Luxury 360 - The fun of Beauty Part 2

In my last post: LUXURY 360 - THE FUN OF BEAUTY PART 1, I showcased the "fun-ness" of Chanel's Color Creativity video and the reasons luxury brands are instilling more creativity into beauty from a branding and sales perspective.  

Today I want to share a really interesting except from the L2 Think Tank Digital IQ Index supplement, "Beauty in China" to further illustrate the reason beauty is a key focus and growth area for luxury brands:

• Young women in China currently spend 10-15% of annual income on beauty products
• Trading up; the prestige beauty segment is outpacing the mass category in terms of growth
• China is the largest online beauty market in the world with 17% of beauty bought online (compared to 4-6% in 'mature' markets) 

What trends are you seeing in the luxury beauty market?

Luxury 360 - The fun of Beauty Part 1

I swear the beauty industry keeps getting more interesting.  Take these still shots above from the Color Creativity video featured on Chanel's beauty webpage here.  The reinterpretation of the iconic design of Chanel beauty products is...well, fun!  

It makes sense that Chanel and other luxury brands are similarly increasing their point-of-view (and often investment) in beauty to entice consumers in new and innovative ways:

• Beauty can be a huge revenue generator to brands (as it is for Chanel and Dior) and has higher margins than fashion. 
• Beauty as entry-level priced products allows everyone to become part of a luxury brand's often aspirational world.
• Once a consumer has been introduced to a luxury brand through beauty, a brand can then cross and up-sell to higher price point items.  
• Apart from fragrance, which is a highly fragmented market with low brand loyalty, make up and skincare are high on brand loyalty.  Think about it.  Once you find a concealer, blush or even a mascara that works for you, you repeat buy.       

So much more to say on this topic but I thought I would split it into two posts.  More beauty insights to come in the next post, LUXURY 360 - THE FUN OF BEAUTY PART 2.

Luxury 360

Luxury 360 is a new and recurring post where I will examine the current luxury goods market trends and recap the main highlights.  I personally like to know the big picture of the industry and sometimes find it difficult to get this information in one place.

• 2012 has proven a good year with sales for a third year in row showing double-digit growth. Globally, luxury goods sales are estimated to reach 212 billion euros in 2012, a 10% increase from 2011.  Sales for 2011 were 192 billion euros up 11% from 2010.
• Accessories (leather goods and shoes combined) are the champion category of 2012 with sales up 14%.  For the first time accessories are the largest piece of the market overtaking apparel.  
• At 27 billion euros Greater China (Mainland, Hong Kong, Macau) is now the second largest luxury goods market behind the United States, bypassing Japan.  However Greater China, which accounts for half of luxury spending in all Asian markets, is slowing with projected growth of 20% in 2012 versus 30% in 2011.
• Men are gaining share in luxury spending accounting for 41% of all sales.  In 1995, men accounted for 35% of luxury purchases.  

Hope you found this interesting!  If you want a more in depth look into these highlights, see the Bain & Co. luxury goods market report here.


Photo credit: Runway Passport