NPD beauty insights show areas of private brand opportunity

A new report from NPD Group about the prestige beauty industry is highlighting consumer demands fueling the category’s growth. These demands offer an opportunity for private label to differentiate retailers' beauty aisles. 

The Port Washington, N.Y.-based market research firm found that the U.S. prestige beauty category sat at $18.8 billion in 2019. While this figure is mostly flat compared with 2018, it does include a 7% dropoff in makeup sales and increases found in skin care, fragrance and hair, which are up by 5%, 2% and 16%, respectively. 

Though the $7.6 billion makeup segment still has the largest share of dollars, NPD said the dropoff in sales is partially due to lower overall makeup usage. The company’s recent “The Changing Face of Makeup Report” with CivicScience found that nearly a quarter of U.S. women are cutting back on how much makeup they use to create a natural look. 

"'Natural' is a big buzz word in many industries, especially beauty – in terms of product ingredients as well as consumers looking to achieve a more natural look. How makeup responds to this movement will be key to its revival," said Larissa Jensen, vice president and beauty industry advisor, The NPD Group. "Historically, NPD data has detected a shift between makeup and skincare every four to five years. Based on this, and the slowdown in makeup that began to take hold in 2017, I anticipate we'll see makeup rebound in the next one to two years."

The natural craze also is hitting skin care, which totaled $5.9 billion and is 30% comprised of natural brands. At the same time, skin care essentials — cleansers and moisturizers — were top sellers, as were targeted treatments. In terms of private label, skin care is an area where everyone from Trader Joe’s to Amazon is looking to gain a foothold — with the former’s shoppers naming its Rose Water Facial Toner, Coconut Body Butter and Ultra Hydrating Gel Moisturizer among their favorite home, bath and beauty products recently. 

Besides capitalizing on consumer trends, Jensen noted that customers, especially in the beauty category, are looking to connect with the products they buy. This, in turn, can play a large role in the success of a private brand.

"My one word to characterize the beauty industry in 2019 was 'disruption;' my word for 2020 is 'connection' — not in terms of technology and devices, but the human connection we have to each other, to brands, and to the environment," Jensen said. "As topics such as transparency and sustainability become more mainstream, consumers are putting the social and environmental impacts of their purchase decisions front and center, and brands will need to act accordingly."