Granular Data and Local-Level strategies — Model for Success for the Beauty Industry
By Rorri Heller Executive Director, Advanced Analytics U.S. Beauty

Prestige beauty is growing despite slumping consumer confidence.  As of August 2011, dollar revenues were up 8 percent compared to the same time period in 2010*, with positive results in all nine U.S. Census regions.  To continue this positive momentum, retailers and manufacturers must rely on robust data assets and informed analytics to make fact-based decisions.

The outlook is clear: prestige beauty opportunity is driven by local-level insight, and success is driven by local-level achievement. We are partnering with our clients to evaluate performance, identify opportunities, and provide the market sizing, pricing, and marketing effectiveness assessments to capitalize on these prospects. Our statistical modeling integrates volumes of data with inputs from a variety of sources. This allows us to directly and succinctly answer specific business questions regarding price elasticity, segmentation, driver identification, forecasting, and other types of predictive analytics.

Our research has revealed that prestige beauty sales within a given market depend on population characteristics, competitive set, and breadth and depth of products and brands available. We’re using our Store Selling Area analytics to provide manufacturers and retailers with visibility into the consumer demographics and retail and product mix surrounding their stores, highlighting important patterns, linkages, and growth opportunities.

Working with our clients, we have developed a deep understanding of the roles ethnicity and geo-demographics play in beauty consumption. We’ve learned healthy prestige beauty markets tend to possess a number of cultural elements that converge to support beauty growth. Cluster analysis results suggest these markets often exhibit a higher-than-average penetration of Hispanic, Asian, and mixed-race residents.  They tend to skew toward urban settings and average to above-average income levels, a mix that lends itself to a blended, cosmopolitan feel.  Assessing new product opportunities at the market level also has shown that ethnic communities vary greatly in their support of prestige beauty, as well as their adoption of specific products and brands.

We continue to align and customize our Advanced Analytics capabilities to meet your evolving business needs. Of primary concern is the need to target resources efficiently, given the often unrelenting pressure to do less with more.  We’re partnering with clients to develop creative and practical strategies for proper allocation, helping them tailor their assortments to align with specific store characteristics and selling area constituencies.  Local strategies are empowering companies to align field support teams to market needs and assess marketing program effectiveness before allocating funds on a broad-scale basis.  We’ve worked with clients to develop methodologies aimed at maximizing their launch and roll-out dollars. These methodologies help identify the specific local selling areas most likely to be receptive to new products, based on their support of similar, existing ones.

Granular data and local-level strategies can help create a model for success.  Understanding why select stores and markets do better than others remains among the most effective ways to evaluate brand performance and uncover fair-share gaps and opportunities. 

 Source: The NPD Group/U.S. BeautyTrends® Prestige Retail Tracking Service / 12 Months Ending August 2011

As the economy moves into a slow recovery and the prestige beauty marketplace evolves, companies must rely on robust data assets and deep business insights to make the right decisions to ensure sustained and profitable growth.  The most effective of those decisions will be made – and ultimately actioned – at the local level.

For more information about what sets our Advanced Analytics solutions apart, please contact Charles Camaroto at 866-444-1411 or email contactnpd@npd.com.