Us Nail Polish Industry Analysis
Nail Polish Industry Analysis
Introduction and Background
The US nail polish industry has a total revenue of $1.1 billion and a profit of $118.4 million in 2012, with an annual growth of 2.3% in 2007-2012 and a projected annual growth of 3.3% from 2012-2017 (Panteva). The nail polish industry is able to survive the recession because they are sold at low prices, starting at a retail price of lower than $5 to $10 for professional grade nail polishes at drugstores (Panteva). Unlike other consumer goods, consumers are not as inclined to limit their purchase of nail polish, due to low prices.
Current Performance
Despite the recession that significantly the economy, the nail polish industry was almost unaffected and has shown a positive trend. Industry revenue grew at an average annual rate of 2.3% since 2007. As the economy continues to recover, industry revenue is projected to increase by 4% (Panteva).
Although the general trend is positive, in 2009 the industry suffered a minor setback when disposable income per capita decreased 3.2% and the industry revenue decreased 0.6% (Walker). This is caused by a shift from visiting nail salons to purchasing cheap nail polish from drugstores, which caused a low-priced purchase of nail polish between $1-$5. As a result of decreasing purchase price, nail polish manufacturers suffered decreasing profit margins. Profit margins for nail polish used to be 10.8%, but decreased to 9.2% during 2009 (Panteva). As the effects of the recession are diminishing, consumers are purchasing higher priced nail polish and profitability increased. However, profit margins are still below pre-recession margins. With disposable income growing at 2.3% annually for the next five years, consumers will be able to visit nail salons; industry revenue will experience an increase (Wendlandt). Regardless of a minor setback, the factors that are driving the industry are strong and with the economy recovering, the outlook of the
Introduction and Background
The US nail polish industry has a total revenue of $1.1 billion and a profit of $118.4 million in 2012, with an annual growth of 2.3% in 2007-2012 and a projected annual growth of 3.3% from 2012-2017 (Panteva). The nail polish industry is able to survive the recession because they are sold at low prices, starting at a retail price of lower than $5 to $10 for professional grade nail polishes at drugstores (Panteva). Unlike other consumer goods, consumers are not as inclined to limit their purchase of nail polish, due to low prices.
Current Performance
Despite the recession that significantly the economy, the nail polish industry was almost unaffected and has shown a positive trend. Industry revenue grew at an average annual rate of 2.3% since 2007. As the economy continues to recover, industry revenue is projected to increase by 4% (Panteva).
Although the general trend is positive, in 2009 the industry suffered a minor setback when disposable income per capita decreased 3.2% and the industry revenue decreased 0.6% (Walker). This is caused by a shift from visiting nail salons to purchasing cheap nail polish from drugstores, which caused a low-priced purchase of nail polish between $1-$5. As a result of decreasing purchase price, nail polish manufacturers suffered decreasing profit margins. Profit margins for nail polish used to be 10.8%, but decreased to 9.2% during 2009 (Panteva). As the effects of the recession are diminishing, consumers are purchasing higher priced nail polish and profitability increased. However, profit margins are still below pre-recession margins. With disposable income growing at 2.3% annually for the next five years, consumers will be able to visit nail salons; industry revenue will experience an increase (Wendlandt). Regardless of a minor setback, the factors that are driving the industry are strong and with the economy recovering, the outlook of the
References: Barbalova, I. (n.d.). Nail Polish Brings New Affordable Luxury . Euromonitor International. Retrieved December 3, 2012, from http://euromonitor.com/2012/04/nail-polish-brings-new-affordable-luxury.html Maffin, T. (n.d.). OPI Grows Word-Of-Mouth . Case Studies Online. Retrieved December 3, 2012, from http://www.casestudiesonline.com/opi-grows-word-of-mouth/ O P I Products, Inc. . (n.d.). Hoovers . Retrieved December 3, 2012, from http://www.hoovers.com/company-information/cs/sales-preparation. O_P_I_Products_Inc.a61e6d6a80a041f8.html Panteva, N. (n.d.). Market Research Reports & Analysis . Ibisworld. Retrieved December 3, 2012, from http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=4962 Sole-Smith, V. (n.d.). Toxic Nail Polish: Lies Found on Beauty Industry Labels. Slate Magazine . Retrieved December 3, 2012, from http://www.slate.com/blogs/xx_factor/2012/04/13/toxic_nail_polish_lies_found_on_beauty_industry_labels.html Walker, R. (n.d.). State of the Industry . GCI Magazine. Retrieved December 3, 2012, from http://www.gcimagazine.com/marketstrends/regions/world/156321685.html?pag Wendlandt, A. (n.d.). Beauty industry sees growth at its fingertips. Reuters. Retrieved December 3, 2012, from http://www.reuters.com/article/2011/10/11/us-fashion- nails-idUSTRE79A3QJ20111011