1. 1 A Service US RETAIL BEAUTY TRENDS A cross-channel view February 2013 KELLY TACKETT Research Director

2. 2 1.Sector Overview  Sizing the Category  Key Drivers  Channel-by-Channel Overview 2.Top Trends  Channel Blurring  Loyalty Schemes  Price Transparency  Private Label  Services  Instore Technology  Shopper Segments  Social Media 3.Implications Contents

3. 1. Sector Overview

4. 4 CAGR 2007-2012: 3.6% The pace of US spending growth in the health and beauty category will accelerate to a 6.1% average annual rate over the next five years, compared with an average rate of 3.6% annually the previous five years. CAGR 2012-2017f: 6.1%

5. 5 A host of demographic and consumer trends will drive the faster pace of growth. Demographic trends:  The aging population and associated demand for anti-aging products and services.  The category entrance of the Emerging and Millennial generations, who are likely to be more brand and channel agnostic than their predecessors. Consumer trends:  Emphasis on health and wellness, including preventative care at all ages.  New product innovations, particularly around at-home devices and high-tech formulations.  Expansion of sub-categories targeting specific consumer segments, e.g. male, baby, ethnic, organic/natural. Note: f – forecast Source: US Census Bureau National Population Projections Seniors (born pre-1946) Boomers (born 1946-1964) Gen X (born 1965-1981) Millennials (born 1982-2002) Emerging (born after 2002) US: Generation as Share of Population, 2012-2017f (%) -5 percentage point (ppt) change. 31% in 2017 +6 ppt change. 48% in 2017