As many of us step into 2021 holding our breaths for the arrival of COVID-19 vaccines, beauty trend forecasts comprise a fascinating medley of skin-focused initiatives and do-it-yourself endeavors. Unlike other segments that will face a longer recovery, the beauty industry could be back to 2019 levels by the first quarter of 2021, according to McKinsey & Company's State of Beauty 2021 report.
While some other geographies won't rebound until 2023, China's beauty market has already recovered and a well developed e-commerce channel is expected to help the U.S. return to growth by mid-2021. However, Europe and Japan will be slower to recover, not rebounding to 2019 sales levels again until 2022, driven by deeper initial volume loss.
This year, categories that have been negatively impacted will continue to lag behind, most notably color cosmetics and fine fragrances. The global makeup category will fall to 14% of total retail beauty sales in2021. Overall, McKinsey forecasts that global beauty retail sales will increase by 1% — from $485 billion in 2019 to $491 billion in 2021.
According to Euromonitor International’s research, trends “that will define consumer behavior and influence business strategies this year” will focus on “craving convenience”, “mental health” and “phygital reality”. “Nearly 70% of [executives polled] expect consumers to be more concerned about sustainability than before COVID-19,” Euromonitor noted.
CEW projected that the upcoming month’s customer trends will center around innovative skincare and hair care products targeting self-care routines and eco-friendly beauty options.
Skincare and Wellness Categories Boom
According to Euromonitor research, skincare is projected to reach US$183.5m in 2021. During the pandemic, prestige skincare online sales in the U.S. swelled by 42% during the first half of the year and reached $1.1 billion in Q2 2020, according to Nielsen data.
In a consumer trends study conducted by NPD, around 20% of consumers said the pandemic had directly changed their skincare habits and one-third agreed that their skincare spending had increased. Nielsen’s data showed that mass facial skincare grew more than 20% this year, driven by a rise in online sales.
“Today, taking care of one's skin is an expression of self-care — and self-care is more important than ever. Consumers are actively exploring sub-categories and expanding their regimens, finding peace of mind in the ritual of routine,” The Estee Lauder Companies President & CEO Fabrizio Freda.
Data reported by Revieve shows that skincare purchases decreased by 19% in December 2020, as consumers got a healthy head start on holiday shopping. Concerns like acne and hyperpigmentation were mentioned almost as frequently as the previous month.
According to a Feelunique report, skincare outperformed other categories with a 57% uptick in sales for the period. The company reported a 39% increase in skincare sales and is on track to exceed £100m. In Ulta's most recent annual report, the company’s skincare, bath and fragrance sales were up 22%.
Hair and Scalp Health
The hair segment is currently booming. Throughout 2020, stylists have leveraged digital tools and platforms to educate and engage consumers, which has also paid off for beauty brands and retailers.
According to Sarah Curtis Henry, Chief Marketing Officer at Tatcha, hair care became a vital aspect of the company’s pandemic response. She notes that thriving categories like haircare and self-care will continue to resonate into the future.
“These are all trends — if you want to call them trends — that consumers are still very much engaged with and that we expect to see continue going into next year. It will breed lots of new brands,” she said.
Last year, professional haircare brand Kérastase revealed its new personalized haircare diagnostic service. It was developed in collaboration with the “Digital Services Factory” by L’Oréal, a diagnostic tool that helps users gain a better understanding of the texture and health of their hair and scalp, along with general hair concerns. As a result, customers receive a personal diagnosis along with a treatment routine that’s customized for their individual hair needs.
Another example of a forward-thinking initiative is a multi-dimensional smart salon created by Ted Gibson. Gibson opened a new smart salon incorporating technological advancements to pave the way for the future of hair salons. The salon features individual pod spaces — known as “clouds” —that include voice-activated lighting and music. “We wanted to update the salon model that hadn’t been updated in forever,” Gibson told Happi.
The pandemic has brought environmental and personal wellness concerns to the forefront of many consumers’ minds. Driven by a renewed focus on health and wellness and rising climate anxiety, a values-driven younger generation demands transparency and authenticity.
Brands know that sharp, vocal Gen Z consumers are carefully examining the initiatives, products and services offered on digital channels. Now more than ever, the younger generation expects beauty products to be clean and sustainable as a standard.
90% of Gen Zers intend to buy a clean beauty product within the next 12 months. Gen Z “really celebrates and supports brands that stand for something,” said Monica Arnaudo, Chief Merchandiser Officer of Ulta Beauty.
“They can see right through it if it doesn’t feel authentic,” Arnaudo continued. “It’s a bit of a balancing act. It can’t just be that I see that this is a trend, and now I’m going to check the box. It’s got to be part of the heart and soul of the company.”
Exploring low-impact packaging has become a bigger priority. Shiseido Company has implemented a range of sustainably-focused activities and products to cultivate a social value unique to the beauty industry. For instance, customers can return empty bottles to be cleaned and refilled. Likewise, L’Oréal has developed a bottle made from captured carbon emissions.
Consumer insistence on sustainability is expected to accelerate post-crisis and companies are planning to consider investments in various eco-initiatives.
The Role of AI/AR Technology in Beauty
With the onset of the pandemic, brands that were already building up their digital capabilities found it much easier to connect and engage with their customers. Beauty brands and retailers are switching to augmented reality (AR) and artificial intelligence (AI) to recreate the excitement and experimentation vital to customer purchase decisions — which has largely been lost during the pandemic.
66% of customers are more likely to buy from beauty brands that use technology that “recommends new or relevant products to me that are similar to what I am shopping for” and 70% favor a brand that “remembers my shopping preferences and customizes the online experience accordingly.”
From personalized recommendations to in-store interactivity, the role of AI and AR technology in beauty and retail extends beyond phones and laptops, bringing the “frictionless experience” model that’s so central to online experiences to the physical world.
“Those that utilized social media platforms were able to stay in touch with their consumers, as physical retail presence was limited. Additionally, brands that mastered shade matching technology and the use of online-diagnostic skincare tools helped ease weary consumers into virtual shopping,” said Lauren Goodsitt, Global Beauty & Personal Care Analyst, Mintel.
According to Sampo Parkkinen, CEO of Revieve, the pandemic has changed how technology is perceived.
“What the pandemic has changed is the perception of technology as an individual, isolated use-case (like a virtual try-on) into something that can fundamentally help drive the entire customer experience and journey through helping consumers not just with a try-on but with education, product discovery and after-purchase loyalty generation,” he said.
In 2020, Revieve launched a number of new technology partnerships, including one with No7, which is using Revieve’s Digital Beauty Advisor tool to deliver a more personalized skincare shopping experience.
Parkkinen adds, “Leveraging Revieve’s AI skin diagnostic capabilities, the Live Video Selfie Analysis solution enables the accurate analysis of skin, health and beauty-related factors directly from a live video feed, as well as the presentation of individualized findings directly on alive video feed.”
Together, these solutions enable Revieve’s brand and retailer partners to drive engagement and provide a superior interactive customer experience across a number of digital touchpoints, including mobile apps, social platforms, e-commerce and in-store digital.
Embrace the Change
This year, we are likely to continue seeing partnerships and acquisitions of digitally-driven solution providers by industry giants such as Coty, L’Oréal, CVS and Procter & Gamble.
Meanwhile, getting ahead of consumer trends and changing market demands, as well as leveraging digital channels and technologies, are key to maintaining a competitive advantage. “The beauty industry is becoming increasingly complex,” said Coty CEO Camillo Pane at the WWD Beauty Summit in 2020. “Our instinct is to dislike complexity. But we either embrace it, or we’re not going to be around.”
More beauty brands and retailers will leverage advanced technologies for the curation of consumer product recommendations to proactively offer novel products and explore new ways to meet customer needs.