Between the continued growth of dupe culture, skincare’s surprise sales — and the category’s new Gen Alpha proponents — and the rise of American social commerce and AI-driven personalization, the inner workings of the beauty industry are rapidly evolving.
On Thursday, CEW’s State of Beauty Report 2024 experts from Iced Media, CreatorIQ, Spate, Google, Mintel, NIQ and Circana presented key themes and insights regarding the state of the beauty industry.
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Here are the key themes and takeaways.
From social commerce to AI, early adoption is critical
With social commerce expected to generate $70 billion in the US alone this year, Leslie Hall, founder and CEO of Iced Media, dove into the TikTok Shop juggernaut. Beauty reigns as the top-selling category on the platform, which has helped drive sales from certain early adopters like The Beachwaver Co., which Hall said has sold more than 300,000 units of its rotating curling iron since launching on the platform last summer debuted.
Prestige brands, both in the US and abroad, can implement “exclusives and bundles.” [offerings]allowing them to not have to discount their products,” Hall said, as a way to thrive on TikTok Shop without being driven by discounts.
AI programs like Meta’s Advantage+, TikTok’s AI avatar, and Snapchat’s recently launched AI Chatbot, meanwhile, can serve as effective tools for consumer acquisition and personalization.
“The AI revolution is here and there is no need to fear it; Try and experiment with different tools and find what works best for your business,” said Hall.
Commitment over impressions
CreatorIQ highlighted five brands to be acquired in 2023 – K18, Naturium, Dr. Dennis Gross, Mielle Organics and Creed – and the unique factors behind their respective social media success.
K18, which was picked up by Unilever in December, was the fastest growing hair care brand by earned media value in 2023, growing 409 percent year-on-year. An effective TikTok strategy drove most of this growth, with the platform accounting for a whopping 43 percent of the brand’s total EMV.
“TikTok is growing across the board, but on average is responsible for perhaps 20 to 30 percent of most brands’ EMV; Instagram is still the dominant platform, driving about 70 to 80 percent of the typical brand’s EMV,” said Alexander Rawitz, director of research and insights at CreatorIQ.
Elf Beauty-owned Naturium, meanwhile, saw a 170 percent year-over-year growth in engagement, thanks largely to high-profile figures in the skincare community like Hyram Yarbro.
Although Dr. Dennis Gross was mentioned in fewer posts in 2023 than years before, the brand still saw 135 percent growth in TikTok EMV because “the TikTok content the brand appeared in was just that much more effective,” Rawitz said.
Mielle Organics saw significant social growth thanks to new creators: 50 percent of users who mentioned the brand in 2023 had not posted about it in 2022, with the brand’s Black Friday activations in particular generating a lot of buzz.
Creed’s growth was largely driven by Instagram, where the Kering-owned perfume brand saw 87 percent growth in EMV and 55 percent growth in engagement, despite only seeing 2 percent growth in impressions.
Other brands gaining traction on social media include Patrick Starr’s One/Size, Saie Beauty, Hailey Bieber’s Rhode, Tower 21 and Refy, Rawitz said, adding that “we see engagement is more important than impressions for growth.”
Education, beauty of body and mind and inclusivity through AI
Mintel predicts that three key trends will come into play in 2024. The first is “refined simplicity,” referring to a growing group of value-driven consumers who are focusing on “how quality and effectiveness factor into purchasing comparisons,” says Sarah. Jindal, senior director of beauty products and consumer health.
The relationship between mind and body will also become increasingly important as mental health becomes an increasing issue and ingredients that promote well-being, such as adaptogens, are increasingly used in topical products. Psychodermatology is also gaining prominence as another aspect of this phenomenon. “We’re seeing more research at this intersection of dermatology and psychiatry, and gaining a better understanding of how our brains impact our skin, whether it’s psoriasis, eczema or acne – those kinds of things all have a psychological link,” said Jindal. .
Finally, the growing influence of AI in the beauty space will allow brands to more easily identify new, eco-friendly formulations and packaging options while creating a more inclusive beauty landscape “through various algorithms trained to look at these diverse data sets and find out how they can respond to this. to a wide variety of beauty needs within consumer groups.”
Generation Z wants good products and a better atmosphere
Not only is the skincare category growing, but interest in makeup has surpassed pre-pandemic levels and hair care has also grown thanks to hair density and growth products, Google Search data shows.
Fragrance was the fastest growing subcategory in beauty in terms of search interest in 2023, with an increase of more than 35 percent. “Specifically, Generation Z associates scents with their energy and atmosphere; they have different scents for different moods, energies and emotions – we expect we’ll continue to see that in 2024,” said Sam Mintz, head of sales strategy and insights at Google.
Gourmand fragrance ingredients such as vanilla and strawberry are more popular, while K-beauty is also experiencing a comeback thanks to brands such as Medicube and Skin1004.
In hair care, Amika and Kérastase dominated searches; Rare Beauty, Laura Geller and Elf Cosmetics topped the makeup list; Valentino, Paco Rabanne and Jean-Paul Gaultier led scent searches. By/Rosie Jane and Ffern, meanwhile, were among the top emerging fragrance brands in terms of search growth.
Interest in mini-size products is increasing, especially alongside lipstick, Beauty Blenders and perfume, with discovery perfume sets showing 29.1 percent year-on-year growth.
Maximize omnichannel strategies – and don’t fear dupes
Beauty saw double-digit sales growth in Africa, Europe, North America and Latin America in 2023, although growth slowed in parts of Asia due to ongoing real estate market tensions.
Dollar sales growth has been partly supported by inflation – NIQ reports that today it costs $132 to buy what cost $100 in 2019 – but consumers are also generally spending more on beauty, with markets like India showing notable growth thanks to the country’s growing middle class.
In the US, TikTok Shop claimed its spot as the 12th largest e-commerce destination for beauty and personal care in 2023; Amazon maintained its position as number one. NIQ’s Tara James Taylor said: “While online is extremely important, it’s also important that brands consider the in-store experience – don’t lose sight of that when managing your online and omnichannel strategies.”
Hispanic consumers in the U.S. visit beauty stores six times more annually than non-Hispanic U.S. consumers, she added.
Interestingly, wellness and beauty/personal care go head-to-head in terms of overall sales growth, delivering growth of 11.8 percent and 11.7 percent respectively in 2023.
Celebrity beauty brands, which remain relevant in the US thanks to brands like Selena Gomez’s Rare Beauty and Tracee Ellis Ross’ Pattern Beauty, surpassed $1 billion in US sales
“More than 60 percent [of celebrity beauty brands] are still growing, while 37 percent are not growing,” Taylor said.
NIQ also found that the five most duped beauty brands experienced an average sales growth of 54 percent, suggesting that the duped products are not undermining their performance.
The original ‘dupes’, or private label lines, have seen 12 percent growth, with the strongest increases in hair care and particularly bath and body.
Masstige Beauty’s growing market share
Circana data shows that U.S. beauty product sales will increase 11 percent to $108.2 billion by 2023.
Sales of prestige products grew by 14 percent, while mass market sales grew by 11 percent. Major brands—although they represent only 11 percent of total beauty dollar sales—are growing faster than the other segments, up 16 percent.
Masstige brands represent almost 20 percent of total hair care sales, although they see the softest growth in the category (masstige brands recorded 10 percent growth in hair care; 12 percent in makeup; 18 percent in fragrance and 28 percent in skin care ).
“Masstige brands are capturing greater dollar share at the expense of both traditional prestige and mass brands, making competition broader and more complex if you are a traditional beauty player,” said Larissa Jensen, vice president of beauty and industry advisor to Circana.
“Prejuvenation” emerged as a trend among younger consumers, who are increasingly using “minimal or non-invasive cosmetic procedures to reverse signs of aging, such as tired-looking eyes and expression wrinkles,” says Jensen, adding that it is unclear is whether the trend will negatively impact sales of traditional beauty products among Gen Z.
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