Prestige fragrance in the US shows no signs of slowing down this holiday season after posting an 11% increase, bringing category sales of $1.3 billion in the third quarter.

The NPD Group reported fragrance dollar sales grew by 4% from October 2 through December 3, 2022, compared to the same period in 2021. The category also outperformed overall discretionary general merchandise spending during key weeks, including Black Friday and Cyber Monday.

Fragrance category sales growth was attributed to higher average prices combined with fewer discounts during this nine-week holiday period.

NPD said the price increase was primarily due to consumers shifting their spending to higher-priced products, such as higher fragrance concentrations and luxury brands.

"Fragrance sales reached new heights following the pandemic, and it's particularly impressive that the market is maintaining this elevated level rather than softening, which is typically the case after such an unprecedented performance," said Larissa Jensen, Beauty Industry Advisor at NPD. "Considering that most holiday shopping for fragrances occurs within the two weeks leading up to Christmas, and December alone accounts for over 50% of fourth quarter sales, much of the fragrance category's sales success for 2022 is yet to be determined."

Weekly retail tracking data from NPD during Black Friday week showed fragrance sales at brick-and-mortar outlets outperformed the online channel, driven by prices that are notably higher offline.

Physical stores remain important for the fragrance category during the holiday period, accounting for 70% of sales in the nine weeks ending December 3, 2022, which is an increase of 1 point versus the same period last year. Specialty retailers are gaining dollar share, with beauty specialty stores fragrance sales growing at four times the rate of department stores in October, according to NPD Checkout data.

"Consumers are returning to holiday gatherings this year and embracing the in-person store experience where they can test products and get advice from sales associates, which bodes well for fragrance sales and the beauty industry overall," said Jensen. "As holiday crunch-time sets in, it's important for brands to continue to work hard to capture consumer attention in these crucial final weeks of the season."