Premium cosmetics are recovering following a difficult period at the onset of the economic downturn, as premium cosmetics player focus on brand experience through high tech, targeted and more customised innovation, while increasing the scope of consumer interaction with the brands, both in store and in the digital space.
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Global retail sales in premium cosmetics continued to grow but underperformed the mass segment in 2012. Consumer trading down in developed markets impacted the growth of premium cosmetics.
Value growth in global premium cosmetics has decisively shifted from developed markets to developing markets. Demand in emerging markets is growing strongly on the back of dynamic economic development and rising disposable incomes.
Premium cosmetics is highly consolidated, with the top players commanding large shares. The financial strengths of these players are crucial in their scientific research and product development, the key attributes to ensure product quality and price.
Personalisation has formed a key part of the premium cosmetics business, particularly in skin care and fragrances, in which innovations have been focused on more targeted and customised solutions to cater to specific consumer preferences.
Adapting to consumers? more careful spending, premium players are creating offerings at lower prices by means of smaller packaging, broadening distribution channels and even cutting prices to make premium products more accessible to consumers.
Upmarket premium offerings are best for targeting affluent consumers who are less impacted by volatile economic development, bypassing middle-income consumers to reinforce premium status and build up brand equity.
Expanding their presence in the digital world has now become a given among premium players. Engaging consumers with easy, fun and convenient activities, and emphasising premium status with a lavish shopping experience has paid off for many players.