By Saloni Patil, Sabrina Placeres and Lauren Cosby, IRI
Accounting for $41.6 billion (in L52W in MULOC) and touching nearly every household in the U.S., the beauty industry is massive and constantly evolving. Beauty products are almost as old as human civilization itself, dating back to 10,000 BCE in Ancient Egypt where both men and women used oils and creams made from herbs, flowers and roots. Even then, the goals were much the same as today – health, hygiene and a more youthful appearance. While beauty has been an industry in some way for hundreds of years, it wasn’t until the 20th century that beauty products and cosmetics became dominated by a handful of global companies, including L'Oréal, Unilever, Procter & Gamble Co., The Estee Lauder Companies, Coty and Shiseido Company.
Source: IRI POS data, 52 weeks ending 12/29/2019
Within beauty, hair care is the largest segment with dollar sales reaching $10.3 billion and sales growth of 1.1%. Skin care and personal cleansing are also growing, but all other segments, including cosmetics, are showing a decline.
In recent years, several trends have emerged – driven by smaller, more niche companies – that are disrupting the beauty industry, including:
1. Sustainability – Shoppers are expecting more from brands all across the store, and this includes beauty and skincare brands. They want more earth-friendly packaging, ingredients and manufacturing practices. As a result, brands are shifting to a whole new paradigm when it comes to sustainability, and shoppers are increasingly aware of the consequences of unsustainable practices. As seen in an April 2019 IRI consumer survey on sustainability, consumers view sustainability as a multifaceted concept. Some of the top themes associated with sustainability include minimizing environmental impact, commitment to renewable resources, reducing waste and minimizing the exploitation of natural resources. Unilever’s Love Beauty and Planet, ranked as one of the top 10 non-food New Product Pacesetters by IRI, encouraged conversation by promoting its “movement” and “tribe” on its website. This made it easy for consumers to tap into product attributes and join a community based on “daily small acts of love” that help restore the balance and beauty of the planet. Along with the users’ experience with the products, social chatter on sustainability (analyzed by IRI Social Advantage) was a big part of the brand’s positioning.
Source: IRI survey on sustainability, April 2019
2. Natural Simplicity – Now more than ever, consumers are demanding transparency in their beauty products, specifically in the ingredients used. IRI’s New Product Pacesetters research revealed that 1 in 4 U.S. consumers consider having-easy to-understand ingredients and products being formulated with natural ingredients as important considerations in their beauty/personal care purchase decision. Over the past year, Unilever has launched Love, Beauty and Planet; Henkel introduced Nature Box; L’Oréal launched Seed Phytonutrients and La Provençale Bio; and Procter & Gamble launched Pure by Gillette – all of which focus on natural and/or simpler ingredient lists. LOLI Beauty’s “Coconut Vinegar” – a one of a kind facial toner, which, when combined with water, can be used as a hair rinse as well – caters to consumer demand for both natural and streamlined beauty.
3. Streamlined Beauty Routines – Consumers’ fast-paced lives are begging for quick and easy beauty regimens. Consumers are gravitating to options that provide multiple solutions in one product. According to a Mintel October 2019 study on Beauty Retailing in the U.S., consumers appear to be moving away from color cosmetics and toward more holistic and wellness-focused skincare products.
With the U.S. on its way to becoming a multicultural majority by 2044, multicultural cosmetic shoppers are naturally a major force driving the U.S. beauty industry. Building on the trends above, a Horowitz Research study — that explores where consumers are seeing advertising, what advertising consumers are paying attention to, and how to create advertising that is more resonant with consumers and stands out in the complex media landscape — has revealed that representation in advertising is important with multicultural audiences.
Source: Horowitz Research, State of Consumer Engagement 2019 report
These consumers make up a growing portion of most brands’ target groups, so understanding how beauty and cosmetics are purchased across multicultural households is a relevant effort. Interestingly, while sales for traditional brands with a presence in brick and mortar have declined by 2% year-over-year and leading companies like L’Oréal, Revlon, and JAB/Coty are all experiencing weaker performance, companies like e.l.f. Cosmetics, Kiss and L.A. Colors are growing by 8.7%, 34.3%, and 10% annually (according to IRI POS data, last 52 weeks ending 12/29/19) and appear to successfully cater to a multicultural audience. All of these brands have an opening price-point advantage where new and young aspiring makeup users can buy products on a budget or where aspiring savvy makeup users can explore without splurging.
e.l.f. Cosmetics: e.l.f. has made several changes recently that are contributing to its growth, in both face and eye categories. In early 2019, it closed all 22 of its brick-and-mortar stores as it focused on expanding its brand in national retailer and digital channels. In line with the trends mentioned earlier, e.l.f. recently launched a light-hearted campaign featuring a video manifesto introducing several "e.l.f.isms," such as "e.l.f. control — when you can have it all," "why the e.l.f. not — be extra without paying extra" and "e.l.f. respect — the feeling when you learn e.l.f. is vegan and cruelty-free". In addition, e.l.f. has placed heavy emphasis on diversity and inclusion in its marketing and this strategy appears to be resonating with its target audience. Across products, e.l.f. indexes highly among Hispanics. We also see that e.l.f. customers tend to be from bigger families with children and tend to live in middle-class comfort in multi-ethnic and multi-lingual neighborhoods.
Kiss Products: You might know of Kiss as an adhesive nails or false eyelashes brand. Last year, it teamed up with CVS to launch Joah Beauty, named after the Korean word that translates to "I like it" and comprising a massive selection of lip, brow, eye, face and skin-care products — the majority of which retail for less than $10 each. While most sales still come from its Broadway brand, Joah has seen a steady increase in sales. Kiss products skew heavily with Hispanics and across all generations, from Gen Z to Boomers.
Beauty 21: The Beauty 21 Cosmetics brands, LA Girl and LA Colors, offer beauty products in vibrant colors to both aspiring makeup users and aspiring makeup artists alike. Beauty 21 is positioning itself as the makeup brand for consumers who love makeup and want bold looks without a big investment. Central to its mission is to make luxurious-looking but budget-friendly beauty products available to all of its consumers. This plays well with its base, which tends to come from multi-ethnic households with children (and particularly teens) present.
For brands that sell in brick-and-mortar stores, the ability to appeal to the new wave of aspiring cosmetics users from younger demographic groups has helped drive in-store growth. As demographics in the U.S. continue to evolve, beauty manufacturers that have data, insights and strategies that focus on multicultural beauty and cosmetics consumers and their specific needs, including representation in advertising, will continue to be a key to success in today’s competitive beauty landscape.
Need a better understanding of the multicultural consumer so that you can better target, measure and optimize your marketing? Reach out to your IRI representative or IRI@IRIworldwide.com to learn more.