What\'s new with NPD Beauty - direct from the experts themselves.

1. the beauty book
REBUILD: BEAUTY’S NEW CALL TO ACTION
RETHINK: CONNECTING INSIGHTS, INNOVATION, AND VALUE
january 2010
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3. 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.
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4. 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 01.41.97.25.00
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, 34.91.4.119.445
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).
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6. 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.
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7. 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).
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8. 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
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9. 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.
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11. 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.
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12. 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
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13. 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
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14. 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
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16. 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).