Beauty Retailing - US - September 2017

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
The issues
Slow growth expected for the future
Figure 1: Total US sales and fan chart forecast of beauty products, at current prices, 2011-22
A whole new retail landscape
Figure 2: Retailers shopped, by age, May 2017
Role of sales associate evolves
Figure 3: Attitudes regarding sales associates, by select generations, May 2017
The opportunities
It’s all about the experience
Figure 4: Method of shopping, May 2017
Figure 5: Interest in retail services, by select generations, May 2017
Stay ahead of social media trends
Figure 6: Attitudes and behaviors toward social media, by select generations, May 2017
Invest in e-commerce and technology
Figure 7: Attitudes and behaviors toward mobile technology, May 2017
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Continued slow growth expected
Top three categories account for nearly half of sales
Top categories mitigate losses from smaller categories
Multicultural population benefits market
MARKET SIZE AND FORECAST
Consistent and steady sales pattern
Figure 8: Total US sales and fan chart forecast of beauty products, at current prices, 2011-22
Figure 9: Total US retail sales and forecast of beauty products, at current prices, 2012-22
MARKET BREAKDOWN
Share leaders
Color cosmetics sits firmly on top
Fast-growing categories
Body care and sun protection products gain on facial skincare
Facing challenges
Shaving and hair removal, fragrances, and nail care post sales declines
Figure 10: Total US retail sales of beauty products, by segment, at current prices, 2015 and 2017
Seven out of 10 purchases occur outside of supermarkets or drug stores
Figure 11: Total US retail sales of beauty products, by channel, at current prices, 2012-17
MARKET FACTORS 
More buyers in the market bodes well for sales growth
Figure 12: Female population by age, 2012-22
Men also play a key role
Huge multicultural influence
Figure 13: Population by race and Hispanic origin, 2012-22
Bright economy should positively impact market
Positive halo effect from investments in health and wellness
Channel shifting is occurring as department stores struggle
Direct sales remain small, but could be a threat in the future
Figure 14: Direct sales company shoppers – Any shopping, by age and gender, May 2017
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Specialty retailers feeling the love
Department stores playing catch-up
Why fix what’s working? More tech, tools, automation on the way
Is Amazon ready to be a prestige beauty seller? Better yet, is prestige beauty ready for Amazon?
WHAT’S WORKING?
Young women flocking to specialty beauty retailers
Figure 15: Specialty beauty retailers shopped, May 2017
Ulta company overview
Sephora company overview
Customer profiles
Figure 16: Specialty beauty retailers shopped, by key demographics, May 2017
Keys to success
WHAT’S STRUGGLING?
Department stores bet on beauty for turnaround efforts
WHAT’S NEXT?
More tools and tech
Figure 17: FaceCake’s Custom Augmented Kinetic Experience tool, March 2016
Figure 18: WAH Nails store, UK, December 2016
Figure 19: Burt’s Bees Wall of Kisses magic mirror, UK, March 2017
New automated salespeople and data-based consultants
K-beauty’s influence leading to more retail partnerships
Anticipating Amazon’s next move in beauty
THE CONSUMER – WHAT YOU NEED TO KNOW 
Young women buy the most items
Mass merchandisers and drug stores remain top channels shopped
In-store shopping preferred over online
Store and brand familiarity leads to repeat shopping
Social media is a playground for beauty enthusiasts
WHO’S BUYING?
Nearly a quarter of beauty purchasers are “heavy” buyers
Figure 20: Repertoire of beauty items purchased, May 2017
Young parents are a key target group
Figure 21: Repertoire of 8+ beauty items purchased, by key demographics of heavy buyers, May 2017
Figure 22: Amount spent by category, January 2016-March 2017
Figure 23: Mean spending by category, by key demographics, January 2016-March 2017
In their words: interest in beauty products
RETAILERS SHOPPED
Specialty stores reign in traffic
Figure 24: Retailers shopped, May 2017
Subscription services fail to scale audiences
In their words: subscription services
Men more likely to grab-and-go while women seek options
Figure 25: Retailers shopped, by gender, May 2017
Retailers need to remain mindful of multicultural customer base
Figure 26: Retailers shopped, by race and Hispanic origin, May 2017
Drug and mass channels make big changes to retain core customers
Figure 27: Retailers shopped, by age, May 2017
In their words: where they shop and why
METHOD OF SHOPPING
In-store shopping remains valuable
Figure 28: Method of shopping, May 2017
In-store shopping incidence rises with age
Figure 29: Method of shopping, by generation, May 2017
Online shopping rates expected to rise
Figure 30: Frequency of buying items online, May 2017
What can retailers do to improve loyalty of online shoppers?
Figure 31: Attitudes toward online shopping, by select ages and household incomes, March 2017
In their words: in-store influencers and online product preferences
ITEMS PURCHASED
Grooming staples purchased by majority
Figure 32: Items purchased, March 2017
Higher overlap between less-involved product categories and mass retailers
Figure 33: Items purchased, by retailers shopped, May 2017 – Part one
Figure 34: Items purchased, by retailers shopped, May 2017 – Part two
Men remain important to the category
Figure 35: Items purchased, by gender, May 2017
ATTITUDES AND BEHAVIORS TOWARD SHOPPING
Robotic shopping behavior presents challenge for brands
Figure 36: Routines versus experimentation, by age, May 2017
In their words: impulse versus planned purchases
Understanding purchase drivers can help brands reach new audiences
Figure 37: Purchase drivers, by gender and age, May 2017
In their words: importance of vegan, natural, and/or organic products
ATTITUDES AND BEHAVIORS TOWARD MOBILE TECHNOLOGY
Mobile momentum continues
Figure 38: Attitudes and behaviors toward mobile technology, May 2017
Four in 10 would rather talk to their mobile device than a salesperson
Figure 39: Attitudes and behaviors toward mobile technology, by gender, May 2017
Many available mobile moments to connect with multicultural consumers
Figure 40: Select attitudes and behaviors toward mobile technology, by race and Hispanic origin, May 2017
As category involvement increases, so does digital engagement
Figure 41: Select attitudes and behaviors toward mobile technology, by repertoire of beauty items purchased, May 2017
ATTITUDES AND BEHAVIORS TOWARD SOCIAL MEDIA 
Moving at the speed of social media
Figure 42: Attitudes and behaviors toward social media, May 2017
Figure 43: Attitudes and behaviors toward social media, by select generations, May 2017
Figure 44: Attitudes and behaviors toward social media, by gender and age, May 2017
Personal recommendations hold weight among iGens and Millennials
Figure 45: Purchase drivers – Any rank (net), by all women and Millennial women, December 2016
In their words: influencers
Shoppable social media should bring more change
SOCIAL MEDIA INFLUENCERS AND RETAILER SPOTLIGHT
Key influencers
Instagram
YouTube
Lifestyle bloggers
Celebrity makeup artists
Brand initiatives
Social media spotlight on specialty retailers
Figure 46: Social audience, July 2016-June 2017
Figure 47: Posts per platform, July 2016-June 2017
Figure 48: Number of engagements, July 2016-June 2017
Figure 49: Ulta Beauty post on Pinterest, February 2017
Figure 50: Ulta Beauty post on Pinterest, March 2017
Figure 51: Sephora post on Pinterest, June 2017
Figure 52: Sephora post regarding Urban Decay news on Instagram, June 2017
Figure 53: Ulta Beauty post regarding Urban Decay news on Instagram, June 2017
INTEREST IN RETAIL SERVICES
Did someone say free samples and gifts?
Figure 54: Interest in retail services, May 2017
Figure 55: Interest in select retail services, by women 18-34, May 2017
Experiences can draw in multicultural shoppers
Figure 56: Interest in select experiential services, by race and Hispanic origin, May 2017
On-demand delivery not a key driver of store preference
Figure 57: Interest in on-demand delivery, by key demographics, May 2017
TURF analysis provides quantitative support for maximizing reach
Figure 58: TURF analysis – Interest in retail services, May 2017
In their words: “If I was in charge of my own beauty store … ”
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Consumer qualitative research
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET 
Figure 59: Total US retail sales and forecast of beauty products, at inflation-adjusted prices, 2012-22
Figure 60: Male population by age, 2012-22
Figure 62: Disposable Personal Income change from previous period, January 2007-May 2017
Figure 63: Median household income, by race and Hispanic origin of householder, 2015
APPENDIX – THE CONSUMER 
Figure 64: Amount spent on fragrances, January 2016-March 2017
Figure 65: Mean spending on fragrances, by key demographics, January 2016-March 2017
Rival IQ methodology and supporting tables
Figure 66: Total social audience, by platform, by listed brands, July 2016-June 2017
Figure 67: Total posts, by platform, by listed brands, July 2016-June 2017
TURF methodology and supporting tables
Figure 68: TURF analysis, table – Interest in retail services, May 2017