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Ten years ago, people were still sharing photos through printed photo albums and, for some early adopters, through new-fangled websites like Facebook and Flickr. Beauty industry advertisers were still using traditional channels like TV, print media, and billboards to reach their target audiences.
Today, there’s Instagram.
The platform has over 500 million daily active users uploading over 100 million photos and videos per day – a large percentage of which directly relate to beauty products, tips, and the beauty regimen recommendations of celebrities, influencers, and regular consumers. Instagram has, in fact, become the de facto ground zero in today’s rapidly-expanding beauty market.
Indeed, the market has gone digital but, as it turned out, this is not the only change that’s happening in the beauty industry. A number of dominant trends are making waves as well and any up-and-coming brand who wants to make a splash in the market will need to pay close attention to get attention.
Conventional supply and demand thinking would have us believe that when there’s an over saturated supply, demand would naturally become uneven and inconsistent. While that may be true for other industries, the beauty industry has seemingly managed to turn around this rule– for the time being, at least.
With several big-ticket names of established players (big ticket names like L’Oréal, Estée Lauder, Shiseido come to mind) in the industry and dozens of independent brands cropping up every day, you’d think there’s an over-supply of beauty products in a saturated and shrinking market.
Surprisingly enough, the beauty market has moved in a direction that has defied quite a few expectations. It has expanded exponentially in a sort of open-arms welcome to any rising brand with a new product line to offer.
People are actually buying more beauty products per household today than at any time in the past 70 years!
This is not your mom’s beauty market by any measure. A decade ago, the vast majority of consumers would be content with having about 3 to 5 beauty brands at home. Today, the highly lucrative 18 – 34 segment are the so-called heavy buyers who purchase more than 10 types of beauty products per year.
Fabrizio Freda, the President & CEO of Estee Lauder, in an interview with Forbes, disclosed that “Women are spending more [on beauty products], 13% more on foundation, 18% more on concealer, 35% of women use more than five makeup products every day and 80% use three skin care products every day ... and six mascaras are sold per minute in the U.S.”
Who are the winners in this fast-expanding market?
Viewed in the light of this exploding market, it may seem interesting that the more established companies – the big players – are experiencing a downturn in overall sales worldwide.
Who’s hitting the jackpot then in this booming recession-proof market?
The good news to all startup beauty brands and service spas everywhere is that newer brands seem to be gaining a disproportionately bigger share of the pie. The smaller brands are dominating this market in both growth rate and actual share of overall consumer purchases.
Marc Rey, the President and CEO of Shiseido Americas, in the same Forbes article, reported that traditional makeup was down 1.3% but independent brands were up 42.7%.
In direct response to a seemingly insatiable market demand – fueled in no small part by the so-called Instagram culture (we’ll come to that later) – small independent brands are now being created at a blinding speed offering myriad beauty products to a far wider range of consumers, from the smallest niches to larger and more opaque categories of customers.
Emily Algar, a beauty journalist writing for Byrd, remarked, “Stores like Mecca Cosmetica and Sephora have introduced a huge range of international brands, and opened up access. What's more, smaller, indie brands are cropping up everywhere, giving big beauty conglomerates a serious run for their money.”
Traditional roadblocks (lack of capital, no distribution network, etc.) to enter the market have all but disappeared for many startup brands.
The trailblazing Kat Von D has a rather colorful explanation of why new players have successfully encroached into spaces normally reserved for the more established companies,
"It’s like music, everyone can do it now so in order to succeed you actually have to be f**king good!"
So, how do you get to be exceptionally good to make a dent in this fiercely-competitive environment?
As a matter of fact, for the most successful emerging beauty brands today, listening to their customers is the single most important key that enabled them to leapfrog over the competition.
Cliché? Easier said than done?
Not really. When you factor in today’s digital landscape, going online to figure out exactly what your customers want makes a lot of sense.
Indeed, all of the top independent brands that made the cut in 2018 have established their own robust digital footprint and cultivated active online communities.
Having an online presence is now a staple entry-level requirement for any brand seeking to gain a toehold in today’s beauty industry!
Any talk of digitization, of course, brings us back to Instagram and the other platforms in the current digital ecosystem.
During the annual WWD Beauty Summit, the premier beauty industry gathering, Karin Tracy, Head of Industry (Beauty, fashion, luxury, & retail) at Facebook pointed out these staggering numbers: Facebook has 1.9 billion users, Whatsapp has 1.2 billion, Instagram has 700 million and Facebook messenger has 1.2 billion … 20% of the time spent on the internet is with one of those brands. On those combined platforms … every day there are 526 million posts that relate to the beauty industry.
In short, hundreds of millions of customers are spending time on social media every day exchanging ideas and beauty tips and giving real-time feedback about brands and specific beauty products. Emerging brands wanting to penetrate the market will need to open up their own online space and join myriad online communities to get an accurate reading of what the market wants.
Fabrizio Freda of Estee Lauder, contextualizing the so-called Instagram effect that’s fueling the growth in today’s beauty market, told Forbes:
“Younger generations are defining the culture with images of self-expression. They take more pictures in a day on average than their parents took in a year. Sixty-five percent of teens rely on social media to discover and select beauty products.” Emily Algar, in the same Byrd article, rhetorically asks,
“What is a beauty brand without a digital presence? Digital, and more importantly social platforms, are basically public discussion threads where feedback (albeit good or bad) is hand-delivered straight to beauty brands.”
Brands that have taken the initiative to develop an impressive digital presence showcasing their products and have engaged their customers in ongoing public conversations are routinely rewarded with constructive and authentic feedback that allows them to improve product lines and gain bigger market share.
Customers who patronize and are emotionally invested to certain beauty products are also more likely to become “brand evangelists,” the term used by advertisers to describe a brand’s customer base that go out of their way to create content and enthusiastically reach out to their own networks of friends and colleagues to talk about their preferred brands.
Jo Malone, the founder of brands like Jo Malone and Jo Loves, singled out this enthusiasm of customers to talk about the brands and products they love, “They take it all up and spread the word for you.”
Brands like Nike and Glossier, for example, now regularly features what insiders call “earned content” that the customers themselves create (such as photos, videos, and online articles or blurbs) telling others “what they love about a product, and what inspires them to share the brand message.”
So, what products do customers want?
When it comes to product offerings and what’s making it in the market, the trend reflects the increased attention among millennials and the younger set to social and environmental issues that they care most about. Cruelty-free, non-toxic, and natural ingredients are the industry buzz words these days because of this.
Kat Von D, whose product lines and messaging clearly resonate with this large market segment explained that, “millennials really do care.”
As Rachel Brown of Olapic notes, “They want the brand from which they’re buying to reflect the culture in which they live, the diverse people that surround them, and the causes they support.”
A holistic approach that encompasses both beauty and wellness is fast becoming the norm to product creation in the leading cosmetic houses and brands. Consumers want products that not only makes them look and feel beautiful but are actually safe to use.
Amy Regan of Skinfix, pointed out that “seventy-three percent of millennials say they want natural skin care products. Skin care is about beauty meeting wellness. That’s the future of this industry.
The general perception among consumers is that using products that might prove harmful to themselves or their children will not only affect quality of life in the short term but will also be dangerous to health and well-being, not to mention costly, in the long term.
These days, long before a product hits the shelves or becomes available for online orders, super-savvy customers are already busy tracking down the ingredients of these products, comparing notes with each other, and validating or debunking claims by the product developers. In the U.S. for instance, ingredients is the single biggest factor in the buying decision of 40-50% of women consumers.
There’s a growing awareness among consumers that when it comes to product formulation, “less is more” and that extravagant claims on the latest product launches should be scrutinized and weighed against the available evidence.
With product and ingredients information readily available online, consumers of beauty products are more knowledgeable about formulation these days and are increasingly pressuring beauty brands for greater transparency when it comes to product testing and all the ingredients that go into any product being offered in the market.
The result is a more sweeping openness on the part of beauty product manufacturers to disclose testing and formulation practices. The threat of being dragged publicly on social media about unethical testing and harmful or ineffective formulation has left very little room for brands to make unwarranted claims about their products.
As Emily Algar suggested, “we are super clued-up when it comes to ingredient listings. No longer can brands fudge claims, or pack its product with cheap fillers—because millennials will call them out.”
The good news to rising independent beauty brands is that consumers will readily reward them for quality products and transparency. The exponential increase in the number of beauty brands competing for attention has not resulted in a scorched-earth race-to-the-bottom environment of price-slashing and undercutting that plagues most expanding industries.
As Richard Kestenbaum of Triangle Capital LLC, a seed funder for consumer-related businesses, observed, “consumers want unique products and experiences and they will pay for them when they’re what the consumer wants.”
What do consumers want?
Just as recently as 10 years ago, no respectable beauty brand would launch an ad campaign without featuring the standard airbrushed, Photoshop-perfected model that invariably made many women feel insecure about their own appearance and forced them to aspire to a virtually unreachable ideal.
Fortunately, those outdated misogynistic norms about beauty are fast becoming a relic of the past.
Consumers these days want wider representation when it comes to brand messaging and product offerings. More and more women are now empowered to embrace their own individuality and are redefining our perception of beauty according to their own lights.
Rachel Brown aptly describes this new preference among consumers, noting, “Whether a female is Gen-Z, Millennial, or Boomer-aged, all women want to see themselves depicted accurately in advertising and marketing: They want to see the curls, the scars, the imperfections, sizes, colors, and everything in between.”
The paradigm shift towards greater inclusivity when it comes to our collective definition of beauty is clearly gaining prominence in the beauty industry and both established and independent players are responding to this consumer-empowering trend.
Camillo Pane, the CEO of Coty, in a nod to this new definition of beauty offers his own take, “Beauty is being beautiful the way you are.”
Aerie, an American Eagle brand, ditched Photoshop from their ad and marketing materials back in 2014 and started moving towards a more authentic representation of a diverse lineup of body and skin types. The underlying message was to highlight the importance of portraying the real beauty of women.
The response among customers to this body-positive messaging was overwhelming and Aerie has been enjoying a year-on-year double-digit increase to their sales numbers since they adopted the strategy five years ago.
Glossier, the brand founded by the social media-savvy beauty editors of Into The Gloss blog, designs most of their makeup line and skincare set with their customers in mind. Their messaging revolves around the idea of women “loving themselves in their own skin” and “feeling comfortable in the way they show off their unique beauty.”
The financial success of Aerie and other companies who shifted to this new mindset about beauty has forced the rest of the industry to take a look at the trend and shift their messaging.
Tarang Amin, the CEO of e.l.f. Beauty, commenting on the insidiously deflating effect of old-style supermodel-centered messaging noted that “the unattainable aspect of beauty can be intimidating. Our approach is the opposite. We want to be as inclusive as possible.”
The concept of inclusivity has far-reaching implications beyond the diverse categories of female body and skin types. In fact, inclusivity now includes acceptance of gender identities and preferences.
Milk Makeup, one of the fast-rising independent brands last year has practically blurred the lines in their recent genderless campaign featuring various models that identify as male, female, and all gender categories in between including those who are referred to as “agender” or those whose identity do not appear in the gender spectrum.
The overwhelming success of the campaign among millennials that directly translated to increased brand recognition and raging sales numbers for Milk Makeup is a clear signal to industry insiders that the ground shift in the definition of beauty has finally become mainstream and could impact their bottom lines.
So, what’s the key takeaway from all these trends? What do these changes mean for your beauty brand?
All these trends bode well for the entrepreneur who’s determined to make a name in today’s ultra-competitive beauty market.
Primarily, with today’s fast-expanding beauty market and an open and relatively level playing field where the barriers to entry have been significantly lowered,
Not only can any brand easily gain entry into the market, consumers now base their buying decisions on factors that do not necessarily include brand name recognition – a major advantage of well-established cosmetic houses. We only need to look at the double figure growth rate of independent brands to see that any startup brand has a genuine chance to compete toe-to-toe with the big players.
Of course, there’s no free ride to success, but if you’re willing to put in the hours and the effort to make it, you most likely will.
First, you will need to engage with customers and prospects on a much deeper and more authentic level and to do that you’ll have to be at the same place where your customers are, right now. Getting online, establishing a digital presence for your brand, and interacting with your customers in online communities and social platforms would be a good start.
Millennials are extremely knowledgeable about the stuff they want to buy and use, there’s no way to go around that fact nor would you want to. They’re your primary market and to gain their trust, you’ll need to be transparent with stuff like your product testing protocols (cruelty-free) and formulation (natural ingredients, less synthetics) – things that the market is quite passionate about.
Finally, I think it’s a winning idea to embrace diversity and individualization in your brand messaging and marketing campaigns. The definition of beauty has shifted to become more inclusive and consumers are more welcoming of brands who empower them just as they are and portray them in their own true skin (and body types).
In the end, like anywhere else, the more things appear to change in the beauty industry, the more some fundamentals stay the same.
As Fabrizio Freda of Estee Lauder notes, “The art of leading through change is understanding what has not changed and how to leverage our historical strengths.”
