Christmas just passed by, but still there are left tons of gift guides and wish lists from all the beauty and luxury brands promotions, let's say holiday's season is not over yet. In addition, New Year is coming and it is a good time for reflection, so I felt the need to answer a question that often comes into my mind during this time of the year (as a marketer in the fashion and luxury industry): What does the Holidays Season Means for the Beauty Industry? or to be truly honest (am I the only one going crazy and buying fragrances during this season?).
Based on my experience as a compulsive shopper and loving the feeling of adrenaline while doing the last minute Christmas shopping every year, I came up with the conclusion that one of the easiest gifts for the season are fragrances or any other category from the beauty brands. And the main reason is because when I have no idea about what to buy for a friend I tend to go to the beauty department and buy skincare products or fragrances. One of the reasons I do it is because I think everyone just like me (in that moment) want to be pampered and take care of themselves every once in a while. What can be better than beauty products that are applied directly in something as precious as your own body? For sure is not the same experience as it is to wear a new sweater, a pair of shoes or a new bag, it is something beyond that.
Being aware that giving someone a body cream as a Christmas gift could be considered not a very nice choice, I thought about how fragrances are the first option from this beauty department. And it isn’t hard to find the best fragrance and option for your gift list, since every single brand is offering a special promotion and give away deals (in my personal experience this is the way it is in the U.S. big department stores) that you’ll find what you need in less than 30 minutes. Not for nothing beauty companies such as L’Oreal Paris focuses strongly to invest on their fragrance category during this particular season of the year.
I decided to do a further research and better understand the beauty market and I was able to see that according to Fashionbi Sector Reports, this market in 2012 was valued 77.45 billion Euro. Then thinking that probably the second major product on the Christmas gift list could be jewelry and apparel from premium brands, I discovered that the market size for jewelry was lower with only 22.9 billion Euro, and the same was with apparel from premium brands which reported a market size of 35.78 billion Euro.
What a surprise since I thought that premium apparel brands were more likely to have the largest market size or the jewelry. You just think that’s the way it should be!
Anyway, I wanted to find out how much impact the fragrance category represents in the beauty sector, to do it I needed to know which are the best- seller fragrances, and according to retailer Sephora this is the list:
1.Flowerbomb by Viktor&Rolf
2.Dolce&Gabbana's Light Blue
3. Daisy by Marc Jacobs
4.Stella by Stella Mc Cartney
5.Dot by Marc Jacobs
6.Acqua di Gioia by Giorgio Armani
8.Amazing Grace by Philosophy
9.Bright Crystal by Versace
10.Florabotanica by Balenciaga
All of the products and brands included on this list belong to the prestige market segment from the beauty industry, which comprehends a market size of 10.48 million Euro in 2012. And from all the brands belonging to this market segment, the 24% offer fragrances as a category, the product offer is targeting women’s in 98% of their brands.
This is very significant because it means that brands are targeting women like me and there is no coincidence that I find fragrances as one of the best options for my Christmas gift list, since 98% of the brands out there in the prestige beauty market are strategically thinking in getting my attention, I’m the target!
Secondly, I wanted to see how much impact do the premium and luxury apparel brands have in our minds while choosing our fragrances, so I went up again to Fashionbi Sector Reports to see the TOP10 players in the premium market and guess what I found?
Dolce & Gabbana , Versace , Marc Jacobs and Giorgio Armani are definitely on this list with impressive numbers for total revenues. It sounds like these brands certainly can afford big publicity campaigns as a result there’s a big brand awareness in consumers' mind. It is easy to see the correlation here. A very smart move, if you think that aspirational consumers who can’t afford an apparel item for more than 500 euros, they can get at least a taste of the brand’s lifestyle experience and story-telling for only 150 euros.
I mean I might not be able to look like Scarlett Johansson wearing that beautiful lace dress from the last fall-winter collection but for sure I can go and buy the limited edition of THE ONE. See my point here?
Another interesting fact I found to justify my theory and share it with you is that in the United States 60% of the fragrances sales happen during the holidays season, no wonder why Esteé Lauder is expecting holidays to boost sales for this year.
Further on, we are being bombarded not only at the department stores, but also when traveling and online, helping the big conglomerates to keep a great performance in the market. Just for The Esteé Lauder company the family stocks directly owned are valued at $2.6 billion, and L’Oreal and Beiersdorf AG are up 19 percent more than last year.
But who is truly getting the largest piece of the cake here? Which companies are the major players in the Prestige Beauty Market? If you asked me I will say without thinking twice L’Oreal Paris and Esteé Laudeer right? I see their brands everywhere.
To verify my hypothesis and knowing how well informed I am I accessed the Fashionbi’ s Sector Reports. Guess what? Shame on me I was completely wrong, according to the Market Shares by Companies (2012) graph, Procter & Gamble owns 36.2 % of the brands in the Prestige Beauty Market! And no it is not seconded by L’Oreal (which owns 12.4%), but instead by Unilever Group and on third place, of course, there is the French conglomerate LVMH.
To my surprise, my beloved beauty companies are ranked 4th and 5th place in the Major Players list by company on this market. Definitely their total revenues are not on the top of this list, when Estee Lauder registered only 7.69 billion, number one in the list Procter & Gamble Co. reported a total revenue of 66.27 billion Euro in 2012!
Summing together all the players of this Prestige Beauty Market Segment the market size increased 15.12% just in 2012, and recent reports from the media announce that the growth peace is definitely going up.
It seems like there is a beauty boom coming and I can predict that this will be a beautiful Christmas and a Happy New Year for the beauty industry, it just can't be the opposite with these companies stocks and market size growth rising up. I can’t wait to see if my favorite companies will be able to move in the TOP 3 for next year!
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