SHM Corporate Navigators™ recently released a report about the opportunities for buyers and sellers in the middle-market prestige beauty market. The prestige market is defined by luxury cosmetic and beauty products available mostly at fine department stores or through online vendors. According to the report, the prestige beauty industry is expected to match historical growth trends with skin care and color cosmetics as key drivers and sales in the United States reaching $5 billion in just the first half of 2013. However, the industry faces challenges due to the follower factors:
Luxury for the Masses. Consumers are experimenting with lower-cost products found in drugstores that claim to have the same benefits as their more luxury-priced counterparts. This trend is common in cosmeceutical skin care products such as Olay® Pro X and Loreal Garnier Skin Renew®.
Increasing competition for key distribution channels. Smaller brands face increasing barriers to entry due to vendors that now expect numerous financial concessions.