The Beauty Glow-Up

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27 November 2019

As a sector, the beauty industry is large and continues to grow. In fact, the global cosmetics market was valued at US$532 billion in 2017 and is expected to reach a market value of US$806 billion by 2023.

However, it is also a sector facing challenges due to changing consumer priorities and broader societal issues which, like many industries, the beauty industry is not immune to. Bearing this in mind, we thought it timely to review the industry from the perspectives of both the consumer and supplier, identifying the following six broad themes of change in the industry:

SUSTAINABILITY AS THE DEFAULT
More than 120 billion units of packaging are produced every year by the global cosmetics industry. Moreover, the cardboard that envelops cosmetics products contributes to the loss of 18 million acres of forest annually.

Bearing in mind rising environmental consciousness, there is immense pressure on the industry to make changes and brands are indeed beginning to understand their responsibility to provide a sustainable approach to beauty. Initiatives such as the Loop programme allow consumers to buy products in reusable and refillable containers, while Naked Beauty products are designed without the need for packaging. We are also starting to see the emergence of water-aware cosmetics and vegan and cruelty-free products.

Takeout: Beauty brands must address sustainability issues as a matter of urgency, but they must do so from a position of genuine social responsibility rather than as a marketing tactic. Moreover, that sustainability must involve all areas of the business.

NATURAL PRODUCTS FOR NATURAL LOOKS
There is a growing emphasis on naturalness in beauty, both in the “look” that users are aiming to achieve, but also in the use of natural ingredients, with large and growing numbers of consumers keen to buy more natural products. Rising consumer awareness and mistrust of chemicals (such as bisphenol A and phthalates) is creating a surge in demand for natural beauty products. When considering three natural ingredients (bakuchiol, pumpkin, and blue algae), it is apparent each is currently enjoying a surge in interest, with some 49% of females aged 18-34 years agreeing that “I am keen to try products that use natural ingredients” like these.

Takeout: Natural ingredients are enjoying a surge in popularity as consumers turn away from artificiality. However, care must be taken to ensure that efforts to add more natural ingredients into products do not come at the expense of sustainability.

BEAUTY FOR ALL: THE RISE OF INCLUSIVE AND TARGETED PRODUCTS
The beauty industry is rapidly waking up to the opportunity that exists in inclusivity and diversity, however there is still a lot more that can be done. With a sizeable number of consumers rewarding inclusive brands with their custom, the business case behind developing and promoting more inclusive products and services is becoming less easy to ignore.

We are seeing a rising recognition of a number of separate opportunities, including male grooming, pro-ageing rather than anti-ageing, cosmetics for different ethnic groups and LGBT and non-binary/gender fluid beauty.

The beauty industry is facing up to a challenge that it created for itself. Having spent decades or more creating and reinforcing strong ideas of beauty rooted in gender norms, it is now faced with societal pressure for more fluid ideas around identity and sexuality that extend to gender-neutral concepts of beauty. Perhaps it is not too surprising that relatively few feel it has yet succeeded.

Takeout: The industry is gradually transitioning to a position of gender-neutrality. Brands must re-evaluate the ways in which they categorise and describe their product offering and ensure their marketing communications are as diverse and inclusive as possible.

MY LOOK, MY WAY: PERSONALISATION

In the world of beauty there is a complex “Rubik’s cube” of factors to be included in a consumer’s product choice including genetics, skin type, style preference, allergies, price, brand and so on.

Beauty brands are embracing individuality. One way of doing this is by multiplying the number of SKUs in their product lines to take account of idiosyncratic variations. Rihanna’s Fenty Beauty brand is a good example: the brand was created with the vision that “women everywhere would be included” and the range has a key focus on creating products for hard-to-match skin tones with 40 shades of foundation.

Another route to personalisation is by experimenting with the new world of data and algorithms. HelloAva, a “skincare matching engine, provides customers with personalised recommendations on which skincare products to buy. Recommendations are driven by customers’ responses to several skincare-related questions, delivered via a chatbot called Ava.

Takeout: While brand efforts at personalisation currently sit at the creepy end of the creepy-cool spectrum for many, this won’t be the case for long. With individuality so much at the core of the beauty industry, it is ideally placed to drive efforts at personalising offerings, though this needs to be more profound than merely personalising email outreach.

DIVERSIFICATION OF RETAIL APPROACHES

The retail shakeup of recent years has changed the way that consumers learn about and purchase beauty products. Greater competition has invigorated existing channels (such as direct to consumer) and created entirely new ones (such as direct subscription box services).

Brands which interact with and sell directly to consumers have been around for years, but the rise of e-commerce has fuelled an explosion and diversification of the direct-to-consumer scene. Take Glossier for example: the brand is a back-to-basics, digitally native, direct-to-consumer beauty brand and it has built a cult following, particularly among millennials.

Takeout: No longer do transactions happen solely in traditional retail locations. Brands must gear up to the consumer expectations that brands will come to them, by being available via a multitude of channels – clickable YouTube videos and Instagram posts, social channels as well as online and physical outlets.

INFLUENCERS UNDER THE SPOTLIGHT

The rise of YouTube and Instagram beauty influencers, or content producers, has been well documented. Indeed, some 61% of consumers, aged 18-34 years, have at some point been swayed in their decision-making by digital influencers.  From Kylie Jenner to Rihanna, Selma Hayek to Katie Price, Kim Kardashian-West to Ashely Tisdale, celebrity cosmetics and fragrances have won market share from the more established beauty houses. Compare and contrast these figures, for instance: Anastasia Beverly Hills had a pre-tax profit of US$180 million last year while Revlon Inc. “only” posted a US$133.5 million pre-tax profit.

However, definite question marks exist over the authenticity of posts, often focusing on the nature of the relationships between influencers and brands. While new legislation requiring greater transparency when posts are paid or products gifted will help, the longer-term nature of influencer marketing is less clear.

Takeout: For all the criticism that influencers have attracted, it is undeniable that they offer brands a unique route into their consumer audiences. Working within the new influencer transparency rules is a given but brands should also explore ways for collabs to be more than just about product placement and instead offer insight and creativity.

For an in-depth review of the trends and challenges facing the beauty industry, download a copy of Unlimited Group’s The Glow-Up report here. This article was written by Nick Chiarelli, Head of Trends for Unlimited Group.

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