The Future of Beauty – Industry Growth Areas & Companies Leading the Way
July 25, 2019
In the future, beauty brands who engage in a two-way conversation with consumers are likely to succeed, through social media, user-generated content, new beauty technology and other concepts.
What does the future of the beauty industry look like? The beauty market is currently worth $465 billion globally, set to reach $750 billion by 2024. It’s likely that a two-way conversation between brands and consumers will support this growth, with consumers speaking as informally and conveniently to beauty companies as they would their friends.
- Brand values
- Supply chain traceability
- Brand consolidation
- Own the relationship
- Combining high & low
- Male beauty
- Augmented reality
- Artificial intelligence
- Next-gen tech
That’s the impact of social commerce, user-generated content, and influencer marketing, and all the signals show that this is where the beauty industry will continue to head.
Expect new digital tools to help, whether it be increasingly sophisticated chatbots or the melding of humans and machine to assist in providing product recommendations and personalised beauty regimes. The goal is to make buying health and beauty products a conversational and personal experience.
Certainly, consumers will want to engage with beauty brands and their stories on a much deeper level. Yet with the influx of influencers, vloggers, and bloggers broadcasting information about products, the need to cut through the increasing noise will be crucial.
Innovation – in terms of go-to-market strategies as well as technology – will be key to meeting the future demands of consumers. Here are a number of concepts to look out for amongst established and up-and-coming beauty brands:
Consumers are inundated with influencer content and are now becoming more selective. Authenticity is cited as a key differentiator in the market now. If brands are looking to have a social conscience, then it must be reflected in every part of their business. Customers value authenticity and trust just as much as the actual product, and engaging here requires aligning authentically to their values.
Gen Z and Millennials now say they care more about values of the retailers and brands they buy from. We are in the age of Greta Thunberg, the Swedish school-child climate activist, the David Attenborough revolution, and the Extinction Rebellion. It’s not falling on deaf ears. The industry is realising many people will spend more for a product they see as ethical. As fashion seeks sustainable clothing, in beauty, think cruelty-free and vegan products.
Supply chain traceability
Expect traceability from farm to dressing table. More consumers globally are looking for products that are organic, plant-based, and with no synthetic ingredients. They also want to know where it is made. It’s why nature-hacking is on the rise where biomimetic products and biotech-based solutions are likely to be more popular.
Newer, independent brands could consolidate into new conglomerates. With the potential to be stronger and more impactful together, it makes sense to combine them into one holding company. This is potentially where private equity comes in to play.
The European and North American shopper is no longer restricted to shop within their jurisdiction. Thanks to improved international eCommerce, you can now get your hands on the latest mascara or lipstick quickly and competitively from Japan or South Korea in days, not weeks.
Owning the customer relationship
Social media, whether it be YouTube, Instagram, Facebook, or Snapchat, owns the relationship with the consumer. Brands use this as a medium. The question is how brands can take this one step further? How can they own the conversation? If companies believe that having customers as a core part of the company is the way to build brands and new products, they must start to own that relationship fully.
One major area for growth is truly conquering the ‘try before you buy’ concept, where beauty tends to fall behind other sectors, like fashion for instance. Subscription boxes and in-store experiences have gone some way to addressing this, but there is still room for improvement. Clinique, for example, do small samples that consumers can try before purchase. But brands need to do more with returns. This is what consumers expect now, due to advancements in other sectors.
Combining high and low
Again, comparing to fashion – think a Zara dress paired with Prada platforms. The same goes for beauty, particularly with budget-conscious Generation Z. They’re after a specific look, but at a certain price.
The key to remaining Amazon-proof is to offer a selection of products that can’t be found anywhere else. Sephora and Ulta require many of the brands they carry to sign exclusive deals that explicitly bar them from listing products on Amazon. Beauty does not want its category commoditised, and brands should be wary of how and where they sell.
Men en vogue
This sector is predicted to hit US$166 billion by 2022, according to Allied Market Research. The success of digitally native brands catering directly include Harry’s and Dollar Shave Club. But it’s about moving beyond shaving and into skincare. This era is all about inclusivity. Look at Fenty Beauty’s male cosmetics line and L’Oréal’s collaboration with male beauty vlogger, Gary Thompson. They have changed the conversation of inclusive beauty in the last year or so.
This area also continues to grow in popularity, with brands seeing it as a future area for growth, looking beyond traditional gender specifications as well as age and ethnicity. Nearly 40% of adults aged 18 to 22 have shown interest in gender-neutral beauty products, according to NPD’s iGen Beauty Consumer report.
The demand for online video continues to grow. 2019 will be the first year online viewing eclipses that of television. Instagram stories, Snapchat and YouTube will continue to be huge. But also think interactive streaming ads, and the continued proliferation of tutorial, review, and unboxing videos. You know there’ll be another new video trend here before long.
Madison Reed, L’Oreal, and Punky Color are integrating augmented reality into their digital marketing strategy. Maybelline’s print ad was a slick example, triggered a fun nail polish try-on. It has become more commonplace in the market, expect more realistic technology, as brands help consumers to try products virtually before buying. The upcoming 5G rollout will enhance experiences here.
Retail AI is here. Conversational AI, via smart chatbots, will be used to help foster authenticity and personalisation online on another level, depending on the amount of data that customers want to share. Facebook Messenger bots have been used successfully by brands such as L’Oreal and Sephora, as relatively quick and low-cost solution to chatbots, on a platform consumers love. Expect this technology to continue to learn and become even more accessible for smaller brands.
More advanced beauty-tech
Major multinational beauty brands are investing in technological innovations, in a bid to offer smarter and tech-validated solutions through the latest beauty technology. They are exploring smart apps and tools that track beauty regimes and recommend products, as well as providing real-time diagnostics for skincare. They are also developing smartphone connected beauty tools that provide more personalised solutions. Online recommendations will become more relevant and personalised.
LiveArea is an award-winning global commerce services provider, with vast experience working with health and beauty brands. A comprehensive portfolio combines consulting, strategy, design/UX, technology, and digital marketing to bring commerce to life. Get in touch to find out more.