In cosmetics, foundation and the eyes have it

Articles
May 01, 2009

In cosmetics, foundation and the eyes have it

What does a double-digit percentage drop in the dollar sales of lipstick signify in this recession? It could underlie any number of trends: That women might prefer a more natural, healthy look today. They’re cutting back on extraneous spending. Some can’t get ‘lipstick on a pig’ references out of their head since the past Presidential election. Or the Lipstick Index minted by the Estee Lauder CEO after the terrorist attacks of 2001—when lipstick sales rose 11% and he credited it to women buying such items to make themselves feel better in difficult times—is shown to be meaningless. People worried about making their mortgage payments are less concerned about looking good through the use of cosmetics. People driven to feed their families are centered on real issues rather than artificial appearance. None of this means cosmetics sales are fading in food, drug and mass merchandiser stores, including Walmart. Quite the contrary. Total cosmetics sales in these channels rose 1.3% to $4.16 billion in the 52 weeks ended March 21, 2009, albeit on a 2.8% unit volume decline vs. the year-earlier period, Nielsen data show.

What does a double-digit percentage drop in the dollar sales of lipstick signify in this recession?

It could underlie any number of trends: That women might prefer a more natural, healthy look today. They’re cutting back on extraneous spending. Some can’t get ‘lipstick on a pig’ references out of their head since the past Presidential election.  Or the Lipstick Index minted by the Estee Lauder CEO after the terrorist attacks of 2001—when lipstick sales rose 11% and he credited it to women buying such items to make themselves feel better in difficult times—is shown to be meaningless.

People worried about making their mortgage payments are less concerned about looking good through the use of cosmetics. People driven to feed their families are centered on real issues rather than artificial appearance.

None of this means cosmetics sales are fading in food, drug and mass merchandiser stores, including Walmart. Quite the contrary. Total cosmetics sales in these channels rose 1.3% to $4.16 billion in the 52 weeks ended March 21, 2009, albeit on a 2.8% unit volume decline vs. the year-earlier period, Nielsen data show.

Although the dollar-sales growth rate slowed from the 1.9% advance in the prior 12 months, a sales pick-up in two recent months suggests the shift to FDM channels from department and specialty stores is accelerating as women economize. In the four weeks ended March 21, 2009, cosmetics sales rose 3.3%; this followed a 5.1% gain the prior four weeks ended Feb. 21, 2009.

Nielsen data revealed winners and losers among the 15 different cosmetics segments tracked.  Notable were the upturn in foundation-cream & powder sales and the downturn in lipstick sales.

By mid-winter, the index of foundation-cream & powder users leaped suddenly to 122 from 100 in the prior month. In those four weeks ended Feb. 21, 2009, dollar sales of the segment rose by 7.5% to $29.9 million over the same year-earlier period. Then came a 12.5% rise over the same period a year ago in the four weeks ended March 21, 2009, on a 6.8% unit volume increase, Nielsen reported.

By contrast, lipstick sales have been badly smudged this past year, with 12 straight months of unit movement declines and 11 out of 12 months of dollar sales drops. In the latest two months, for example, dollar sales slipped by 9.6% and then by 13.6% to $54.9 million in the four weeks ended March 21, 2009, the data show.

On the upswing are make-ups related to the eyes.  The false eyelash and accessory segment, while comparatively small at $41.7 million in the latest 52 weeks, was up 16.6%, on an 8.4% unit volume rise. Indeed, eight straight months of double-digit gains point to a style trend that is lifting related segments as well.

Eyebrow and eye liner dollar sales rose 4.3% to $431.5 million in the latest 52 weeks. This trend has escalated in recent months, with a 10.5% gain in the four weeks ended Feb. 21, 2009, and a 16.8% climb in the four weeks ended March 21, 2009. Similarly, mascara sales rose 5.4% to $717.9 million in the latest 52 weeks, a trend that was helped by growth in the past three months of 10.6%, 16.5% and 12.1%, said Nielsen.
 

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