Dollar Stores Tempt Shoppers with Luxury Cosmetics

New research from US agency Kline & Company shows the market for cosmetics and toiletries in the US has shown only minor growth over the last five years. Department stores and food stores have seen their sales hit hardest, as consumers head for bargain outlets instead.

The Beauty Retailing USA 2004 report analyses retail trends in beauty products sold through eight purchase channels, and examines the impact of promotional activities and private-label products. It says the shift in cosmetic sales channels has had the greatest effect on food stores, which have seen a 3% average annual decline in sales of cosmetics and toiletries over the past five years.

Meanwhile, the study shows that dollar stores have increased their sales of cosmetics and toiletries by more than 16% a year from 1999 to 2004, albeit from a small base. A similar trend is developing in the warehouse club channel.

Department stores are also losing ground, with women's fragrances showing the most dramatic shift. According to another Kline study, Cosmetics & Toiletries USA 2004, the sale of luxury fragrance brands through mass outlets has grown dramatically over the past decade.

Lenka Contreras, Head of the Consumer Products practice for Kline's research division, says the change is due to a 'bargain-hunting mentality in a slower economy', which is driving consumers to seek their favourite products at lower prices. She says that 'mass retailers know that offering luxury brands helps to boost their quality image among consumers'.

While department stores have been experiencing an extended slump in their beauty product sales, one saving grace has been high-end facial treatments. Professional skin care brands like N.V. Perricone MD, Dr. Brandt, and DDF have helped ensure that department stores avoid an overall loss in cosmetic and toiletry sales.

David Vladyka, Head of Kline's Consumer Products consulting practice says that marketers should take note of the changes, and diversify their distribution channels. 'Rather than trying to lure customers back to the traditional channels that worked in the past, they should be looking to reach them in the channels that show the most promise for the near term'.

Established in 1959, Kline & Company provides MR and business consulting to the consumer products, speciality chemicals, life sciences, and energy industries. The company's web site is at www.klinegroup.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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