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Income and Wealth Distribution Exposes the Market Potential of Fast-Fashion Beauty

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A recently published global briefing entitled Colour Cosmetics Make a Bid for Staple Status: New Growth Concepts Drive Demand explores how in an era of upheaval in colour cosmetics, new genres of brands are disrupting the marketplace with their nimble networking and ability to instantly gratify. Over in the merciless and vast mass arena, fashion for the face has been establishing itself as a credible challenger in mature markets for some time. Fast-fashion brands operate swiftly when it comes to speed to market and frequency of stock turnaround. Shaping this sphere is a combination of apparel players such as H&M and Topshop, whose make-up division grew at a 32% CAGR over the previous five years, along with high volume, trend-driven pure beauty brands like Kiko Milano, which achieved an even more impressive 39% CAGR. Such agile brands also play a pivotal role as established industry names squirm in the grip of a “duping” revolution, whereby today’s unscrupulous consumer is seeking immediate and cheaper alternatives of cult products because either the consumer is priced out or the product is sold out.

Mass make-up for all

Understanding the demographics of the typical mass consumer is fundamental to uncovering where fast-fashion’s fortunes may lie. Euromonitor International’s Income and Wealth Distribution Model reveals that the largest mass colour cosmetics markets globally in no way represent one homogenous consumer group. In fact the reality is quite the opposite; an erratic mix of populations of both high and low disposable incomes, highlighting how mass products are not reserved solely for low earners. The middle class are just as likely to buy Mac as they are Maybelline which cements the need for brands to consider the threat of competition from beyond their price positioning.

The anomalous distribution of disposable income indicates that many consumers in these predominantly middle-income markets buy mass through choice and not through necessity, and highlights the need for sophisticated innovation and not just low price points in the mass sector. While China and Brazil are amongst the largest overall colour cosmetics markets, Mexico and Russia are not, but rank in the top 10 mass markets. These countries have a high proportion of low-incomeadults and it can be expected in these cases that affordability is a stronger driver of a mass purchase than choice.

Largest Mass Colour Cosmetics Markets 2015

Source: Euromonitor International Income and Wealth Distribution Model

Does fast-fashion apparels success hint at fast-beauty gold mines?

So if mass cosmetics are for all, where does fast-fashion fit into the equation? The largest fast-fashion markets in apparel have similar demographic profiles; large middle and upper classes and smaller bottom classes. One market which stands out is Spain, a country closely associated with fast-fashion thanks to Inditex’s successful brand portfolio including Zara, Bershka, and Pull & Bear. Spain is also a key market for fast beauty, including Kiko and also Cosnova’s Essence and Catrice brands, which are among the fastest growing mass brands in Spain, recording double-digit CAGRs between 2012 and 2015.

Largest Fast-Fashion Apparel Markets 2015

Source: Euromonitor International Income and Wealth Distribution Model

Spain’s joint income and wealth reveals habituated but hard-up consumers

Spain has a considerably larger proportion of its population in the bottom bracket of disposable income compared to other large fast-fashion markets. Interestingly, compared with Germany and the UK, its percentage of adults earning middle-incomes is lower but the percentage of adults earning middle incomes and sitting in the middle wealth bracket is the highest. Spain’s population may generally have low disposable incomes but wealth is robust; telling of the country’s financial woes, which are relatively new. Spain’s recent history of affluence has allowed wealth to be accumulated, and consumers have become accustomed to being able to afford to keep up with trends. Whilst the great recession of 2008 left over a quarter of the population unemployed and reduced spending power, the Spanish appetite for keeping up appearances was maintained. Fast-fashion’s mass price points, perceived quality and trend alignment suit the fashion-conscious Spanish consumer. These shoppers may not have a monthly salary to splurge on premium products but they have been conditioned to want more than basic mass offerings, and are not so destitute that they are unable to afford to take risks on trends.

As fast-fashion beauty brands usher in a new normal when it comes to reaction time and speed to market, their successes will be replicated by more and more. Aspirational but frugal shoppers that are willing to take a punt on novelty are crucial to this model. As laid bare by the demographic profiling of Spain, an impending global economic slowdown could prove to be more sweet than bitter for fast-fashion beauty.

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