Forget the Lipstick Indicator, It's All About the Nails
"The recession and innovation have re-energized the category and clearly played a part in the resurgence," said Bill Boraczek, senior vice president of Global Marketing at Sally Hansen.
"(Estee Lauder Chairman) Leonard Lauder talked about the lipstick index...Today, I believe it should be called the nail polish index," Boraczek said, referring to the concept that women indulge in little pleasures like lipstick when economic times are rough.
In the past, the indicator was lipstick, in today's recession it is nail polish.
"Since the recession, nail color growth has exceeded the growth of the entire cosmetics category at a greater rate every year," he said.
The industry rang up $327 million in nail polish sales to the mass market, and sales have grown 21 percent in the first half of this year, according to market researcher NPD Group. The mass market includes nail polish sold in supermarkets, drug stores, but excludes sales to Wal-Mart Stores .
In the prestige channel, which includes nail care products sold at department stores, sales rose 54 percent to about $8.6 million dollars in the first half of 2011 from the first half of 2010, according to NPD.
"It's rare to see a trend grow so strong in both mass and prestige channels," said Karen Grant, vice president and global beauty industry analyst at NPD.
"Beauty is recovering overall," she said. "Consumer spending is still difficult, but beauty is having one of its most robust years. Small indulgences — even still in the prestige channel, paying at most $20 [for nail polish] — is still an affordable amount of money."
Color is a huge trend in fashion right now and it's translating to nail polish. It's even breaking the rules and blurring the lines of what is considered "age appropriate" as older women opt for bright, bold colors or darker that previously had only been worn by younger women.
"I think for real women, if neon yellow is a real trend and the option is either buying a screeching neon yellow dress or a screeching yellow manicure, she'll opt for the manicure," said Jan Arnold, founder and creative director at Creative Nail Design. "Nails are a cheap thrill."
The manufacturers are showing retailers and consumers that you can bring fashion to your nails. Not only the colors, but also different textures.
"This has been building over the course of three to four years, and has been explosive in the last two years," Grant said.
And having companies such as Chanel veer from the traditional red and pink tones to try silver, gold, blue and other darker tones, validates the idea that polish is a chic accessory and alternative colors are okay.
Chanel is "seeing a huge success in unconventional colors," said Isham Sardouk, a senior vice president of Trend Forecasting at Stylesight. "They lead the way, and now have become the most trusted brand with this, a lot of brands are trying to catch up, but they are the first."
Even the technology of the polish has evolved and allows for more shades of colors, shimmers, and more effects.
Color is no longer one dimensional, but plays a role in the ability to change up your nails frequently. The complexity of nail design harkens back to products like Sally Hansen's Salon Effects and iridescent effects at CND.
At the same time, technology also is giving nail polish lacquer increased staying power with products like CND's Shellac and Calbrook International's Calgel.
On the runways at New York Fashion Week, it was clear that nails were an accessory.
CND's Arnold cited designer Wes Gordon's spring 2012 show as an example. Gordon used "Poppyfield," a shocking neon orange color, painted on an almond-shaped nail.
"And [Gordon] went with no jewelry," Arnold said. "So his nail was the accent. That was the jewelry."
"When we started working Fashion Week 15 years ago, every designer we met with, it took them off guard to even think about nails," Arnold said, reflecting on how far the industry has come. "They would think about hair and makeup, and as time went on, they realized nails can be an accessory."
Newer generation of designers have a different perspective toward manicures and pedicures that the previous generation. "This generation is so involved in it from day one," Arnold said. "Nails are part of their thought process as opposed to an afterthought."
Grant said there's still a lot of opportunity left for growth.
"It will be interesting to see if the industry continues at this monumental growth," she said. "There may be some leveling, but there's still a lot of opportunity. We still don't see makeup artist brands, there's still more opportunity in reach. Early adopters already caught on, now we're moving more mainstream, more consumers will be catching on."
(Correction: The NPD figures were misstated in the original version of this story.)
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