Industry watchers are witnessing an unprecedented era of innovation and change within the beauty industry. Rohan Widdison, CEO of New Laboratories previews the year’s trends and what is to come in the future.
As the impact of technology and the influence of a new generation of consumers converge on a massive scale, the speed of change and the leaps and bounds made in terms of product, marketing, distribution and more will continue to upend long standing conventions.
One thing that’s for certain is that beauty remains one of the most lucrative segments in the consumer market. From skincare to makeup, haircare, and everything in between, beauty brands have evolved to meet the ever-changing tastes and desires of the global consumer and been richly rewarded for it.
Today the beauty and personal care market is worth an incredible $USD579.20 billion. While the bulk of revenues are from the US, growing markets in China, India, and Brazil suggest there’s plenty of consumer appetite and huge potential for sustained growth.
Major trends shaping the beauty industry of tomorrow are centred around the preferences of Gen Z, the integration of technology such as AI and AR, the impact of social media, and consumer desire for a personalised beauty experience.
Gen Z redefines beauty
Gen Z with their unique outlook on beauty wields considerable influence on the industry’s future direction. Their impact is multi- faceted and all-encompassing, shaping trends, brand values, as well as how products are marketed and consumed. Gen Z may spend more money on skincare and makeup averaging $290 per year on skincare and makeup, but winning them over isn’t easy when so many distrust advertising and 99 per cent will skip ads when they see them.
Dubbed the “values generation”, Gen Z prioritises authenticity, inclusivity, and sustainability. They’re more likely to support brands that align with their principles and are quick to call out those that don’t. As digital natives they tend to discover, share, and purchase products online. Gen Z wants to know what ingredients are in their products, where they come from, and what values the brand represents – cruelty-free, sustainable, and ethical products are favoured over ones that aren’t.
Packaging considerations are a huge factor for brands that want to emphasise their eco-clout. Brands are trading plastic for glass and metal, starting up recycling programs for their empty packaging, and manufacturing refillable beauty products to reduce their impact on the environment.
On the product front, Gen Z’s push for brands to be more inclusive has made individuality mainstream. The values generation also happens to be the individualistic generation. Gen Z’s desires individuality but how this looks doesn’t always fit traditional beauty standards. Custom foundation shades, unconventional makeup palettes, bright and bold colours are all on the table for this rule-bending cohort.
We see this in the way brands now showcase shades on several different skin colours in their online images. The sheer variety of colour ranges, gender-neutral products, and campaigns that represent different ethnicities, body types, and identities is fast becoming the new normal as Gen Z seeks representation outside of the thin, white female stereotype.
Lastly there’s the desire for more holistic beauty. Gen Z views beauty as an important part of overall wellness and mental health. Products that offer therapeutic or self care benefits be it skincare infused with calming ingredients or makeup that incorporates skincare benefits are a trend that’s here to stay.
The age of social media
Having grown up in a digital age, Gen Z relies heavily on social media and other online platforms to shop, socialise, and research. Tiktok has been an industry game-changer thanks to its powerful algorithms and massive global audience.
Because of TikTok, products can skyrocket from relative anonymity to going viral overnight, driven by catchy challenges or glowing influencer reviews. For smaller brands, this is an unexpected boon but there’s also the potential that brands can lose relevance as quickly as they shot to fame if they become overly reliant on “one- hit wonders” products to sustain them.
Be it through streamlined e-commerce channels, clever social media campaigns, or influencer partnerships, beauty brands must cultivate an online presence to keep their audience engaged. Platforms like Instagram, TikTok, and YouTube have become pivotal for brand marketing and product launches, offering a space for tutorials, reviews, and influencer collaborations to appeal to increasingly stratified online audiences like Gen Z.
High-tech beauty makes an entrance
Technology has embedded itself in the beauty industry in a number of ways, mainly by bridging the gap between the digital world and tangible experiences of the product itself.
Brands like Sephora and L’Oréal have been among the many to incorporate AR into their apps, allowing users to virtually try on cosmetics. Though not yet near maturity, AR capabilities do enhance the online shopping experience and increase consumer confidence when making online purchases.
Some brands are also exploring nascent VR tech to offer immersive shopping experiences where consumers can browse virtual stores and receive beauty consultations in a simulated environment. Lancôme’s pop up 3D retail experience in Australia is the current reality for consumers in the billion dollar luxury Chinese market where expenditure on VR is estimated to be US$65.21 billion.
Meanwhile AI is also being utilised for personalised skincare and makeup recommendations. Using data like skin type, preferences, and concerns, algorithms can suggest specific products or routines that are tailored to an individual’s needs. The advancement of skin analysis tools powered by AI doesn’t stop there: apps on the market can now analyse one’s skin, evaluating issues like hydration levels, wrinkles, and even sun damage.
Data-driven insights feature heavily in the world of tech-driven beauty. The collection and analysis of consumer data allow brands to understand purchasing behaviours, preferences, and trends more deeply, which in turn guide product development and marketing.
As tech reaches greater heights of sophistication it will present beauty consumers with incredibly advanced personalisation, more convenience, and more value than ever before.
Growth strategies for a competitive beauty market
It may seem as though the dominance of established brands leaves no room for smaller operators to compete but in a digitised world, indie brands have many options to leverage technology to create niche products and foster deep connections with their customer base. While they can’t compete in terms of volume and reach, small brands are on a more equal footing when it comes to brand loyalty, customer engagement, and personalised experiences.
It helps enormously that Gen Z are less brand loyal and are always searching for the next big thing. Their support has given rise to many smaller brands that have gone on to challenge the established giants with innovative products and unique brand narratives.
Technology has empowered brands to sell directly to consumers via their own platforms, optimised supply chain operations, ensuring seamless production processes, better inventory management, and quicker product rollouts. In 2023, beauty brands big and small will be able to gain even more control over the customer experience, bypassing the role of traditional retailers to scale and innovate in partnership with trusted collaborators.
This is undoubtedly an exciting time to be in the business as the speed of innovation renders all aspects of the industry ripe for disruption. Brands that generate the right buzz whether through innovative products, sustainability initiatives, or inclusive campaigns have the power to reshape market dynamics in a way that wouldn’t have been possible a decade ago. As we look to the future, one thing is certain: beauty will always be in demand, but the ways we define, consume, and engage with it will never be the same again.
This article was submitted by Rohan Widdison, CEO of New Laboratories.
Rohan’s career and experience in the cosmetic sector extends back three decades, encompassing local and international exposure to manufacturing, distribution and retail.
This article originally appeared in the Summer 2024 print issue of Professional Beauty.
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