Beauty Trends

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THE UK BEAUTY INDUSTRY 2010 TRENDSREpoRT BY L’oRéAL

CoNTENTS

THE UK BEAUTY mARKET Foreword 1Executive summary 2

BEAUTY SALES TRENDS IN THE UK Cosmetics and Fragrance 3Skincare 8Haircare 12

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FoREwoRD

In April this year, L’oréal published the first UK Beauty Barometer report, providing factual and empirical evidence of the impact the current economic climate was having on consumer shopping habits in the UK beauty industry.

Drawing on this research, the following document outlines the key trends L’oréal anticipates will drive the UK beauty industry in 2010. The trends are based on the latest market research, sales information and consumer behavioural analysis.

The report splits the trends according to the following categories: cosmetics and fragrance, skin care, and haircare and styling.

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ExECUTIvE SUmmARY

• women will continue to use cosmetics to cheer themselves up and to help them face the pressures of prolonged economic uncertainty

• In April 2009, research by L’oréal discovered that a “Foundation Factor” had replaced the “Lipstick Index” as a new economic indicator. New research indicates that sales of foundation will continue to remain strong in 2010 – at present, they are outpacing lipstick and lipgloss sales by 13 percent (Source: AC Nielsen, October 2009)

• The notion of escapism will drive consumer purchasing habits in 2010, as consumers look at ways to escape the pressure of rational consumption, by embracing personal creativity and experimentation. In 2009, L’oréal found that as the recession took hold, women were four times more likely to choose natural looking make-up than they were to wear brighter colours. However, latest research confirms that bolder colours are beginning to replace the nudes, as consumers drive a backlash against recession

• The market for false lashes and false lash effect mascaras is also growing rapidly, as consumers experiment with their appearance and embrace a bolder, more dramatic look

• Conscious of their budgets, consumers are choosing trusted, established brands which represent value for money and which offer accountability in terms of product claims

• Faced with financial pressure, discerning consumers will continue to shop around for the best products and therapies and are increasingly seeking specialist, pre-purchase advice to ensure they buy products that best meet their needs

• Key innovations in beauty in 2010 and beyond will come from advancements in genomics (the study of genes in the skin), proteomics (the study of proteins in the skin) and stem cell research and their ability to provide highly-tailored products which best respond to individual’s skin age to slow the ageing process

• Cost-conscious consumers will look for products which offer integrated application tools to ensure maximum effectiveness

• Strong demand in the women’s market for lightened hair will continue to drive the market for hair colourants both in the salon and at home

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CoSmETICS AND FRAGRANCE

“ In times of stress, anxiety often manifests itself on the skin, and so a flawless complexion can boost a woman’s confidence, making her feel less vulnerable and more in control. This trend became very evident at the start of the economic downturn and is set to continue in 2010 because women are still seeking a groomed, refined look.”

Lucy Beresford, leading Pyschotherapist

Foundation factor

In April 2009, research by L’oréal discovered that a “Foundation Factor” had replaced the “Lipstick Index” as a new economic indicator. The popularity of foundation soared across all sectors and age groups and was considered to be the one “must-have” product that women wanted*. Latest research by L’oréal confirms that the market for foundation has since grown six times faster than the overall cosmetics market – sales of foundation are now outpacing lipstick and lipgloss sales by 13 percent in the mass market**.

(*Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09 – Asked which one product women could not live without, 26 percent selected foundation (lipstick 25 percent). **Source: AC Nielsen, 52 weeks ending October 2009)

According to leading psychotherapist Lucy Beresford, this trend is set to continue in 2010 as women opt for foundation that maintains a flawless complexion and hides the effects of stress and money worries on the skin. However, as consumer confidence begins to improve, L’oréal anticipates growing demand for foundations that provide a more luminous look. In February 2010, L’oréal paris will launch Matte Morphose its first foundation formulated with mati-Crystal technology, which unlike mattifying powders, allows light to pass through it, resulting in luminous looking skin that controls shine in all the right areas.

At the end of 2009. maybelline New York launched Dream Cream foundation for women prone to dry skin and for whom a mattifying finish is not an option. offering 100% baby-smooth perfection, 14 hour hydration and a dewy finish, Dream Cream promises to encapsulate Spring/Summer catwalk trends for make-up in 2010.

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Personal creativity and false lashes

According to a study by wGSN, (www.wgsn.com) personal creativity will return to the top of the agenda in 2010 as women experiment with their style and appearance, with a focus on self-expression. The market for false eyelashes is one such market which continues to grow; at shu uemura sales of false eyelashes (prices start from £12) represent more than 30 percent of the brand’s business in Selfridges and is growing at 60 percent like-for-like.

Growing demand for more dramatic looking eyes is also driving the market for false lash effect mascaras and mascaras offering dramatic styling. Sales of Yves Saint Laurent’s False Lash Effect Volumizing mascara are up seven percent (year to date), while Lancôme’s Hypnôse mascaras have experienced a 27 percent sales growth year on year (Source: L’Oréal

sales data, Epos YTD week 50 2009). In 2010 maybelline New York will launch Falsies mascara as an extension of the UK’s number 1 selling Volum’ Express range offering the mass market ‘instant false lash glam in a tube’.

Based on studies by L’oréal Research on the mechanisms that determine eyelash growth cycles, L’oréal paris introduced Renewal Lash Serum mascara in 2009. Capitalising on the anti-hairloss technology developed by L’oréal’s haircare divisions, researchers established that by nourishing the lashes, they could prevent lash loss during the telogen phase (the point at which hair/lashes are shed) and provide optimal conditions for lashes to re-enter the anagen, or growth phase. The result is the creation of a thicker ‘fringe’ of lashes. The lash serum now sells one unit every minute, confirming that consumers want quality items that will deliver on their promise by drawing on proven scientific research.

“ False lashes are a fun and easy way to experiment with your look, without breaking the bank. Our lashes come in a variety of styles, suitable for every occasion, and are popular with women and girls alike! Our in-store make-up artists also offer complimentary lash applications, making them simple to use and perfect for a quick pre-party fix.”

Amandine Ohayon, General Manager shu uemura, Kiehl’s and Biotherm

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“ In the run up to Christmas women want to enjoy the excitement of the season with a dramatic assertion of their femininity. By accentuating the feminine features of eyes and lips in bold colours, false eyelashes and dramatic mascaras, the caution evident during the recession is being trumped by escapism, playfulness and freedom of expression.”


Boldness is back

In early 2009 L’oréal also found that as the recession took hold, women were tending to opt for more natural looking make-up (Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09 – over a

third (41%) of women opted for a pared-down, natural look as a direct result of the economic climate, while one in

eight (12%) experimented with brighter colours). However, as economic difficulty became certain and consumer confidence began to plateau, L’oréal has observed a resurgence in the demand for more dramatic looks and darker shades. Dark lipsticks are rising in popularity and demand for deeper, more dramatic shades are replacing the discreet colours and neutral shades of early 2009. Since it was launched in october 2009, Rouge d’Armani has fast become one of the brands top sellers. Sales of Lancôme’s L’Absolu Rouge lipstick have also increased 17 percent over the last year. The Fatal Red shade of maybelline New York’s Color Sensational lipstick is the most popular shade in the range, accounting for 12 percent of sales, despite only being launched in August 2009 (Source: L’Oréal sales data).

“ For the past twenty years, L’Oréal has been working towards understanding how hair and skin work. Our most recent work focused on comparing the hair fibres on the head with those that form the eyelashes. We were able to establish that scalp hairs and eyelashes are composed of the same proteins, which meant that the technologies that we had developed for hair are transferable to eyelashes.”

Julie McManus, L’Oréal’s Scientific Director in the UK and Ireland

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Integrated application tools

L’oréal is working on a number of revolutionary products which incorporate technology-based application tools and expects the market for cosmetic technology to grow quickly in 2010, as more products are introduced both in the mass and luxury markets.

In 2009 Lancôme introduced its first vibrating mascara Ôscillation which pulsates up to 7,000 times per minute to ensure that lashes are coated through 360°, highlighting consumers’ interest in innovative products.

maybelline New York is renowned for offering innovative mascara technology and in 2009 launched its first vibrating mascara, Pulse Perfection. The powerful motor inside generates a 100 micro-pulsations every second, this combination with a patented waved elastomeric brush ensures lashes are perfectly coated from root to tip.

L’oréal paris also introduced Roll On True Match, an innovative new beauty tool for flawless foundation application. New Roll on True match combines a high performance foundation with an innovative applicator for perfect coverage. with its ergonomic shape, the applicator conforms to facial contours, even on difficult areas like the eyes and the sides of the nose.

Multi-purpose products

In 2010, consumers wishing to keep a closer eye on their purse-strings will look for multi-purpose products such as L’oréal paris’ Color Riche Serum Inside lipsticks, which include L’oréal’s most advanced skincare technology (including Hyaluronic Acid Collagen and pro-xylane) in a range of tropical shades to meet next season’s trend for statement lips.

The trend was first spotted by L’oréal in April 2009, which found that consumers looking for new ways to consolidate their beauty budgets, were opting for multi-purpose products, such as two-in-one face washes which experienced a 5.4% increase in sales in the mass-market (Source: Internet MR, poll of 1000 women in Dec 08 & Feb 09).

“ Consumers will continue to respond to innovation, which will have a positive effect on the market overall. In the climate we face today, consumers want to get as much as they can for their money and we are therefore looking to provide what they want.”

Grita Loebsack, Managing Director, L’Oréal UK & Ireland

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Fashionable and aspirational brands drive fragrance sales this Christmas

The fragrance market is also embracing the notion of escapism, as consumers look to fragrances to experiment with and upgrade their style at affordable prices.

The introduction of prestige fragrance brands such as Diesel and Stella mcCartney has also created a new trend amongst consumers, who are purchasing fragrance to complement their wardrobes, rather than upgrade them.

At L’oréal, over a third of full year fragrance sales are made in the four weeks to Christmas (Source: L’Oréal sales data 2008) and affordable fashion brands offering fragrances to be bought alongside their clothes, are expected to profit most this Christmas and beyond. In 2009, Diesel, known for its alternative and urban fashions, launched Diesel Only the Brave fragrance for men. Only the Brave has become L’oréal’s biggest ever fragrance launch and is now the best-selling fragrance in the men’s portfolio (Source: L’Oréal sales data 09).

In the premium fragrance market, consumers who aspire to designer brands such as Armani, Yves Saint Laurent and Ralph Lauren, are looking to fragrance lines, as a way of “buying-in” to the brand at more affordable prices. viktor and Rolf has grown 48 percent YTD and 19 percent like-for-like (Source: L’Oréal sales data 2009).

“ The success of fragrance brands such as Diesel whose heritage lies in unconventional, urban fashion, is indicative of consumers’ appetite for high-fashion, affordable luxuries. Fragrances have always been a popular gift choice at Christmas but now, more than ever, consumers are considering their spend on gifts more carefully; brands which offer aspirational fashion at accessible prices will be the biggest winners this Christmas and in 2010.”

Thierry Cheval, Managing Director of L’Oréal Luxury Products UK

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SKINCARE

Scientific innovation

Key innovations in skincare in 2010 will come from advancements in scientific research, particularly genomics (study of the role of genes in the skin), proteomics (study of proteins in the skin) and stem cell research, and their ability to provide highly-tailored products which best respond to individual’s skin age to slow the ageing process. Anti-ageing skin creams represent a third of all facial skincare products (Source: AC Nielsen, 52 weeks ending 3.10.9).

Until recently, scientists did not know which genes and proteins are responsible for the youthful characteristics of skin. However, for the first time, L’oréal has developed a way to identify these genes by monitoring the impact of external influences to the skin (such as skin friction and contact with detergents). This has enabled the company to better understand the processes which take place during epidermal recovery.

(For further information see: Large scale study of epidermal recovery after stratum corneum removal: dynamics of

genomicresponse. Experimental Dermatology. (2009) DOI:10.1111/j.1600-0625.2009.00976.x)

The first of these products were introduced on the market in 2009; Lancôme’s Genifique and Biotherm’s Skin Vivo which sold out within six weeks of launch. Genifique has fast become one of the top-selling luxury skincare products in the UK, with one unit sold every two minutes (Source: UK sales data for Lancôme’s Genifique product which launched in march 2009. Before September,

one product sold every five minutes). Genifique is now Lancôme’s biggest selling product in the UK confirming consumer appetite for anti-ageing products based on proven science.

“ The discoveries which L’Oréal made available this year, mark the start of a new and very exciting era for anti-ageing skincare products. Understanding and isolating the gene response of skin to external stresses means we can develop products which are proven to improve and accelerate the process of epidermal recovery, which we know plays a vital factor in youthful-looking skin.”

Bruno Bernard, Group Leader of Life Sciences Department, L’Oréal Research.

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SKINCARE

A second area of scientific discovery which is set to lead the market for anti-aging skincare products in 2010, is stem cell technology. In 2009, L’oréal became the first company to discover that contrary to previous industry thinking, the number of stem cells in skin does not decrease with age, it is their performance that diminishes. Using its reconstructed skin model, L’oréal was able to identify new active ingredients which would restore the potential of stem cells to perform as effectively as they did in younger skin.

with this knowledge, L’oréal introduced two major product breakthroughs: Lancôme launched Absolue Precious Cells, its first anti-ageing cream that helps restore the potential of skin stem cells by providing an optimal environment for the stem cells to function. vichy also launched Aqualia Antiox with Citrus Polyphenol™ which helps protect stem cells from oxidative stress so that skin remains fresh and radiant and hydrated.

“ Our customers are discerning and want brands they can trust and which are accountable for product claims, making scientific innovation and proven results critical to our success.”

Thierry Cheval, Managing Director of L’Oréal Luxury Products, L’Oréal UK & Ireland

Integrated application tools

In 2010, discerning consumers who want to maximise the efficacy of a product will choose products which offer integrated application tools based on technology. In 2009, Garnier introduced the Garnier Eye Roll On, the first ever roll-on applicator to massage the eye area and help reduce the appearance of tired-looking eyes. In its advertising campaign, Garnier confirmed that one product now sells every 15 seconds. L’oréal is working on a number of revolutionary products which incorporate technological application tools and expects the market for these products to grow heavily in next year and beyond. This integration will be taken one step further in 2010 with the launch of Garnier Tinted Eye Roll On, a 2-in-1 product offering ‘anti-dark circle care’. The roll-on offers instant coverage using tinted mineral pigments in the caffeine enriched formula.

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SKINCARE

L’oréal paris also introduced its first facial skincare tool Revitalift Pro Contouring System in September 2009. Inspired by professional lifting techniques, the dual action treatment combines massage and concentrated care. with a unique 40 point pressure action, it helps to stimulate the skin and encourage natural drainage of the tissues through its pressing and lifting action.

The massaging tool reinforces and complements the toning benefits of the concentrated anti-wrinkle and tautening cream for twice the improvement on jawline sagging, versus the concentrated cream alone*.

(*Average improvement in the clinical score given for ptosis after 4 weeks: -11% for the formula alone; -23% for the tool and formula combined.)

Specialist advice

Faced with greater financial pressure, consumers will see a shift in the power balance of brands to consumers; brands must work harder to convince customers that their product is fit-for-purpose.

According to mintel, consumers are becoming increasingly interested in the contents of their products and how ingredients work. At L’oréal, the Consumer Advisory team (0800 458 4848) has experienced a 16 percent increase in consumer enquiries year- on-year, the most frequent callers asking for advice on the best products for them and for education about products.

“ We predict that the fusion of technology, innovation and cosmetics will be a significant driving force in consumer trends over the next decade. L’Oréal is working on a number of revolutionary products which incorporate technology-based application tools and expects the market for cosmetic technology to grow quickly in 2010, as more products are introduced both in the mass and luxury markets.”

Damien Bertrand, General Manager, Garnier and Maybelline New York, UK and Ireland

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“ The recession has made customers much more conscious of buying the right product for their skin type and by informing and providing derma-skincare advisors with the right diagnosis tools, so that they can provide a personalised, added value customer service, sales of pharmacy skincare products will continue to grow.”

Denis Donohoe, Managing Director, Active Cosmetics, L’Oréal UK and Ireland

SKINCARE

In department stores and pharmacies, consumers are demanding more specialist advice before making purchases. L’oréal expects this trend to become more engrained in the purchasing cycle throughout 2010, as consumers continue to ensure their money is well spent.

vichy and La Roche-posay are at the forefront of a new derma skincare category within Boots offering free skin health consultations to meet the demand for accessible, helpful advice and guidance from skin health experts. In 2009 vichy and La Roche posay hosted National Skin Health month in association with Boots. The roadshow offered free independent skin health consultations to the public across ten shopping centres around the UK, to ensure that consumers were making the best skincare choices for them. At each vichy Skin Health Centre, independent dermatological nurses analysed skin type, oil hydration levels, melanin and skin ageing and recommended individual skin prescriptions. Customers were also given the opportunity to speak with a Boots derma skincare advisor using the exclusive Dermo Analyzer (digital skin analysis tool).

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HAIRCARE

Scientific research

Key trends in hair care in 2010 will also be driven by scientific research and new product innovation. In September 2009, L’Oréal Professionnel introduced the first ammonia-free, permanent hair colour called INOA. The absence of ammonia means that the application of the colourant is odourless. However, one of the greatest benefits of INoA is its ability to return hair to a “virgin” or pre colour-treated state, after multiple applications, by using the product’s innovative oil Delivery System. The product has already been adopted by 3,000 salons in the UK, and L’oréal expects consumer demand for the product to take-off in 2010, as more cost-conscious consumers demand treatments which offer greater long-term benefits for hair.

Blonde is back

L’oréal also anticipates a growing demand for natural-looking highlights, particularly in the first part of the year and in run up to the summer months. At home, women are experimenting more with their look; the success of products such as Garnier Nutrisse (which has experienced over 1,000 percent* growth for its Shade of the Nation colour) has led to an increase in the number of who are looking for inexpensive ways to update their look and who are experimenting with home hair colourants (Source: TNS Worldpanel – Salon Survey, 6 months to March).

(*Source: UK sales data Nov 08- March 09)

The under 24 category is leading this trend and is the age group most frequently buying home hair colourants (Source: TNS Worldpanel – Salon Survey, 6 months to March). To meet this demand, in spring, L’oréal paris will be introducing a new Blonde collection under its Excell 10 brand. Garnier will launch two blonde ranges in 2010, Belle Color Luminous Blondes and Nutrisse Radiant Blondes.

“ Blonde hair suggests youth, playfulness and fertility, so by going blonde, women are tapping in to an “I-like-to-have-fun” image. The softer look of blonde hair emphasizes the feminine and, especially in the winter months, highlights suggest attractive sun-kissed health.”


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HAIRCARE

Women will not compromise on appearance

women will continue to visit hair salons as often as they did pre-credit crunch (Source: TNS

Worldpanel – Salon Survey, 6 months to March), confirming the notion that women will not compromise their appearance despite facing greater financial pressure. In fact in 2009, the 25-34 age group saw a 10 percent increase in the number of women paying to have their hair done in salons and a 43 percent increase in the number of women who wanted colour or a perm (Source:TNS Worldpanel – Salon Survey, 6 months to March 2009).

Customer services

However, in an effort to promote customer loyalty, salons must continue to look at new ways to maximise their services and drive revenue. L’Oréal Professionnel for example has increased the number of training courses by 18 percent to provide salons with further business skills in customer retention (Source: L’Oréal International Academy, London, 2009).

“ Our research confirms that appearance is one thing that UK women will not neglect in wake of the economic downturn. We’re observing that women are using their disposable incomes to “treat” themselves with smaller, more affordable luxuries, such as blow dries, hair colour and styling, rather than splashing out on expensive holidays, cars and clothes.”

“ In a competitive market, salons who adopt the latest products and who upgrade the salon services will reap the biggest rewards. In the last three months alone, a considerable number of hair salons have adopted INOA –proof that salons are looking to breakthrough and innovative products to drive their businesses in 2010 and beyond.”

Vincent Mercier, Managing Director, L’Oréal Professional Products Division

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