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When Beauty is a Budget Buster

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In the midst of a wobbly economy, shoppers generally ease up on spending. They tend to choose private labels instead of national brands. They keep their cars and furniture a bit longer, and they wear their winter coats and boots an extra season or two. But there is one area where folks appear less willing to make sacrifices -- prestige make-up and skincare.

According to beauty market research conducted by The NPD Group, Inc., total prestige skincare and makeup dollar sales in U.S. department stores are on the rise. From January to June 2011, prestige women’s and men’s skincare dollar sales increased 14 percent and 9 percent, respectively -- surpassing sales for the first half 2008, which is considered pre-recession. The same can be says of prestige makeup sales – up nearly four percent compared to the same timeframe in 2008.

All categories of prestige makeup posted growth. The strongest increases are attributed to the rediscovery by consumers of color cosmetics, such as eye and lip products, as well as the resurgence of the nail and other color segments. Most outstanding growth was in the nail category, which has increased 65 percent since first half 2008. When looking at prestige skincare, the best performing category was “sets and kits,” with 56 percent growth, compared to first half 2008.

The prestige fragrance category continues to build momentum, but it has yet to reach pre-recessionary levels. In first half 2011, women’s and men’s high-end fragrances, generated four and two percent less dollar sales, versus first half 2008. However, when compared to first half 2010, women’s and men’s prestige fragrance sales increased 14 and 8 percent, respectively -- resulting in 10 percent dollar growth overall.

“If prestige fragrance sales momentum continues at the accelerated levels experienced since April 2011, sales in the second half of 2011 may well exceed the second half of 2008,” says Karen Grant, vice president and senior global industry analyst, The NPD Group.

“Historically, we saw fragrance purchasing follow the consumer confidence trend. When sentiments were low, so were fragrance sales. However, the trend in fragrance appears to have shifted. While fragrance suffered the steepest declines at the start of the recession, there has been a turnaround in recent months even though consumer confidence has not yet fully recovered. Consumers are gravitating to classics and new scents, as well as, high-end and niche brands,” Grant notes.