The year in Beauty: Opportunities to watch out for

- Read the article in French or Poland -

2022 was a phenomenal year for beauty, with a flurry of celebrity launches and innovative retail models. Success in the year ahead will depend on brands' ability to understand consumer needs and capture all the opportunities that arise.

Beauty has become a rare avis for retailers as people rein in spending amid rising inflation. Experts attribute the rise in beauty sales in times of economic hardship to people indulging in affordable splurges. As prices climb, some people are putting off big purchases such as TVs or cancel Netflix accounts. But for now, they are still splurging on beauty.

Events such as weddings have also picked up with the relaxation of health restrictions, and at the same time people have moved away from Zoom video calls and returned to the office. Some people even got into the habit of pampering themselves at home with face masks, hair treatments and other beauty products during the pandemic. Larissa Jensen, a beauty analyst at the market research company The NPD Group, called it the return of the "lipstick index", a term made famous by Estee Lauder CEO Leonard Lauder to explain the surge in cosmetics sales during the recession of the early 2000s.

All in all, the global beauty industry shows the potential to reach $596 billion by 2025, according to Euromonitor International.

Let’s review the industry trends on the horizon and how they can impact the market and consumer behavior.

Innovation

“Skinminimalism” is a trend gaining popularity, especially among younger beauty shoppers who favour simpler routines. This has led brands to opt for fewer but more innovative launches. In September, Hermès launched Plein Air skin balm, a hybrid product of make-up, skincare and fragrance. Mac Cosmetics introduced a performance-based skincare line designed to improve skin and enhance make-up at the same time.

All indications are that innovation in product formulastions will continue to be a key trend in all global markets. “Consumers will move away from extensive routines and heavy makeup looks, favouring multi-use products, leading to lower volume sales than pre-pandemic, but higher unit prices”, predicts Emilie Hood, senior beauty research analyst at Euromonitor International.

Clean beauty

Fuelled mainly by the pandemic, consumers are striving to take better self-care, scrutinising cosmetic formulas and turning to more natural ingredients. About 41% of shoppers choose products based on natural and pure components as well as cruelty-free and environmentally friendly beauty brands. Services like INCIDecoder have also emerged, allowing consumers to check the active ingredients of beauty products to make a conscious purchasing decision. As an example, Kiehl's removed parabens from its moisturiser formula, increasing conversion rates to 78% and average order value by 33%. 

Beauty brands are embracing the clean beauty philosophy, committing to ethical standards in the production of cosmetics and perfumes, the development of innovative reusable face masks and eco-friendly packaging that can be reused and refilled.

Diversity and inclusivity

Growing awareness of individual needs is moving consumers away from the belief that one product fits all. In fact, more and more consumers are looking for products that suit their lifestyle and specific hair or skin needs. Fenty Beauty, created by Rihanna, is considered a leader in multicultural cosmetics and offers more than 50 foundation shades. But inclusivity and diversity today are much more than a wide range of shades. It is a trend towards self-expression and a sense that brands are empowering customers to do so.

An increasing number of brands are also working to expand the range of products and services for men. The market for men's grooming products is expected to reach $277 billion by 2030. As the number of male beauty influencers and make-up artists skyrockets, brands such as YSL, CoverGirl, Glossier and Maybelline, among others, are choosing men as ambassadors, helping to set new trends and open up new market opportunities.

Star power

In recent years we have seen the number of celebrity beauty brands grow. Selena Gomez, Pharrell Williams and Jared Leto are just a few examples, alongside influencers such as Tina Craig and Charlotte Palermino, and even a younger generation of creators like Emma Chamberlain and Hyram.

Celebrity-led brands and celebrity collaborations are quick to generate buzz since they already have the recognition. However, most have a limited timeframe for relevancy before momentum shifts to another star. It therefore makes sense to use the opportunity “to drive penetration and distribution in the short to medium term”, says David Schneidman, director of Alvarez & Marsal Consumer Retail Group.

Hitting the right influencers

Surveys claim that up to 67% of shoppers seek information about beauty products from social media influencers, and 88% of consumers trust reviews. Generation Z is the main target audience here.

Beauty brands need to pay attention to who represents their product online, choosing someone who aligns with the brand's mission and can convey their message with sincerity. For cosmetics consumers, seeing the desired product in use by real people they trust can instantly lead to a purchase.

Personalisation to increase brand loyalty

Customers are more inclined to stick with a company that knows their preferences and tastes and offers customised products. According to a research study by CB Insights, shoppers are 78% more likely to buy if personalised products are suggested to them.

Brands are leveraging modern beauty technology to track their consumers' shopping behaviour and offer AI and AR technology to personalise their experiences. Neutrogena, for example, uses AI and AR and offers an at-home skin check to suggest customised experiences and treatments. Fenty Beauty uses technologies to guide consumers through the perfect shade match and offer virtual try-on technology in most of its make-up.

Personalised shopping experiences are here to stay: they improve brand loyalty and customer satisfaction, boosting customer engagement.

Final thoughts

To conclude, we have picked up on the view of David Schneidman for Vogue Business, claiming that "brands can position their internal experience as their USP and make scientific innovation their point of difference in a crowded marketplace". Corporate social responsibility will continue to be demanded from consumers, while maintaining a seamless omni-channel experience will be paramount. "Beauty is a unique, emotional, functional and transformative category. And so with that, people want a personalised experience and [the ability] to try the product [online and offline]," concludes Schneideman.