.png)
.png)
According to The US Beauty Consumer report, it stands out as the fastest-growing retail category in the United States, witnessing an impressive surge in consumer spending, totaling a staggering $94.36 billion in the previous year. The allure of beauty products appears to be unwavering, as a multitude of consumers express their intention to elevate their beauty budgets in 2024.
This remarkable growth can be attributed to a confluence of factors, notably the resilient phenomenon known as the "lipstick effect." Despite economic fluctuations, the enduring tendency for consumers to indulge in affordable luxury beauty items remains a driving force in the market.
As we navigate the post-pandemic world, the beauty market has shown remarkable resilience and recovery. According to McKinsey's report titled "The beauty market in 2023: A special State of Fashion," the industry is on a trajectory to reach an estimated $580 billion by 2027, reflecting an anticipated annual growth rate of 6 percent. This resurgence signifies not only a rebound from the challenges posed by the COVID-19 pandemic but also an indication of the sector's adaptability and ability to thrive in the face of adversity.
In this exploration of the growth and global trends in the beauty and cosmetics industry, we delve into the dynamics that have propelled the sector to new heights and examine the key trends that continue to shape consumer preferences and spending habits.
5 factors driving the growth of beauty and cosmetics sales
Moving forward, we will explore the five factors that have driven the growth of the beauty & cosmetics category, as outlined by Insider Intelligence.
1) An affordable luxury
Consumers are choosing to allocate their spending towards beauty, even as they make cutbacks in other areas, considering it a form of affordable luxury. While the lipstick effect has manifested in previous economic downturns, this time, it is amplified by an increased focus on wellness and self-care, a trend that has endured in the aftermath of the pandemic.
2) Online recommendations
The prominence of beauty awareness was propelled into the mainstream, particularly among the younger demographic. Gen Z and even Gen Alpha exhibit a more advanced understanding of beauty compared to previous generations at similar ages. Furthermore, the spending habits of millennials play a pivotal role in shaping the trajectory of beauty sales. As the largest generation in the workforce, their preferences and demands significantly influence market trends.
Consumers are now inclined to rely on recommendations from influencers and content creators, demonstrating a willingness to make online purchases without physically trying the products in-store. As indicated in eMarketer survey, 'The Beauty Path to Purchase,' nearly half (48.0%) of beauty shoppers in the US have embraced new products based on online feedback from others”.
The rapid dissemination of product information, reviews, and the rise of viral dupes on platforms like Instagram and TikTok contribute to an accelerated pace of trends in the beauty landscape.
3) Product dupe
The emergence of dupes, along with companies specializing in more economical alternatives to high-end products, is not only driving increased consumer spending but also encouraging exploration of diverse products and brands. This trend marks the initiation of a potential new consumer journey: commencing with the purchase of a dupe and subsequently progressing through various price points towards the highest— and authentic—option for the product.
Morning Consult reports that intentionally purchasing a dupe is a deliberate choice for 31% of adults. This inclination is more pronounced among the younger demographic, with 49% of Gen Zers and 44% of millennials intentionally opting for dupes.
4) The Influence of Millennials
Millennials occupy a pivotal position, displaying a keen interest in beauty and wielding greater disposable income compared to younger demographics. Their vibrant lifestyle, marked by frequent social engagements, establishes a robust connection between beauty and real-world experiences such as travel and dining.
As per eMarketer report, 'The US Beauty Consumer,' millennials lead the pack in online beauty spending, with nearly a quarter (24.4%) of the generation investing $1,000 or more in the past year. Furthermore, over a third (36.0%) of millennials anticipate a substantial increase, at least doubling their current expenditure, in online beauty spending within the coming year.
5) E-commerce Giants Associated with China
For instance, Temu, while not traditionally recognized as a beauty hub, has become a favored destination for styling and grooming tools due to its economical prices and extensive consumer base. Given the affordable nature of items, customers are more inclined to experiment. Shoppers also leverage discounts and promotions to enhance their shopping carts.
The beauty market
According to a McKinsey report, the beauty industry is poised to be marked by a trend of "premiumization," wherein the premium beauty tier is anticipated to expand at an impressive annual rate of 8 percent, surpassing the 5 percent growth expected in mass beauty, from 2022 to 2027. This surge in premium beauty reflects consumers' inclination to trade up and elevate their expenditures, particularly in categories like fragrance and makeup, signaling a dynamic and lucrative shift in consumer preferences within the beauty market.
The landscape of beauty has undergone a remarkable transformation, with e-commerce experiencing an astounding nearly fourfold increase between 2015 and 2022, now commanding a share exceeding 20 percent and showing substantial growth potential in the foreseeable future.
According to Statista data, online sales are projected to contribute 19.2% of the total revenue in the Beauty & Personal Care market by 2024.
Conclusion
Actively engaging in eCommerce is not just a choice but a strategic imperative for brands aspiring to ride the wave of growth within the beauty and cosmetics category. In this dynamic digital landscape, a robust online presence in line with market demands is paramount, and Shalion stands as a key ally. By incorporating a tailored retail media strategy, brands can significantly amplify the impact of their investments, ensuring a more effective and targeted approach. The ability to measure product visibility becomes a linchpin in the pursuit of gaining a competitive edge in eCommerce. Shalion, with its expertise in digital strategies, stands ready to empower brands on this transformative journey. To witness the potential firsthand, we invite you to request a demo and discover how Shalion can elevate your brand's presence in the eCommerce realm. Let's embark on this digital evolution together!
