The beauty market - a natural extension of the fashion industry

“Twenty years ago I started what I thought would be a small adventure, which ended up becoming a company.The beauty adventure is a natural extension for someone like me, who likes to empower women,” said Christian Louboutin, footwear designer and founder of his eponymous luxury

label, of his recent entry into the beauty market. “To be a part of creating beauty seems like the right next step.”

The designer previously announced the launch of his “Rouge” nail polish late last month, which is the first product from his new luxury beauty range, Christian Loubotin Beauté,

a joint venture between Christian Louboutin and New York-based Batallure Beauty to launch. Louboutin timed its entry into the beauty realm to a T, which comes not only as the brand continues to expand financially and geographically, but at a time when there is an increasing global demand for premium cosmetics.

More fashion labels seeking for a slice of the cosmetic pie

With the value of cosmetic industry said to be at “an all-time high,” worth over 180 billion euros in 2013 according to service firm Ernst & Young, it seems quite logically for a number of luxury fashion labels to extend their reach into the premium beauty market. Over the past year, growth within the luxury goods market has begun to slow down. According to a study from Bain & Co in association with Altagamma, global sales of personal luxury goods are set to increase between 4 and 6 percent at constant exchange rates, compared to the 6.5 percent boost in 2013.

"With luxury goods, we are seeing the emergence of a new normal: The global market is maturing, stabilizing and consolidating,” commented Claudia D'Arpizio, a Bain partner in Milan and leader of the firm's Global Luxury Goods and Fashion Practice.“It is becoming more resilient to economic crises, more responsive to a demanding and highly mobile global consumer base, and less reliant on market booms for growth. For all these reasons, luxury brands everywhere should be focusing on how to build growth organically.”

In the past fashion houses such as Marc Jacobs, Tory Burch, Michael Kors and Tom Ford have entered the beauty market by partnering up with exisiting cosmetic powerhouses, such as Estée Lauder Companies, L'Oreal and Sephora, and successfully launched their own beauty lines. Italian luxury label Gucci is the latest designer company to step into the cosmetic industry, as the brand is preparing to launch its first cosmetic line next month, which will include eye, lip, nail and face make up, as well as brushes and skin primers in partnership with P&G Prestige.

Many luxury fashion labels choose to partner up with an experienced cosmetic firm to help find their bearings in the beauty market, as they have experience within the market and are able to use the luxury label's exisiting brand identity to enhance the new makeup line. The unique allure and reputation which luxury fashion labels cultivate over the years helps them create a loyal consumer base for their new venture. A study from Promise Consulting, found that cosmetic brands which have their roots in the fashion industry are especially prevalent in Europe.

This success is evident in the sales figures. According to the latest financial report from Estée Lauder Companies for its fourth quarter and fiscal year ended June 30, 2014, its make-up category raked in 4,210 million dollars in net sales, which was driven by “double-digit sales increases from the Tom Ford line of cosmetics.” L'Oreal Luxe, which consists of beauty lines from the likes of Giorgio Armani and Yves Saint Laurent, noted that the first half sales for the year grew 7.4 percent like-for-like, which was boosted by “Yves Saint Laurent, with its lip make-up.” The firm also noted that the division “is gaining market shares across all geographic Zones, particularly in the New Markets.”

The rise of the middle and upper class in emerging markets also present luxury labels with the opportunity to use their established brand name to target and attract new consumers. Heritage label Burberry previously took its beauty business in-house, acquiring its licenses rights back from Inter Parfum in 2012 and began expanding its product range to include color cosmetics. Last December Burberry opened its debut stand alone beauty store, Beauty Box, which offers the brand's cosmetic collections, fragrances as well as beauty related accessories and aims to open a second beauty store in Asia next year.

"Cosmetics boost the awareness of a brand because they are the first thing of luxury consumers buy"

“Cosmetics boost the awareness of a brand, especially in emerging markets because they are the first thing of luxury [that] emerging market consumers buy due to their cheaper price,” commented Nicola Ko, senior luxury analyst at Ledbury Research to CNBC. “You are building loyalty amongst emerging market consumers so when they do come into money and they are looking for high-end fashion, they know your brand. So in terms revenue it could be really big.”

Make-up lines and fragrance collection ultimately offer a more viable entry into the world of the designer fashion label. Many consumers may not be able to afford a 2,000 dollar dress or hand bag from a luxury brand like Chanel, but they are able to afford Chanel's No. 5 perfume or Rouge Allure lipstick which give shoppers a taste of the brand, at a fraction of the cost. Although Louboutin's debut nail polish, which was inspired by the label's highest heel, comes with a premium price tag of 50 dollars, or 36 pounds, and sits at a higher price point than lines from Tom Ford or Dior, the designer believes that the beauty of the bottle and the quality of the lacquer, along with the brand heritage that comes with it, are more than worth it.

“Christian has taken his rightful position on the prestigious list of fashion designers who have their own beauty lines,” said Saks President Marigay McKee to WWD. “Launching into this category only accentuates his hyper-luxury position in the fashion realm. Consumers will easily adapt to thinking about the brand multidimensionally.”

Vivian Hendriksz

Images: Rouge, from Christian Louboutin, Marc Jacobs cosmetic line, Tom Ford Cosmetic line