The prestige beauty market, in common with many categories, experiences a huge increase in sales volume during the festive period. Both manufacturers and retailers use new product launches, innovative packaging, enticing offers and gift sets to ensure that they benefit from the sales surge. What is the prestige beauty sector doing to make sure it protects its premium positioning at the most important time of the year for retailers and manufacturers alike?

The prestige beauty market includes premium make-up and skincare, but the category where the festive season plays perhaps the most crucial role is fragrance. Overall in 2011 the prestige fragrance market was worth £815 million and 57 per cent of all fragrance sales in 2011 were made in the final three months of the year. For fragrance gift sets, the last quarter of the year is even more important. For instance last year a massive 86 per cent of all fragrance gift sets were sold in this period.

The prestige fragrance sector is extremely innovative, embracing a range of tools to keep their product offering attractive, fresh, desirable and ultimately worthy of its premium pricing. From beautiful, limited edition packaging, to in-store experiences, manufacturers and retailers constantly invest in and reinvent the product and shopping experience. Despite the challenging economic climate, 2012 has seen many launches of premium fragrances including for women – Chanel Coco Noir, Guerlain La Petite Robe Noir and for men – Victor&Rolf Spicebomb and Chanel Allure Homme Sport Eau Extreme. As a result, the average sales price of new fragrances entering the market grew +17 per cent in YTD August compared to the same period last year. This also had an impact on the cost of gift sets – so important in the Christmas fragrance sales story. The average sales price of a gift set for women has grown by 6 per cent from £29.07 to £30.74 (when comparing the first week of October 2011 with 2012). For men the increase is 14 per cent in the same time period, bringing the average cost of a gift set to £25.11, up from £30.78 in 2011.

However, in today‘s environment, even consumers of prestige products want value for money. And this year manufacturers and retailers have responded in time for a happy Christmas 2012.

Women‘s gift sets remain more affordable than men‘s because the fragrances included are smaller: one of the ways the sector has responded to the recession. So for the first week of October 2012 we saw the numbers of gift sets aimed at women containing fragrance size below 50ml at 50 in the top 100. That‘s an increase from 39 in the top 100 in the same period last year.

The sales techniques are different for male fragrances. Brands try to cater for all consumers, offering a range of gift sets at varied price points. Take for instance Paco Rabanne 1 Million Christmas gift set, ranging from £79.50 for a “prestige” gift sets with 100ml fragrance to £53 and £38.50 for a set with 50ml fragrance. Here again smaller sizes are on offer for a more affordable price.

Innovation is essential. 2012 saw an explosion of new ideas and limited editions to celebrate the Olympics, and sales figures showed a 6 per cent growth in sales value; compared to the same time in 2011 results certainly justified the effort. This Christmas we expect innovative packaging to be extremely important: NPD Group picks out the Jimmy Choo Shoe Box gift set and Dior and Chanel‘s customised gift wrapping services as the star attractions. Smaller sizes are also becoming more important as consumers look to own premium products at a price they can afford. Victor& Rolf Flowerbomb rollerball and lip gloss duo for £19.50 or Calvin Klein CK One Shock priced at approx. £12 for a 20ml eau de toilette might be highly desirable as the price that won‘t break the bank.

At NPD Group we believe that both retailers and manufacturers will rely on their innova