Prestige perfumery: 2021 forecasts by The NPD Group
The retail sector is experiencing a radical transformation: the digital evolution and new consumer habits are affecting the evolution of the more traditional sales channels. This impacts even on individual merchandise categories, as they are forced to adapt to new solutions for distribution. Among these, prestige perfumery has gradually found its way into other channels, especially e-commerce, and opened new doors for development, which may serve as important growth factor in the current economic scenario.
In a Cosmoprof Worldwide Bologna exclusive interview, Sylvie Cagnoni, Executive Director NPD BeautyTrends Italy for The NPD Group, an international company specialized in market research, shares the results of the most recent study dedicated to Prestige Beauty and forecasts for 2021.
Ms. Cagnoni, what factors will affect the economic trend in the prestige sector over the coming months?
Our previsions are the result of estimates based on a mix of variables of various nature. These are official macroeconomic variables and variables specific to the Prestige Beauty channel related to historical data for the category and expectations concerning various factors that can influence market dynamics, including the expectation that stores will close due to the crisis, likely restrictions on movement and the closing of restaurants and meeting points. In addition, working from home and the use of masks affect the way consumers socialize and the cosmetics they buy, especially makeup. We also analyzed the growth of e-retailers, accounting for pure players and the e-shops run by brands, as well as the lack of tourism and of global shoppers. Finally, the market is impacted by the vaccination campaign: a slowdown would certainly have negative effects on the channel. NPD suggests 3 scenarios for 2021: pessimistic, optimistic, and realistic, based on what happens with the different variables considered.
Based on this data, what are your predictions for 2021?
In Italy we expect realistic growth of the prestige market to be +18% compared to 2020, which closed at -23%, but the percentage may be as low as +12% in the worst-case scenario or rise to +21% in the best case. However, if we take 2019 as our benchmark for the sector it is clear that returning to pre-pandemic levels will not be possible. In fact, we expect the sector to see a -10% drop in 2021 compared to 2019, with figures ranging from -14% in the worst-case scenario to -7% optimistically. The data for the other major European countries – Germany, France, UK, and Spain – shows a similar situation. Here too, we predict realistic average EU5 growth at +15% compared to 2020. Germany and France are expected to see a smaller rebound than Italy, +11% and +16% respectively, because they managed to contain the epidemic better than Italy did in 2020. Expectations for Spain and the UK are in line with Italy, with growth forecasts of +16% and +18% respectively compared to 2020. On the other hand, if we compare the trend in 2021 to 2019, the prestige market in Europe will see an average drop of -9%: France and Germany are expected to be at -7%, while we expect Spain to be at -13%. The United Kingdom will see a -10% drop, in line with the percent figures for Italy.
Given the generally negative outlook, can e-commerce still be a driver for growth?
In general, e-commerce has served as a fundamental channel for consumption in 2020, and we expect that trend to be further consolidated in 2021. Following the analysis of the 5 key markets for Europe (Germany, France, UK, Spain, and Italy), we expect e-commerce to grow by +7% compared to 2020; in relation to 2019 the rate is +55%. For Italy, a country where the prevalence of online sales remains low, growth compared to 2020 is expected to be in the double digits: +20% (+146% compared to 2019).
Are there any areas that seem ripe for a rebound in Prestige Beauty?
Categories such as skincare, haircare, and fragrance register the most optimistic expectations, while make-up will continue to have a hard year due to social occasions being scarce and the use of masks still being mandatory. We believe skincare and haircare will continue to benefit from the consolidated beauty routine and from the new personal care rituals discovered in 2020: spa at home, home scent rituals and disconnection rituals.