Cosmetics market trends

The cosmetics industry mainly includes products for skincare, suncare, makeup, hair care, deodorants, fragrances, colors cosmetics and few other niche products. Households in most developed countries have experienced a rise in their disposable income in the past years, changing the lifestyle of an important percentage of the population. This has lead to an increase in the demand for makeup and skincare products. Other facts have been contributing to the rising demand for cosmetics products like the social media boom letting cosmetics brands exposing their products online creating a huge demand. One of the other contributing facts, sadly, might be tied to aspects like climate change which directly contributes to the rise of the global demand for skin and sun care products.

Nowadays, we notice a shift in the market strategy to organic, natural and herbal products in Europe and the US so far, but is expected to hit the other markets including the Asian market. Known to be the biggest consumer of cosmetics products. In terms of service, shoppers are beginning and will be sensitive to hyper-personalized products and great shopping experience. hile projections for growth vary, most economists agree on a 5%-to-7% compound-annual-growth-rate to reach or exceed $800 billion by 2025

Even if the cosmetics market value increases it is expected to create a few big winners and a lot of losers in the industry. Cosmetics brands will be impacted by the future of beauty trends and by how women, and now also men strive to define and meet beauty and skincare criteria. 

Nowadays, a lot of acquisitions, mergers, product launches are made in the cosmetics industry, and it is only the beginning. New strategies are being created to ensure the preservation or the gain of market shares, in the long run, depending on the company.

Cosmetics brands embraced the technological change by gathering the maximum data on the targeted segments and by promoting their products online. Moreover, technological innovation helps cosmetic brands in creating a unique experience, strengthening customer loyalty as well as attracting new shoppers. For example, HiMirror or Neutrogena Skin360 use a smart mirror technology that analyzes the skin of the customer and gives precise result of what to improve and which product to use as a solution. A customer can track the efficiency of each product used with this item while getting a hyper-personalized experience. The smart mirrors will be everywhere in a few years, implying that cosmetics brands must sell quality products, and cannot lie on products effects as few did before. Moreover, the Sisley Hair Analyser provides the user with an accurate diagnosis of their hair quality. Those kinds of innovation will allow brands to increase their sales in a way that people will use more products to fully optimize their skin, hair.

Besides corporate strategies, new technologies, other factors justify the positive business predictions of the cosmetic industry. An interesting theory is the “Lipstick Effect”, theorized by Juliet Shor in the book “The Overspent American: Why We Want What We Don’t Need”, (1999). This theory implies that during an economic slowdown or recession a household buy more of a particular good or service; cosmetics are part of that special category (reference on lipstick). This means that some companies actually perform better during market recessions. Indeed, Juliet Shor noticed that people buy more luxury cosmetics consider as high-price, but is still represent a small percentage of the household’s disposable income. The explanation for that behavior is that people still want to have a few “treats” to forget the financial difficulties and get a positive emotional effect. A fact that supports this theory is the unusual increase in lipstick sales of Estee Lauder right after the terrorist attack of September 2001.

To conclude, the cosmetic industry is facing a strong market competition with a lot of players and still no big winners. This market capitalization is expected to grow thanks to the new technologies and the strategical shifts, but fewer companies will survive the 10 next years. This industry is showing stable year-to-year growth and is expected to stay the same even if the global market comes in recession thanks to innovations and the security explained by the “Lipstick Effect” that gives power to those companies. The future winners will be the ones giving the best experience and the right products to their customers, meaning that the next technological innovation for service will play a key role in the well being of cosmetics companies.