5th Annual Color Cosmetics Study Shows Multi-Year Declines in Purchasing by Heavy Buyers and Key Demographics, and Less Overall Consumer Engagement in the Sector
Shelton, CT – November 27, 2018 – Faced with fewer heavy buyers in key demographics, declines in purchasing across all product types and generally less consumer engagement in stores and online, the cosmetics industry is on the precipice of recession, according to the TABS Analytics 5th Annual Color Cosmetics Study. The study offers insights into cosmetics purchasing trends, including who buys cosmetics, the specific products consumers buy, the outlets at which they make purchases, the factors influencing purchase decisions, and year-over-year changes in behavior and attitudes.
"These surveys have become strong predictors of shifts in consumer behavior, and all signs this year point to some difficult times ahead for the cosmetics industry,” said Dr. Kurt Jetta, president and founder of TABS Analytics. “While the overall health of the cosmetics industry many not be as bad as the research suggests, this sector is clearly in decline and will soon be in recession – a state that retailers and product manufacturers can expect to last for several years."
Jetta continued, “We understand that these conclusions may be startling to some who have held this sector up as a ‘high flyer’ in the consumer-packaged goods sector. However, it is important to note that we have corroborated our conclusions with other reliable industry sources, most notably syndicated sales data and discussions with several companies in the sector.”
TABS’ 5th Color Cosmetics Study was conducted in October 2018 by Toluna and examined 20 products in five categories: eye makeup, face makeup, nail polish and treatments, lip makeup and cosmetic gift sets.
Key findings from the study include:
- Significant Decline in Heavy Buyers and Key Demographics – The cosmetics sector, which has typically been driven by heavy buyers (individuals who purchase 10 or more different types of products annually), saw a dramatic year-over-year decline of over 30 percent after hitting its heights in 2017. Four-year compound annual growth rates for heavy buyers dropped 6 percent, while light and medium buyers grew 4 percent and 1 percent respectively. Because heavy buyers tend to fit into key demographic groups – higher income, ages 18-34, Hispanic and non-Hispanic black – purchasing by these demographics decreased in 2018 even more than the national average. The only exception is non-Hispanic black, which continued to trend upward.
- Purchasing Across Most Cosmetics Product Types Drops – Nineteen of the 20 product types tracked in this study have seen a drop in purchasing during 2018; many types saw declines in the past two years. Over the past year, the number of types of cosmetics products that people purchase regularly dropped 19 percent, and those being purchased at least once dropped 14 percent. While basic product types (high penetration and regularly purchased), such as mascara and foundation, are still more stable, there has been a more drastic drop in complementary product types (lower penetration and purchasing levels). For example, nail products were hot in 2014-2015, with many new brands entering the market; however, the buyer count for those products didn't grow as expected and the number of regular buyers of nail products began to slip. In addition, the 2018 survey showed a steady rise in the number of women who say they purchase no cosmetics at all.
- ECommerce, Drug Stores Grow Share as Specialty Brick and Mortar Drop – Like other non-food categories that TABS Analytics tracks, eCommerce is gaining in share of sales for cosmetics. Amazon, specialty cosmetics websites (ulta.com, sephora.com) and Walmart.com all saw meaningful increases in share year-over-year. Overall sales at brick and mortar stores – including the perennially hot specialty retailers like Sephora and Ulta – were down or flat. The only brick and mortar bright spots were CVS and Walgreens, which both saw upticks in their share in 2018. Reported transactions for all channels were down 12 percent annually since 2016, despite the isolated share gains noted above.
- Consumers Less Engaged in Cosmetic Purchasing – With the exception of heavy buyers, who still seek out deals, consumers, on average, spend less time looking for the best prices from various outlets, and have significantly lessened the time they spend in the cosmetics section. All buyers, including heavy buyers, also reported being less influenced by reviews, and far fewer said they relied on online information and product demos to influence their purchasing.
- Social Media Waning in Importance – While YouTube and beauty blogs are still important to a select population of cosmetic aficionados, consumers are less likely to seek out multiple social media platforms for demos, reviews and other cosmetics information. The average number of platforms visited by heavy buyers has dropped 12 percent over the past year, with Facebook, Twitter and Snapchat’s influence falling the fastest.
"Our survey methodology has been proven so many times now that I accept that the results showing shifts in trends may be accentuated, but the directional conclusions have always been validated. Manufacturers, retailers and investors need to think twice about making big bets in the cosmetics sector in the short-term,” Jetta concluded. “The survey did not directly address the reasons for the decline, but some viable hypotheses include: fewer deals offered and less engagement due to eCommerce dampened overall demand; a saturation effect due to higher pricing has decreased the number of heavy buyers; and a consumer preference discretionary spending shift back to apparel or other consumer goods."
Throughout 2018, TABS Analytics conducted five studies across the consumer-packaged goods industry including: baby care, vitamins, wine and liquor, food and beverage (consumables), and color cosmetics. More information about TABS studies is available at http://www.tabsanalytics.com/resources.
Operating since 1998, TABS Analytics, based in Shelton, Conn., is a technology-enabled analytics firm. Its mission is to simplify and improve the way analytics are conducted in the consumer products industry. TABS offers cloud-based software analytics and applications solutions, including TABS Insight®, Pivotstream® and TABS Total Insights™, for CPG manufacturers that integrate, harmonize, and analyze sales and marketing data. Additional services include TABS CatMan Advantage™, an outsourced category management solution, TABS WorldView™, a global business intelligence tool, and TABS Promo Insight™, a cloud-based software and consulting service that helps companies measure, plan and optimize trade spending. For more information about TABS, please visit www.tabsanalytics.com/press-room to contact us directly.
