If haircuts are an economic indicator, there are signs of better times ahead as the growing trend for short styles—which require consistent maintenance—reflects an attitude of consumer readiness to spend on themselves.

This readiness, said Karen Grant, Vice President, and Global Beauty Industry Analyst, The NPD Group, is also reflected in the consumer sentiment for beauty.

Beauty’s elite gathered Wednesday evening at Manhattan’s The Union League to hear how beauty ended 2013 at this year’s invitation-only CEW/NPD Group’s Beauty Industry 2013 Year-in-Review Event “Hot off the Press.”

And the news didn’t move many in the room: Sales gains of prestige beauty surpassed mass beauty yet again, as total U.S. prestige sales gained 5% to $10.8 billion, while mass beauty sales were relatively flat with a .8% increase to $21.4 billion. Increases in skin care and makeup helped pump up prestige sales, both of which saw 7% increases, while fragrance sales pulled down the average with flat sales for the year. In mass, hair care sales grew 1.6% , cosmetics grew 1.6%, skin care was flat and fragrance sank 6.3%.

“The numbers claiming that beauty would be the first thing they would cut dropped to the second lowest levels since 2008, and those factoring beauty products into their budgets and cutting other things in order to buy their favorite brands was tied with the highest levels seen in six years,” Karen said.

The strongest growth in beauty was seen in the direct-to-consumer channel with 19% growth.

During the Holiday period, from October to December, overall prestige sales grew 4%. Within that, fragrance sales fell 2% during the period, while makeup sales grew 8% and skin care sales were up 6%.

Several factors affected fragrance sales during the time period, including the fact that sales of fragrance gift sets, which the category is reliant upon during the time period, have slowed down.

“This year we saw gift sets become less and less important as juices became more important. So juices and launches have to blow things away to make up for lost sales of gift sets, which were a drag on the category,” Karen said.

It should be noted that while Holiday sales grew 4% in 2013, they fell compared to 2012 Holiday sales, which experienced a 5% uptick, and those results were likely tempered by Hurricane Sandy.

“They’re waiting for more deals. It’s more last minute, it has been for a long time,” said Karen.

The best selling women’s fragrance of the year was Chanel’s Coco Mademoiselle; the best selling men’s scent was Giorgio Armani’s Acqua di Gio. The top three fragrance launches for the year were Polo Red, Our Moment One Direction and Estée Lauder’s Modern Muse.

Several interesting tidbits emerged from data. For example, sales of masks grew 66%.

“Masks tout immediate benefits,” Karen said, explaining their popularity. “Consumers can put one on before a night out and see that their eyes are brighter, their skin looks more luminous. This immediacy will continue to drive consumer behavior and what resonates.”

Nail saw increases of between 5% and 6%, still solid growth but not the double-digit increases the category has experienced since 2010. Karen said a contributing factor to declines is that excluding the mass market, there are more than 3,000 nail shades available in the prestige sector.

A key message for prestige manufacturers during the evening was that while the channel still has the advantage on the mass market, prestige needs to think about beauty differently, such as how skin care and makeup can better play together. And, while price is still a consideration in purchases, it is becoming less so.

Larry Levin, Executive Vice President and Practice Leader, Information Resources, Inc., said data showed that only three of the top 10 mass market companies showed growth in 2013: L’Oréal, up 2%; Unilever, up 4% and Johnson & Johnson, up 2%. Overall, hair care sales grew 1.6% to $8 billion, cosmetics grew 1.6% to $6.2 billion, skin care was flat with $6.3 billion and fragrance sank 6.3% to under $800 million.

“We did some research on promotions for the year and what we found is that the two categories that were either flat or declining did much more promoting than the categories that grew. The average beauty category has about 30% promotions but we saw close to 40% of the dollars being promoted in skin care and fragrance and the net result wasn’t very positive.”

Hand and body lotion led all mass beauty categories in growth with a 4% gain, followed by hair care.

And while Walmart still drives 30% of beauty sales at $7.5 billion, it was flat year on year. Larry pointed to the dollar channel as the “jaguar in the jungle,” saying the $920 million dollar channel represented the largest growth in mass beauty at 4% and that it is “really important from a mass perspective to have the right products in the right store in the right department for [the dollar channel]. The channel is not for the poor, it is for the rich. It is chic.”