Prestige brands need to expand distribution to up sales, says analyst
Data from Unity Marketing’s Luxury Tracking Study, which tracked average spend in the beauty market amongst affluent consumers (those with an income of $100,000+), indicated that luxury consumers are trading down from prestige to mass, said Danziger.
“L’Oreal Paris was the number one beauty brand for ultra-affluent consumers (those with an income of $250,000+) in the fourth quarter of 2009, with 22 percent of ultra-affluents purchasing L’Oreal,” she told CosmeticsDesign.com USA.
Lack of participation in luxury market from lower-level rich
The results of the study showed that the average spend on beauty products by the typical luxury consumer household increased in 2009, with spend in the color-cosmetics sector rising by 63.1 percent.
However, according to Danziger, the results are skewed by higher levels of spending by ultra affluent consumers (those with an income of $250,000+).
“In the last two quarters of 2009, lower level affluents (those with an income of $100,000-$150,000) stopped participating in the luxury market, leaving it much more influenced by ultra-affluents” she explained.
In the US, there are 2.5m ultra-affluent consumers compared to 21.5m lower-level affluents, and the latter demographic contributed significantly to sales of luxury brands before ceasing to participate in the market, said Danziger.
Prestige brands need to expand distribution channels
According to Danziger, although the luxury market has in general been hesitant to enter mainstream distribution channels, doing so may be a way to boost sales, as consumers are looking for flexibility that the traditional department store channel does not offer.
“Prestige beauty brands need to open up distribution to where all consumers are looking for products,” she said, adding that consumers are increasingly looking for specialist beauty stores like Sephora.
Television too, must not be overlooked as a means of distribution, as it has been an important way of raising awareness and introducing consumers to brands, Danziger said, adding that Bare Escentuals, the number three prestige beauty brand, owes it success to television.
