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Insight of the Day: Prestige beauty sales continue to outpace mass with 8% growth in the first half of the year

Key Findings:

  • Prestige beauty sales in the U.S. grew 8% in the first half of 2024, reaching $15.3 billion.

  • Mass-market beauty sales remained flat compared to last year.

  • Prestige fragrance saw the strongest growth, with sales up 12%.

  • High-end hair care, makeup, and skin care also experienced growth, though at a slower pace.

  • Mass-market beauty categories experienced declines or minimal growth.

  • Demand for dupes of high-end fragrances is driving growth in the private-label fragrance market.

  • Prestige hair care is the only category where the majority of sales are happening online.

Key Takeaways:

  • The prestige beauty market continues to outperform the mass-market segment, driven by consumer demand for premium products and experiences.

  • While the mass-market beauty segment struggles, there are still pockets of growth, such as the demand for dupes of high-end fragrances.

  • The shift towards online shopping continues to impact the beauty industry, with prestige hair care leading the way in online sales.

Trends:

  • Bifurcation of the beauty industry: The gap between prestige and mass-market beauty is widening, with prestige brands continuing to outperform.

  • Demand for "elevated value": Consumers are willing to pay a premium for prestige beauty products that offer perceived superior quality and efficacy.

  • Dupe culture: Younger consumers are increasingly seeking affordable alternatives to luxury products, driving demand for private-label dupes.

  • Online shift: E-commerce is becoming an increasingly important channel for prestige beauty sales, particularly for hair care products.

Consumer Motivation:

  • Prestige consumers: Seeking elevated value, high-quality ingredients, and unique experiences.

  • Mass-market consumers: Seeking affordable alternatives to luxury products, particularly in the fragrance category.

Driving Trend:

  • Economic factors: Consumers are becoming more discerning about their spending, but are still willing to invest in products they perceive as valuable.

  • Changing consumer preferences: Younger consumers are more likely to embrace dupes and shop online for beauty products.

  • Retail landscape: The expansion of prestige beauty retailers like Ulta Beauty is contributing to the growth of the prestige market.

People Referred to in the Article:

  • Larissa Jensen, global beauty industry advisor at Circana

  • Dave Kimbell, CEO of Ulta Beauty

  • Consumers (both prestige and mass-market)

Description of Consumers, Product/Service, and Age:

  • Consumers: The article primarily focuses on U.S. consumers, with some mention of younger shoppers driving the demand for fragrance dupes.

  • Product/Service: Beauty and personal care products, including fragrance, hair care, makeup, and skincare.

  • Age: Not explicitly mentioned for the entire consumer base, but younger consumers are identified as a key demographic driving the dupe trend.

Conclusions:

The prestige beauty market is showing resilience and continued growth despite economic headwinds. Brands that can adapt to evolving consumer preferences and leverage e-commerce channels are well-positioned for success. The mass-market segment faces challenges, but opportunities exist for brands that can cater to the growing demand for dupes and affordable alternatives.

Implications for Brands:

  • Prestige brands: Focus on innovation, quality, and unique experiences to justify premium pricing.

  • Mass-market brands: Offer affordable alternatives to luxury products and leverage the growing dupe culture.

  • All brands: Invest in online channels and develop targeted marketing strategies to reach specific consumer segments.

Implications for Society:

  • The bifurcation of the beauty industry may lead to increased inequality in access to high-quality beauty products.

  • The rise of dupe culture could democratize access to luxury trends, making them more accessible to a wider range of consumers.

  • The growing importance of e-commerce could reshape the retail landscape and impact traditional brick-and-mortar stores.

Big Trend Implied:

The beauty industry is undergoing a significant transformation, driven by changing consumer preferences, economic factors, and the rise of e-commerce. Brands that can adapt to these changes and embrace innovation are likely to thrive in the years to come.

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