B Book 2009


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B Book 2009

  2. 2. the beauty book GREETINGS In this year’s B Book you’ll find the kinds of insights and analyses you’ve come to rely on from NPD, but in a different package. Look for Karen Grant’s comments on the state Welcome to the fourth edition of the B Book. of the industry, Claude Charbit’s perspective on NPD’s We find ourselves in one of the most interest- global expansion, and more detail on our new Market ing, although challenging, times, particularly View tools to sharpen your view of the marketplace and for the beauty industry. The tried-and-true give you a competitive edge. solutions aren’t having the same impact with consumers, driving growth as we have As anyone who has ever re-modeled a kitchen or bathroom previously experienced. Collectively we are on a quest to will attest, rebuilding on any scale is not easy. It takes rebuild the foundations of the business by reinvigorating time, energy, and resources – but the end result can be the relevance and value of beauty to the consumer. stunning and, well, amazing. My team and I look forward to working with you as we undertake the challenges ahead, At this year’s HOP, we explore the current scenario and seeking to understand how the changes in the marketplace offer strategies to adapt to the new realities that we find are affecting consumers' attitudes and behaviors and ourselves in today. NPD’s latest tools help provide our redefining the value proposition to meet their needs. clients with the ability to do this: The Beauty Cross Channel Monitor taps POS data from both IRI and NPD, Best wishes, delivering insights into the volatile prestige and mass arena. Retail tracking for the fine department store sub-channel focuses on the nuances of the specialty market. Our Market View Current Conditions Report and Store Level Diane Nicholson capabilities help companies analyze business performance, President, Beauty pricing strategies, and product assortment at a more The NPD Group granular level, in order to make better informed strategic and tactical moves in the marketplace. And we remain committed to listening to your needs for relevant consumer- Many thanks to the sponsors who have helped make this year’s event successful. based topical reports and expanded consumer insights. www.npd.com 1
  3. 3. the beauty book the beauty book Claude Charbit Global President, Beauty Diane Nicholson President, Beauty Karen Grant Senior Global Industry Analyst and Vice President, Beauty Lori Monaco Vice President, Client and Business Development Elise Marshall Senior Account Manager, Business Development Contributors Client Development Team Julie Stewart, Vice President, Custom Services Susan O’Donnell, Director Susan Crescenti, Executive Director, Marketing Judy Sone, Senior Account Manager Joanne McNaboe, Senior Category Specialist, Skincare Carolyn Glassberg, Account Manager Denise Squicciarini, Senior Manager, Custom Research Christine Banno, Associate Account Manager Nicole Wollack, Specialist, Product Management Lindsay Beyert, Associate Account Manager Public Relations Dora Brunette, 516.382.6190 Lucy Boccadifuoco, 516.625.6103 Offices Headquarters, 900 West Shore Road, Port Washington, NY 11050, 516.625.0700 New York City, 250 Park Avenue South, 7th Floor, New York, NY 10003, 866.444.1411 Milan, Viale Edoardo Jenner, 53, 20159 Milano, Italy, 39.02.855.006.1 Paris, Tour Franklin - 29ème étage, 100/101 Terrasse Boieldieu, La Défense 8, 92042 Paris La Défense CEDEX, France Beijing, Room 616, Building B, NanXinCang Business World, Jia 22, Dong Si Shi Tiao, DongCheng, Beijing, China, 100007, 86.10.6409.6603 Madrid, Sucursal en España, C/Pedro Teixeira 8 - 1st Floor, Madrid, 28020, Spain, To subscribe to NPD’s email newsletter, NPD Insights, visit www.npdinsights.com. For information about NPD products and services, contact Charles Camaroto at 866-444-1411 (contactnpd@npd.com). 2 www.npd.com
  4. 4. the beauty book REINVENT, INNOVATE, AND FOCUS YOUR RESOURCES by Lori Monaco Lori Monaco $ Share of 17% 17% Store Level capabilities for the beauty industry have arrived – Prestige Beauty % Po 13% 13% pulation $S now you can dig deeper to answer your business questions. of Pre hare Bea stige of $ Share Prestige 4% 4% uty 4% With the new Market View Current Conditions Report, which Beauty $ Share of % Pop % Prestige 11% 11% ula tion % Populat ion 7% 7% Beauty 5% % presents detailed, Store Level data, you’ll have the more % Population 16% 16% granular view of product and brand sales performance that re of $ Sha ige 6% Prest ty Beau $ Share of Prestige 4% 4% you need for developing fact-based distribution strategies. pulati on 7% Beauty % Po $ Shar % Population Presti e of $ Share of 6% Beaut ge 20% Prestige 11% 11% % Po y % Beauty pulati on 19% Our Store Level information addresses business questions % Populat ion 12% like these: I Can NPD help me quantify and track how my change in spending or shift in dollars for fragrances influences my own business and competition? Should I add incremental Consumers face more choices than ever, yet their spending staff or support dollars to a specific sales territory, and decisions are much more considered. At the same time, what kind of impact might I expect? retailers are evolving in ways that can make it harder for a I How do I compare to my competition in just the doors brand to stand out from its competition. The need to do I am selling in? more with less is a continuing theme, but one that offers the I In which market might a new product launch be most opportunity to reinvent, innovate, and focus our resources. productive for mascara or a new foundation? I Can you help me understand which are the most Going beyond the national view of NPD’s Beauty Trends® important markets/DMAs for skincare and how my POS data can help manufacturers and our retail partners brands compare? manage and deploy precious resources. Every market has I Is there greater sensitivity to my promotions in certain different triggers that drive category and brand dynamics. We regions or markets? know that no two doors or consumers behave alike. Analyzing I What effect will changing price on certain items have business performance, pricing strategies, and product as- on my sales? Does this differ by region? sortment at a more granular level can help you make better informed strategic and tactical moves in the marketplace. 4 www.npd.com
  5. 5. the beauty book If all markets, sales territories, and regions performed Dollars per store selling shows you how your brand is the same, our jobs would be easy. Understanding what the doing relative to competition based on the universe of dollar sales potential is by expanding a brand’s penetration stores each brand is selling in. This is an effective way to in specific geographies will help maximize revenue. measure how productive your brand is relative to competition Knowing which markets will get you there fastest is valuable. or across geographies and how this has changed over Understanding whether you have maximized within a time. Brand F becomes the number-two ranked U.S. category, segment, or sub-segment can help you refine makeup brand on a dollars per store selling basis! strategies and tactics. Dollar Sales vs. Dollar/Store Selling Ranking In this example, we see that Brand A’s skincare market U.S. Dollar Makeup U.S. $/ $/Store share on a national level is 14%. But as we go more Rank Store Selling Selling Rank deeply into the data, we learn that this brand’s skincare 1 Brand A $32,208 1 6 Brand F $22,004 2 market share and ranking differ by region – the East 2 Brand B $15,479 3 North Central, Pacific, and New England regions are 3 Brand C $14,837 4 below the average. If Brand A could achieve its national 7 Brand G $12,177 5 market share in these regions it would achieve an incremental Ranked on $/Store Selling $16.75M annually for this segment. Source: The NPD Group/Market View Current Conditions Report Opportunity Analysis Interestingly, Brand A is only distributed in 25 percent of National Brand A Skincare Share: 14% Pacific region is the most important skincare market the U.S., while Brands B and C are in about 80 percent distribution, suggesting that Brand A is in more valuable Region Regional Share Value of 1 Opportunity makeup doors. Brand Share Gap Share Point Gap East North Central 12.0 2.0 $676M $1,352M East South Central 16.4 0.0 $291M $0 Distribution (% Store Selling) Middle Atlantic 15.1 0.0 $1,029M $0 82% 79% Mountain 15.6 0.0 $393M $0 New England 13.6 0.4 $285M $114M 25% Pacific 12.2 1.8 $1,514M $2,725M South Atlantic 15.1 0.0 $1,203M $0 Brand A Brand B Brand C West North Central 17.8 0.0 $280M $0 West South Central 15.4 0.0 $697M $0 Source: The NPD Group/Market View Current Conditions Report Brand A Total Opportunity Three Months $4,192M To learn more about NPD’s Store Level capabilities and Brand A Annualized Opporunity $16,765M the new Market View Current Conditions Report, please Source: The NPD Group/Market View Current Conditions Report contact your account manager or Charles Camaroto at 866-444-1411 (contactnpd@npd.com). www.npd.com 5
  6. 6. the beauty book STATE OF THE INDUSTRY 2009 Karen Grant by Karen Grant Senior Global Industry Analyst and Vice President, Beauty What did we gain in 2009? As we entered the year, we purpose of beauty in their lives. Before the economic knew it would be a challenging one. Little did we know just downturn, NPD began to report a trend of fewer women how difficult it would be. Every major economic indicator using beauty products. That trend has continued. In just sputtered, and prestige beauty was not immune. Heading the past year, an additional estimated 2.3 million women, into the holiday period, all prestige categories were posting ages 18 to 64, did not use beauty products. For years, declines at record levels. Consumers were shopping less the focus of this trend has been on the fragrance category. – less frequently and for less product. That was and is Now, this trend is in evidence across all three major the reality of our time. Yet while this reality is sobering, categories: fragrance, makeup, and skincare. This shift it is in no way a time for despair or to pause. away from beauty is absolutely the most important factor In the 2009 results and manifestations the beauty industry must address. of consumer choice, there is clear, loud, and unmistakable direction Where do we begin? As we “seek first to understand,” to help us understand we see that consumers are telling us the role of beauty what we must learn and must be more than something to attract a mate, play what is our call to action. dress up, or fix a problem. Beauty is most relevant to our consumers when it makes them feel better about Beyond the economy, themselves, more confident in their lives, more attractive, prestige beauty – and positive. The products we offer are merely the vehicles and, in fact, the entire to get them to that destination. The innovation and service beauty industry, across we offer is the bridge that builds their trust and relationship channels – is at a moment with us. And the value we represent, and can thereby in time when consumers are ask them to spend with us, is fundamentally based on re-evaluating the relevance and the meaning we contribute to their lives. Today, it is vital 6 www.npd.com
  7. 7. the beauty book “ In the 2009 results and manifestations of consumer choice, there is clear, loud, and unmistakable direction to help us ” understand what we must learn and what is our call to action. that we distinguish ourselves on these fronts or we give editions, some top brands doubled new product sales consumers the incentive to choose value based primarily in even the challenging lip category. on savings and price. I In skincare, going where the consumer needs are was a successful tactic, even while the overall category How do we begin? Look at what is working. Then, instead struggled. A focus on the key skin concern of aging, of copying, adapt and translate those insights into our as well as more specialized issues such as acne and individual brands, categories, and retail environments. redness, helped sets gain in both dollar and unit sales. As fewer consumers say they are shopping for I In fragrance during the course of the year, growth was at beauty items in salons and spas, a focus on hair care – both ends of the price spectrum. At either end, the points protection and treatment products – helped prestige of difference were the appeals of novelty, functionality, hair sales rise. And among new products offered by specialty, and aspiration. Sales of premium-priced fra- top brands, there were leaders who posted gains in grances above $100 were positive going into the holiday excess of 30 to 50 percent. period, while the overall category posted double-digit declines. At the other end of the price spectrum, Now as we head into 2010, the reality is that business smaller size women’s fragrances, one ounce and will still be challenging. The other absolute reality is that under, grew both in share of market and sales volume. we know consumers do still love beauty. Like any great I In makeup, capitalizing on increased consumer interest love affair, if we want them to fall in love and stay in love in having a more natural look, new products that com- with us, we will have to continue to “bring our best game.” plemented this trend experienced outstanding success. In addition to a focus on product, we have to look at every While the makeup category entered the holiday period way we can be in our consumers’ consideration set and in decline, new foundation and concealer products be at the top of their minds. We have to be where they sales rose more than 30 percent, and new eyeliner and are spending their time. We have to talk to them where multipurpose eye products sales more than tripled. In they will listen. Our consumers will try, they will stay, they color, where brands supported these categories with will buy – where they see the value. It is our call to action new novelty items, captivating packaging, and/or limited to bring them our very best. www.npd.com 7
  8. 8. the beauty book Interview with Claude Charbit GOING GLOBAL Claude Charbit oversees NPD’s products and services for the prestige beauty market. His career has included leadership Claude Charbit roles with ACNielsen, the EURORSCG French Advertising Group, and more recently, IRI. He joined NPD in 2003. How did NPD’s prestige beauty service meet the needs of What was the highlight last year? It was last year's successful clients in Europe in the past year? Despite global economic completion of a full assessment of our service in China. The difficulties, we have not slowed our efforts to improve on ongoing commitment to a high degree of collaboration with our approach to meet clients’ needs, and indeed, we are our clients resulted in a relaunch of the service in January doing so by using a two-pronged approach: by enhancing 2010, following a successful user conference in Shanghai and upgrading our services in the countries where we attended by the major prestige beauty brands. Many follow- operate now, and by expanding our tracking into new up meetings took place with the objective of translating countries. For example, in Italy, we enhanced our POS such interest into cooperation. sample to all 1,400 retail stores, compared to the 900 stores in 2008. This provided an accurate and more robust In Europe, we are committed to delivering more in-depth view of the marketplace. analyses and insights into the key reasons consumers are not buying. We are considering consumer tracking to We also have expanded our tracking to include Spain. To complete the picture. In addition, we are working with our overcome challenges related to our work in Spain, we U.S. colleagues to bring to the European market some built a step-by-step plan to build coverage. We launched consumer-based services that have been valuable to our retail tracking service in Spain with two years of back clients in the U.S. These may include topical reports for data, exceeding our clients’ expectations. the beauty industry, FragranceTrack, and Skincare Track. What is the future vision for NPD’s global prestige beauty? Our global expansion continues on a country-by-country In 2009, we started to look at new countries for expansion. basis. While we share our clients’ ambitions to have retail The most important decision was to enter the U.K., tracking in place in all 15 countries in which NPD operates, which resulted in a focused effort and reflected input a more prudent strategic business expansion plan is required from our clients. Using a leader panel of key retailers, to ensure our collective success. We are thrilled that our including Boots, Debenhams, and Harrods, we will clients view us as the benchmark for information in this deliver retail tracking data in January 2010. industry. Our goal is to maintain this status and credibility no matter where we operate around the globe. www.npd.com 9
  9. 9. the beauty book WORLD OF BEAUTY Point-of-Sale (POS) Tracking Services Topical Reports BeautyTrends National Beauty Cross Channel Monitor Women’s Skincare In-Depth Chain Participants BeautyTrends® Consumer Report (Special Focus: JCPenney BeautyTrends® National Chain Facial Skincare) Kohl’s Fragrance POS Tracking Service Makeup In-Depth Consumer Report Sears Weekly Fragrance Stage Stores Snapshot Report: Beauty Consumers’ Fine Department Store Sub-Channel Reaction to the Economy BeautyTrends France Participants Market View Current Conditions Report Insight into the Youth Beauty Beauty Success Market Report Douglas Consumer Tracking Services Galeries Lafayette FragranceTrack® Emerging Channels Series Marionnaud Parfumeries Specialty Stores Nocibé Proprietary Research Capabilities Internet Channel Passion Beauté Ad Hoc Studies Home Shopping Printemps Blind Scent Testing Sephora Advanced Store Level Analytics BeautyTrends U.S. + Traditional Independents Department Store Participants Belk BeautyTrends Italy Participants Bloomingdale’s Beauty Point Bon-Ton Beauty Star Boscov’s coin Dillard’s Delle Piane Lord & Taylor Douglas Macy’s Garbo Nordstrom Goccia Parisian Gruppo Ethos Peebles La Gardenia Saks Fifth Avenue La Rinascente Sephora Limoni Marionnaud Parfumeries Olympia Beauté Pieffe Profumerie Pinalli Sephora Unix Profumerie + Traditional Independents 10 www.npd.com
  10. 10. the beauty book Hierarchy of 80+ Categories Allows Detailed Analysis BeautyTrends Spain Participants Women’s & Men’s Skincare Makeup Sephora Douglas Face Skincare Eye Julia Perfumeria Acne Treatment, Age Specialists, Mascara, Liner, Shadow, Brow, Aromas Perfumerias Cleansers, Eye, Exfoliators, Eye Applicator Oriental Perfumerias Lip, Toners/Clarifiers, Makeup Gotta Perfumerias Perfumerias de Confianza Remover, Masks, Moisturizers, Face Primor Oil/Shine Control, Shave Foundation, Powder, Blush, Concealer, Arenal Perfumerias Face Applicator Atalaya Perfumerias Body Skincare Poppy Shop Cleansers, Exfoliators, Lip De la Uz Perfumeria & Cosmetica Firming/Cellulite, Moisturizers, Shave Color, Liner, Gloss, Lip Applicator Gilgo Perfumerias Disperfum Perfumerias Sun Skincare Nail SR Perfumeries San Remo After Sun, In Sun, Self Tanners Color Enamel, Top/Base Coat, Nail Care Aloha Perfumerias Avenida Ana Hair Gift Sets MarviMundo Perfumerias Shampoos, Conditioners, Hair Spray, Je Suis Chic Perfumeri Hair Styling Alberto Perfumerias Passion Beaute Sets and Kits Ella Yel Tot Perfumeria Regia Lirain Vigil Total Prestige Fragrances Manach Oyarzabal Perfumeria Women’s & Men’s Fragrances Bide Onera Juices, Ancillary Products, Gift Sets Galle Men’s Fragrances Juices, Ancillary Products, Gift Sets www.npd.com 11
  11. 11. the beauty book DID YOU KNOW? A Look at the U.S. Beauty Consumer Joanne McNaboe The ego boost is important. Almost Top specialty store converters: 90 seven in 10 prestige shoppers percent of consumers who walk (vs. 46 percent of non-prestige into Bath & Body Works or Ulta shoppers) say that even in these will make a purchase.5 tough economic times, they will still buy beauty products because they make them feel better about themselves.1 The number-one reason that women tune into home shopping networks Anti-aging opportunity abounds. or infomercials but do not purchase Among women who think anti- is they are just watching to relieve aging benefits are extremely/very boredom (45 percent).5 important, 21 percent currently are not using anti-aging moisturizers Safety first! Over half of makeup or serums.2 consumers “look for makeup products that are safe to use” Teen boys who shop most often (top box).6 in apparel specialty stores for their fragrances said the number-one 1 A Snapshot Report On Beauty Focus: TV Shopping Networks & reason they shop there is because Consumers' Reactions To The Infomercials/Paid Programming) there are no pushy/overbearing Economy, May 2009 – Feb. 2009 salespeople.3 Emerging Channels Series: 2 Women's Skincare In-Depth Beauty Care Products (Special Consumer Report (Special Focus: Focus: The Internet), March 2009 Sixty-nine percent of women Facial Skincare), Sept. 2009 Emerging Channels Series: Beauty who do not wear fragrance are Care Products (Special Focus: lapsed users. Health issues are 3 Men’s Fragrance Track 2009 Specialty Stores), April 2009 the top two reasons cited for 4 Women’s Fragrance Track 2009 6 Makeup In-Depth Consumer walking away from the category.4 Report, April 2008 5 Emerging Channels Series: Seven in 10 women spent less Beauty Care Products (Special than $200 on beauty products this past year.5 12 www.npd.com
  12. 12. ABOUT THE NPD GROUP, INC. The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,700 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit www.npd.com. For more information, contact your NPD account manager or Charles Camaroto at 866-444-1411 (contactnpd@npd.com).