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CHICAGO – Following a robust 2022, the beauty industry has sustained its momentum through the first half of 2023, according to Circana.
And while the majority of sales continue to occur at mass merchants, the prestige beauty business – including beauty specialty outlets and department stores – is the industry’s growth engine, Circana said.
Circana reports that beauty industry sales amounted to $14 billion in the first half of 2023, a 15% increase versus the same period in 2022. In comparison, the mass beauty market generated $28 billion and grew 9%.
“Beauty continues to be the darling of retail through the first half of 2023, maintaining its position as the only industry to grow based on units sold across the general merchandise and consumer packaged goods categories Circana tracks,” said Larissa Jensen, beauty industry analyst at Circana. “The beauty industry is hitting the right notes, meeting consumers’ emotional needs through new and existing products, which is especially welcomed at a time when spending power continues to be squeezed.”
Among notable category trends, makeup ended the first half of 2023 as the fastest growing category within the prestige market, with sales up 18%, or twice the rate of gains at mass merchants.
Lip makeup was the fastest-growing segment across all the beauty categories, inclusive of both prestige outlets and mass merchants, during the first half of 2023, Circana said.
Larsen noted that the uptick validates the “lipstick index,” coined by Estée Lauder Cos. heir Leonard Lauder to measure how women spend money in trying times. Lauder posited that sales of “affordable luxuries” like cosmetics rise during economic downturns.
Makeup usage is also on the rise, with usage up 3 percentage points in the past year and surpassing pre-pandemic levels, Circana said.
Sentiment is shifting in skin care
Face serum, body spray, and facial cleansers were the top gainers in the prestige skin care market for the first half of the year, the firm said. Fueled by new launch activity, clinical brands brought in the majority of the prestige skin care sales gains.
Overall facial skin care usage in the U.S. remains flat compared to last year. While usage remains consistent, product preferences are changing, with consumers increasingly turning to hybrid products that together address skin concerns and provide makeup coverage.
More channel blending is taking place, as two-thirds of consumers feel that skin care brands at drug stores or mass merchandisers are as good as higher priced department store brands, a sentiment which is up from last year.
Hair is the category with the highest average price increase in the prestige beauty market, growing at three-times the rate of the overall industry. Styling was the fastest-growing segment in prestige hair for the first half of the year, Circana said.
Gift sets and mini-sized product remain standouts in the prestige fragrance market. Sales of fragrance gift sets grew by 26%, or twice the rate of the market.
