The beauty industry is a highly competitive business. Just look at the store shelves and you’ll find countless brands with new products coming out all the time. — New shades/colors, new packaging, combo products, single material items, etc..
Sustainable practices are nothing new to beauty. Consumers are increasingly choosing natural, vegan, and medically approved products over conventional products.
According to McKinsey & Company’s “The State of Fashion: Beauty 2023” report, the beauty industry, which includes skincare, fragrances, cosmetics and hair care, will generate approximately $430 billion in revenue in 2022. Regionally, North America accounted for $85. By 2022, the industry as a whole will reach $1 billion, and is expected to reach about $115 billion by 2027.
Projected YoY growth from 2022 to 2027
- 7% more fragrance
- Cosmetics 6% growth
- Hair care 6% growth
- 6% growth at 45% of skin care market value
By region, the report shows that the Middle East and Africa will grow the fastest at 12% year-on-year by 2027, followed by China at 8% and APAC (excluding China) at 7%.
McKinsey 2023 Global Consumer Survey Finds More Than Half of Respondents Use 3 or More Brands in Skincare, Haircare and Fragrances, and One-Third Use 5 or More Brands in Cosmetics did.
Profitable and sustained growth over the next few years depends on strong innovation, according to a McKinsey report. Brand portfolios must adapt to rapid product lifecycles, and “hero” products are no longer the primary way to win over customers. Competition is fierce, and so is consumer desire to take advantage of a full range of beauty products to keep them looking and feeling their best.
42% of survey respondents in the US, UK, France, Germany, Italy and China say they enjoy trying new brands.
– McKinsey State of Fashion: Beauty 2023 Report
Consumers shop for beauty products casually at department stores, grocery stores, e-commerce, drug stores, travel retailers and specialty stores.
Purchases made through e-commerce surged from 2015 to 2022, with a share of over 20%. This is the fastest growing segment of beauty products, with a projected 12% year-over-year growth rate through 2027. Travel retail is 10%. Specialty retail is projected to grow by 7%. Grocery retailers and drugstores are tied at 4%. Department stores and “Others” will increase by 2% year-on-year.
From 2015 to 2022, global e-commerce sales will grow at a CAGR of 20%, with eye makeup and skin care products (due to mask wearing) in particular growing significantly during the pandemic.
By 2022, digital shopping will overtake specialty retailers to become the world’s largest personal sales channel, accounting for about one-fifth of the industry as a whole. So far this year 31% of U.S. digital buyers spend between $1 and $50 per month. beauty products On average, according to Statista’s report.
Social media is the only place to see how beauty products are applied and how they are rated by consumers. This is the top channel for new product reviews, thanks in large part to his Gen Z. These his teens and his 20s not only offer a perspective on what beauty means today, but they also reign as beauty influencers.
Beauty companies, influencers, and consumers alike use TikTok and Instagram to inform trends through video reviews of beauty products and how-to applications.
In addition to our two most popular platforms, others include YouTube, Facebook, and Twitter where you can watch even more how-to and review videos.
Consumers now follow advice from dermatologists and other medical professionals more than celebrity influencers, indicating they are more serious about their future skin, hair and facial needs.
Top 5 beauty and personal care trends
Research group Euromonitor International has identified the top five trends.
- Premium and Affordable
- Material-driven beauty
- blurry wellness space
- Health and wellness support
- From function to feeling
1. Premium and Affordability
The recent rise in inflation has pushed beauty and health product prices higher, forcing consumers to make more selective decisions about the products they purchase.
according to Euromonitor InternationalWhat consumers say: The 2022 Summer Beauty Survey finds that global respondents seeking price-sensitive attributes (value-for-money, multi-functional benefits, low prices) when shopping for skincare in 2022 will increase by 2021 increased compared to about 2.5%.
The findings suggest that more quality seekers and premium buyers sought lower prices in 2022 compared to 2021, including through promotions and affordable brands.
As 2023 progresses, the concept of “value” is expected to evolve as beauty consumers reassess their spending habits. For example, a potency seeker is likely to be more price sensitive in 2022 than he is in 2021.
2. Material-driven beauty
T.His use of science in beauty products is nothing new, but biotechnology is taking it to a whole new level.
Today, there are many brands that meet the needs of environmentally conscious consumers with products made from plant-based ingredients. This significantly changes consumer trust in brands due to formula familiarity.
Beauty consumers are demanding sustainability, biotechnology and international beauty concepts. Essentially combining environmental sustainability and advances in biotechnology, “green chemistry” focuses on eliminating harmful substances and adding or replacing previous ingredients with bio-based ones to enhance beauty and It has emerged as a major focus area among personal care companies.
“Upcycling” is the latest green chemistry innovation, referring to the conversion of by-products and waste streams into usable ingredients, an area expected to accelerate in 2023.
3. Blurred Wellness Space
Post-Covid-19 consumer demand for holistic health and prevention is driving companies to merge their traditional portfolios with emerging health needs, according to Euromonitor. As a result, the beauty space and wellness space have become ambiguous.
Beauty is also expected to increase overlap with other industries.
“Looking healthy” was the most perceived way of beauty among consumers around the world.
– Euromonitor International Consumer Voices: Beauty Survey
McKinsey research shows that 45% of US consumers are interested in products that are 100% natural and cruelty-free. The percentage is about the same in the UK, France, Germany, Italy and China. And 39% of US consumers look for products that are free of environmentally harmful ingredients.
The report also reveals that the $1.5 trillion wellness industry is expected to grow at a CAGR of 10% through 2027.
4. Health and wellness support
As women’s empowerment and gender inclusion spread, increased awareness of women’s health will have a noticeable impact on the industry in 2023 and beyond. For example, a deeper understanding of how hormonal imbalances correlate with changing skin and hair needs offers the prospect of tailoring beauty routines with solutions for the entire cycle care.
This is a natural extension to the brand strategy in favor of a more holistic wellness-oriented approach.
5. From Function to Emotion
Gen Z has defined a new beauty. Nearly 50% of them thoroughly research beauty products before purchasing. This is also a fact obtained by McKinsey research. A Euromonitor report reveals that emotional values, such as inner health benefits and social value identities, are becoming integral factors in beauty consumer purchasing decisions.
Neuroscience, especially EEG detection, is beginning to be used as a biosignal to assess emotional function. The concept of ‘neuro-perfume’, which evokes neurologically proven emotional responses, opens up new product offering opportunities for fragrance and ingredient companies. and Educate consumers about this emerging segment.
Mergers and Acquisitions
The number of M&A transactions in 2019 and 2022 was about the same (174 and 175 respectively). But 2022 will be worth half the average value of 2019 deals, a McKinsey report shared.
Of the 139 deals that closed in 2022 with a stake of 30% or more, 90% were conglomerates.
Among the big deals for 2022, Procter & Gamble acquired probiotic skincare brand Tula. Unilever has acquired a majority stake in Nutrafall, a maker of hair wellness products. L’Oréal acquires American skincare brand SkinBetter Science. And Estée Lauder acquired the Tom Ford brand, creator of fragrances and accessories.
Sally Beauty, a leading retailer of salon-quality hair color, hair care and nail products, has just signed a retail agreement with hair color brand XMONDO Color.
L’Oréal is also making inroads into other retail spaces. The It’s Professionnel hair care range is now available for purchase at Sephora.com.
Both reports and additional research show that beauty is competitive, growing, and highly innovative.demand will continue Beauty and personal care products that educate, delight and deliver value — both financially and ethically.