StrataGist 2010

One Analyst's Observations…

In this edition, we summarize some highlights from the "Trends That Affect The Skin Care Industry" session of the 2010 Face & Body Conference that was held July 17th - 19th, 2010 at McEnery Convention Center (San Jose CA). The speaker, Phil Fox, provided Euromonitor International's (Chicago IL) assessments and forecasts for the U.S. and global skin care markets.

Skin Care Industry Trends - July 2010

One of the delightful aspects of attending the Face & Body Conference each year is hearing the latest buzzwords, many of which succinctly describe new developments.   "Trends That Affect The Skin Care Industry" described how consumers are "trading down" from high-end department store brands to low and moderately priced skin care products sold by mass merchandisers (e.g., Target and Wal-Mart).

In response to curtailed spending patterns that consumers embraced during the recession, Procter & Gamble (P&G; Cincinnati OH) launched "masstige" products and tiered pricing. Estée Lauder (New York NY) and L'Oréal (Paris, France) also adjusted their products to accommodate "budget beauty" among the masses. P&G's Olay line includes Complete ($8.49), Total Effects ($9.99 - $20.49), Infinity ($29.99), and Pro-X ($47.00 - $62.00).

The service sector is experiencing similar shifts. Nail salons were doing well until 2006 and 2007. Despite the recession, nail product sales increased to slightly higher than 2005 levels ($600.0+ million), demonstrating increases in 2008 and 2009, a trend that is expected to continue through 2011 before flattening out in the $700.0 million to $720.0 million range.

Cost-conscious individuals are staying in rather than going out. In the day and destination spa segments, the number of outlets has increased since 2004 and is expected to double by 2014. Overall, however, "total growth" peaked in 2008 at approximately 19.0% and is forecast to fall to 2.5% in 2013 before rebounding in 2014 (6.0%). At the retail level, spas are doing slightly better than travel (versus services).

Euromonitor International's skin care forecasts anticipate that consumers will take charge of their health and medical needs during the next four years by pursuing self-care and wellness. In addition to supporting abundantly available private label products (which cost retailers 30.0% less to stock on their shelves), consumers will purchase greater amounts of organic and natural products over traditional choices. "Eco-frugality" along with thrift and value are expected to be long-term drivers in the skin care market.

For past issues of StrataGist, visit the 2008-2009 and 2010 Archives.