What Is Going On With U.S. Makeup Sales?

The prestige makeup world is a murky place right now, particularly in the U.S. market.
Industry sources said numbers from the NPD Group in the first quarter showed significant declines in sales across some of the biggest makeup brands, including MAC, Urban Decay, and Anastasia Beverly Hills — which is said to be down more than 20 percent. The company did not immediately respond to a request for comment. Other big name brands, including Bobbi Brown, Smashbox, Tarte, Stila and Chanel makeup, were also said to have posted dips in the quarter.
In all, NPD said makeup sales were down 3 percent through April.
Industry sources questioned those numbers, saying that the agency can't track exclusive or direct-to-consumer brands, and that sales from those companies could have definitely boosted makeup numbers to at least a break-even point. Brands that aren't tracked include Fenty, Huda Beauty, Kylie Cosmetics, Morphe, Glossier and many others. It's an issue NPD has recognized — the company has organized meetings around how it should potentially evolve its data sourcing.
It's possible part of the reported sales dips were made up through brand e-commerce operations, which many companies have started to focus on as a means to capture customer data. But industry insiders are speculating that untracked newcomers are taking market share at the same time consumer interest in makeup — which peppered the space with launch after launch for a multiyear stretch — has been somewhat exhausted. On top of that, consumers are starting to shop for makeup that gives them a more natural look than the cake-y, contoured trends seen on Instagram. Tinted moisturizer was up 14 percent year-to-date through April, according to NPD.
"That tells me the trend is toward less is more, not as heavy coverage, maybe fewer products," said one industry source.
"There are a combination of factors that affected prestige makeup decline, and consumers favoring the no-makeup makeup look is one of them," NPD Beauty industry analyst Larissa Jensen said, noting that NPD is also showing a 29 percent year-to-date decline in makeup launches for this year.
Another factor, though, is consumers shopping in new channels, she noted.
NPD's numbers show the makeup category was up 1 percent, to $8.1 billion, for that time period. According to Euromonitor data, prestige makeup sales in the U.S. were up 5.25 percent for 2018, to more than $9.4 billion. Euromonitor says its numbers account for retail and online sales, including direct-to-consumer brands.
Without a clear picture, retailers are left to focus on the clearly growing categories.
At Sephora's new Times Square outpost, nearly half the store is dedicated to skin care, hair care, fragrance and wellness.
It's a bold move — and a shift — for the chain that one source termed "the number-one makeup retailer in the U.S."
Makeup still plays a big role at the new location, but the categories that are showing growth in beauty, namely skin and hair, are more prominently featured than in Sephora layouts past. The decision underscores a reality in the U.S. beauty market — prestige makeup is no longer the star of the show.
Over at Ulta, which has revamped its skin care and hair offerings and recently introduced the wellness category, prestige makeup sales have been hit or miss. In the first quarter, new launches in the segment generally underperformed against Ulta's expectations, chief executive officer Mary Dillon told Wall Street analysts on the company's earnings call in late May.
“Many of , including some of the biggest brands…are continuing to struggle. There’s a transformation in the makeup business right now. The category remains healthy but there’s a shift in consumer preference on brands,” said Dave Kimbell, Ulta’s president and chief merchandising and marketing officer. Ulta has shifted its own makeup merchandising strategy to focus on direct-to-consumer brands like Morphe and Colourpop, which it sells as the exclusive retail partner.
“As we look forward on our business, we’re not anticipating that some of the big brands that have been a drain turning around immediately, but we’re confident over time that these brands will regain their footing and get back to growth,” Kimbell said.
Fabrizio Freda, president and ceo of the Esteé Lauder Cos., said in a May interview that declines in foot traffic in the U.S. specifically hurt the makeup category, more than the repeat-purchase categories of skin care or fragrance. "Makeup is very dependent on traffic moments. That's why I believe it was hit a bit harder recently, and that's why I believe it'll probably come back next year," Freda said. The company is turning to granular product and marketing initiatives to try to combat the slowdown, he noted.
But several industry sources remained skeptical that makeup is poised for an immediate comeback, noting that the beauty category is cyclical.
"Historically, there has been a pendulum between makeup and skin care where fluctuate in terms of…spend. They’ll spend a lot of money on makeup, and then they all break out and then they spend on skin care," said Conor Begley, cofounder of influencer data agency Tribe Dynamics. Tribe tracks what beauty influencers are talking about, and lately, they're talking less about makeup, Begley said.
"We have seen a slowdown in social content year-over-year," Begley said. "If you look across the top 50 brands, it's about a 3 percent decline in makeup."
Numbers aside, category dynamics are shifting, too.
NPD data shows year-to-date upticks in categories used to create a "born with it" look, according to Jensen. Tinted moisturizer, concealer, makeup setting sprays and powders and eye brow products are up, she noted, but lip color and eye shadow are both down.
According to Yarden Horwitz, cofounder of search analytics business Spate, consumers are searching more online for skin-care than makeup — though she noted skin-care searches have also faced a hit recently because of declines in face masks, which had been driving much of the category interest.
Lately, Spate's data shows an uptick in searches for procedures — eyelash extensions, dermaplaning, hydrafacials, cheek fillers and Botox have all seen increases in search volume over the past year, Horwitz said. 
In makeup, tinted moisturizer searches are up 21.1 percent year over year, and lip gloss is up 10.1 percent, according to Spate. In the face category, where searches declined 2.3 percent year-over-year, people were searching about topics related to foundation shade selections and skin concerns, especially acne. In the lip category, where searches dipped 10 percent, searches for lip plumper, liner and lipstick all declined, according to Spate.
"The beginning of 2019 indicates that consumers might be less excited about newness in an already saturated market," Jensen said.
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