Glossy x The NPD Group Mid-Year Report: The state of consumer spending in fashion and beauty

Beauty
“[The success of] makeup is tied to the [wearing of] high heels and the Spanx, [and] decking yourself out versus the more natural look,” said Larissa Jensen, vp and beauty industry analyst at The NPD Group. NPD tracked sales performances across makeup, skin care, fragrance and hair for January 2021 through June of 2021, and compared it to the same timeframe for 2020 and 2019.  

During the pandemic, “We just weren’t doing things that would require makeup,” Jensen said.

As a result, makeup was the “hardest hit” out of the U.S. prestige beauty categories, showing a 23% decrease in 2021 compared to the first half of 2019, she said.  

Despite this, makeup, which saw $3.2 billion in sales in the first half of 2021, is “still the largest category so far this year.” Makeup sales increased 22%, compared to the first half of 2020, with tinted moisturizers serving as “one of the very few areas of the makeup category that actually posted growth over 2019,” said Jensen. So while the makeup category “still has a steep hill to climb in terms of recovery,” products that blur the line between skin care and makeup show promise for the category, Jensen said. 

Skin care, which saw $2.9 billion in sales in the first half of 2021, isn’t as dependent on brick-and-mortar stores as makeup and hair — the latter makes up the smallest portion of sales in the prestige beauty category, at $648 million. But the “scientific” aspects of both their skin care and their hair care are important to consumers, according to Jensen.

“One of the top sources of information for skin-care consumers, in terms of what to purchase, is researching products online,” said Jensen. “Gen Z is hyper-focused on caring for their skin, more so than any other young generation before them.” She added that they’ve often found information through dermatologists and ‘skinfluencers’ via TikTok. “That helped the category perform well throughout last year, as well as going into this year,” she said. Skin-care sales are up 21% compared to 2020 and up 6% compared to 2019.

Pivoting to an online-focused strategy is just one of prestige beauty brands’ means of success during the pandemic. Fragrance, another primarily brick-and-mortar store-dependent category, saw sales increase by 82% in the first half of 2021, to $2.3 billion. “To have numbers like that, it has many in the industry perplexed,” said Jensen, who pointed out that this success was seen in “the luxury side of fine fragrance.” In early 2020, the overall fragrance category faced “the same impact as makeup” with “huge declines” in sales, she said. 

“The consumer is looking for this little luxury to treat themselves during a difficult time,” she said. 

Fashion footwear and accessories
The fashion industry has seen similar growth, when it comes to the luxury aspect of consumer purchases, said Beth Goldstein, NPD’s director and industry analyst of fashion, footwear and accessories.

People are “splurging, and they have money to spend,” she said. “The fact that the handbags business has recovered to within a few points of 2019 [down just 6% in the first half of 2021] is demonstrating that there is pent-up demand and consumers spending again.” As for footwear and accessories, the percent of sales generated online in the first half of this year were more than 10 points higher than pre-pandemic levels. In the luxury space, sneakers became the top footwear category, based on sales, which speaks to the way that athleisure overtook fashion, said Goldstein. 

While the total footwear market was up 35% compared to 2020 and 11% compared to 2019, dress footwear is down by about 40% compared to pre-pandemic levels, according to the NPD Group’s Retail Tracking Service.

“We had already been seeing the dress [shoe] market declining for a number of years,” and the pandemic “accelerated that,” said Goldstein. “The continuation of work-from-home and flexible culture will impact what we wear.”

Apparel
While the casualization of apparel dates back to pre-Covid times, the pandemic has “accelerated” the need for comfort — “whether it’s how we work” or how we “go back to social occasions,” said Maria Rugolo, apparel industry analyst at NPD.

Apparel sales in the first half of 2021 were $9.5 billion more than in the same period of 2019, and Rugolo expects sales to surpass pre-Covid levels. According to Rugolo, the rebound of sales has been dependent on the apparel industry’s ability to successfully respond to the push for comfort. 

As sales gravitate toward options that boast comfortability, some brands are “taking the elements of comfort and sleep, and bringing them outside of the home,” said Rugolo. That includes by wearing stretchier fabric and elastic waistbands, to make their clothing “less structured” and more versatile. 

If you’ve traded out your work slacks for sweatpants while working remotely, you aren’t alone: This year, active apparel sales have surpassed 2020 (+52%) and 2019 (+39%) sales for the first half of the year, according to The NPD Group’s Retail Tracking Service. Sweatshirts and sweatpants, in particular, have experienced “double-digit growth,” said Rugolo. The latter, which grew 67% since last year, had 80% growth since 2019, NPD’s pre-Covid benchmark. 

This increase points to a bigger picture in the apparel industry, which is consumers’ desire for a “wardrobe refresh,” said Rugolo. “In 2020, nearly 2 million consumers didn’t even buy one article of clothing,” said Rugolo. 

Since then, many consumers have outgrown their old wardrobes, literally and figuratively. “It was giving people reason to buy, and they can justify that, ‘OK, I didn’t buy anything for a whole year, and things that are in my closet don’t fit that well,’” said Rugolo. She added that 40% of women and 30% of men wear different sizes, compared to 2020, according to Rugolo. “‘And now [they] actually have to make it out [of the house].’” 

Another category under the spectrum of casual apparel that has seen consistent growth in 2021, even after an inconsistent year, is sleepwear. “Last year, a lot of consumers were just holding off to see, ‘Do I need to buy that dress for that wedding? Is it gonna happen?” In contrast, “Sleep is not a category that you would have to do that with,” said Rugolo.

As more companies shift from remote to hybrid work, Rugolo said she expects the apparel industry to adapt accordingly. “Multifunctional [clothing], as long as it’s comfortable and still has a fashion focus,” is “where we’re headed,” she said.

On the same note, as the country opens back up, brick-and-mortar stores are expected to follow suit. “Consumers did want to return to in-store this spring,” said Rugolo. “When you see something online, it doesn’t always translate the same [as] when you try it on.”

In 2021, apparel sales made in-store grew faster than those made online. They were up 53% and 25%, respectively, when compared to 2020, according to The NPD Group’s Consumer Tracking Service.

While this analysis speaks to the importance of the “touch and feel” aspect of traditional retail, “We didn’t make a huge jump [in in-store sales] from prior to Covid,” Rugolo said, referring to in-store apparel sales this year (63% of total sales) in comparison to 2019 (73%).

The “new level” that Covid set for online apparel sales has been facilitated by “shifts to better descriptions of what this [apparel] looks like,” Rugolo said. Features like virtual try-on and livestream shopping have certainly helped. There’s also a lack of “restrictions, as far as quantity of products,” online, the same of which can’t be said of a singular retail location. 

Trends across beauty, fashion footwear & accessories, and apparel 

Casualization
The NPD Group’s data underscores the overarching trend of casualization across the beauty and fashion industries. 

“Comfort casual is becoming a bigger thing” in apparel and “within makeup,” said Jensen. 

During the first half of 2021, sales in the makeup category were down 23%, and they were down 8% in the fashion footwear and accessories category, compared to 2019 sales. The latter was due to the weakness in dress footwear sales.

On the other hand, the activewear and skin-care categories, which increased by 21% and 52%, respectively, in 2021 compared to 2020, demonstrated how the comfort-centric consumer mindset has played out positively.

Categories on the rebound
“The U.S. is in a much better place than many other areas of the world, in terms of recovery,” said Jensen. “We’re coming out ahead of the pack.”

While the data demonstrates a clear shift toward comfort, on the other end of the spectrum, the beauty and fashion spaces also reveal an intersection of in-person experiences and luxury purchases. “The No. 1 reason why anyone purchased a fragrance in the past month was as a treat for themselves,” said Jensen, who noted that fragrance sales rebounded “very quickly.”

In the same vein, luggage, which is dependent on travel, has also rebounded. Out of the fashion footwear and accessories categories, luggage was most affected by Covid, but it recovered to within 80% of sales in 2019, according to The NPD Group’s Retail Tracking Service. 

“The U.S. consumer is out there doing more now. We are seeing a return to travel, a return to experiences — and we’re seeing it across all different industries,” said Jensen.