.
For the holidays, in particular, haircare could have "one of its strongest holidays to date," Jensen wrote. In 2021, the category's revenue growth has been outpaced only by fragrances, and according to Jensen, consumer interest is high, and usage of hair care products is "unrivaled." Festive makeup products and skincare sets could also sell well as customers look for easily giftable items, but fragrance is expected to be the biggest growth driver during the holidays.
"The fragrance category has been the standout winner in beauty all year, posting sales gains that are triple that of makeup and skincare," Jensen wrote, noting that it is a top choice for gifts. "While there has been a general decline in the percentage of consumers who shop late in the season, fragrances are notoriously last-minute gifts. Fragrance sales in December comprise over 60% of the category's fourth quarter, and revenue during Christmas week can be anywhere from 25%, to over 100%, higher than any week prior."
NPD's predictions for beauty come at the tail-end of a recovery year for the category after the pandemic and mask-wearing, in general, put a damper on some products. Wariness of in-store shopping also hit beauty particularly hard, as a high-touch space with in-store services aplenty.
This year, the story has been slightly different, with consumers becoming more comfortable shopping in stores again and some of the in-person experiences making a return. Ulta in August said momentum was continuing to build in the makeup category as events opened back up, a positive sign for a department that has been on a downcycle for a few years now.
Beauty's top retailers also made serious in-store partnerships this year ahead of the holiday season, with Ulta teaming up with Target to open 100 shop-in-shops by the end of the third quarter, and Sephora and Kohl's opening 200 shop-in-shops this fall. Those deals have the potential to extend the audience both retailers reach this holiday season and drive further spending in the category.
However, not all outlooks on the category have been positive: Alvarez & Marsal in October reported that consumers would spend 15% less on cosmetics and fragrance this year, along with a slew of other categories facing potential declines.