Larissa Jensen, Vice President, Industry Advisor, Beauty, The NPD 01.28.20
When one door closes, another door opens. It feels that way every time we enter a new year, and especially a new decade, which typically is full of the promise of what’s to come. But what’s to come, exactly? The past 10 years have been defined in many ways by the rise of technology and the subsequent popularity of social media, which has brought about significant change in the beauty industry. Words like “chaos” and “disruption” have characterized the industry in the 2010’s, but as the decade drew to a close we began to see some backlash on technology, even as technology continues to keep us tethered to our devices. This leads me to believe we could be entering a time where consumer focus could be more on connection – to each other, to brands, to the environment and more. As we close the door on the last decade, we can look ahead to the next 10 years and the many opportunities they will bring to our industry. Here are a few things to consider by category:
Skincare continues to ride high, outpacing both makeup and fragrance in dollar performance, but the category has been losing steam over this past year despite continued growth. Part of what is driving the slowdown is the softer growth of natural skincare, which has grown so much for so long it has become one of the largest brand types on the skincare market today. And when something becomes that big, growth will eventually slow. In fact, if we look back over the past three years, 2019 was the first year we saw performance of natural skincare softer than the year before. That said, growth is still strong and consumer interest is still there, especially in the subset of clean skin-care, which has nearly doubled in size from just two years ago, capturing 10% of total category sales. Of course clean skincare is bigger than natural brands; any brand can be clean by eliminating or replacing hot button ingredients in their products. This is where the biggest opportunity lies over the next few years, and not just in skincare.
While we are currently deep in a makeup recession, a makeup renaissance is in our future. Looking historically, there has been a notable shift between makeup and skincare every four to five years. Based on this, and the slowdown we began to see in makeup in 2017, if history repeats itself we are looking at a rebound in the category sometime around 2021, give or take a year. Note that this does not take into account a possible recession, which would impact more than just makeup. That said, as we look to the year and decade ahead, promotions are a concern, especially in the makeup category. The level of promotion that exists today was not part of the equation years ago. In just the past year we have observed significant spikes in unit sales during the weeks of large retailer and seasonal promotions, and yet the category continues to decline overall. It’s a cautionary tale, and as an industry, we are officially in too deep to turn things around quickly. Our consumer is trained to wait for the deal and the impact of that long term can affect when, and if, a renaissance occurs.
Speaking of renaissance, fragrance has been enjoying several years of positive performance. While artisanal fragrances continue to grow at the fastest rate, it is the success of top ranked designer brands that capture the largest share of category sales which has driven the sales performance. Based on observations over the past few years, we can expect the category to evolve in a variety of different ways over the next 10 years. First, new product types that provide consumers unique ways to apply and layer scent will add incremental volume. Second, innovating through the expansion of new scent concentrations in existing brands will drive performance of the core business. And third, the continued expansion of new fragrance brands that hit on many consumer driven trends today such as vegan, cruelty-free, genderless and clean will eventually drive larger brands to follow suit and look for ways to meet these consumer demands. This could revolutionize category innovation in the future.
Heading into the new decade, we need to consider what will define the next 10 years. If Pantone and dictionary.com are any predictors, the color and word of the year for 2020—Classic Blue and “existential”—could be indicative of a new era where we focus on sustainability and the role we play in protecting the ocean, the earth and ourselves. In beauty, opportunities will emerge across new categories as we become less defined in the consumer mind, and become more of a piece of her bigger picture. But as we look for those opportunities it’s important to remember that ultimately it is beyond identifying the trend; What is important is how the trend plays out in actual sales and acting on that intelligence. Chasing trends is so 2010’s. How will your brand adjust to meet the 2020’s?
About the Author:
Larissa Jensen is Vice President, Industry Advisor for U.S. Beauty business at The NPD Group—and a member of Beauty Packaging’s Board of Advisors.
Skincare continues to ride high, outpacing both makeup and fragrance in dollar performance, but the category has been losing steam over this past year despite continued growth. Part of what is driving the slowdown is the softer growth of natural skincare, which has grown so much for so long it has become one of the largest brand types on the skincare market today. And when something becomes that big, growth will eventually slow. In fact, if we look back over the past three years, 2019 was the first year we saw performance of natural skincare softer than the year before. That said, growth is still strong and consumer interest is still there, especially in the subset of clean skin-care, which has nearly doubled in size from just two years ago, capturing 10% of total category sales. Of course clean skincare is bigger than natural brands; any brand can be clean by eliminating or replacing hot button ingredients in their products. This is where the biggest opportunity lies over the next few years, and not just in skincare.
While we are currently deep in a makeup recession, a makeup renaissance is in our future. Looking historically, there has been a notable shift between makeup and skincare every four to five years. Based on this, and the slowdown we began to see in makeup in 2017, if history repeats itself we are looking at a rebound in the category sometime around 2021, give or take a year. Note that this does not take into account a possible recession, which would impact more than just makeup. That said, as we look to the year and decade ahead, promotions are a concern, especially in the makeup category. The level of promotion that exists today was not part of the equation years ago. In just the past year we have observed significant spikes in unit sales during the weeks of large retailer and seasonal promotions, and yet the category continues to decline overall. It’s a cautionary tale, and as an industry, we are officially in too deep to turn things around quickly. Our consumer is trained to wait for the deal and the impact of that long term can affect when, and if, a renaissance occurs.
Speaking of renaissance, fragrance has been enjoying several years of positive performance. While artisanal fragrances continue to grow at the fastest rate, it is the success of top ranked designer brands that capture the largest share of category sales which has driven the sales performance. Based on observations over the past few years, we can expect the category to evolve in a variety of different ways over the next 10 years. First, new product types that provide consumers unique ways to apply and layer scent will add incremental volume. Second, innovating through the expansion of new scent concentrations in existing brands will drive performance of the core business. And third, the continued expansion of new fragrance brands that hit on many consumer driven trends today such as vegan, cruelty-free, genderless and clean will eventually drive larger brands to follow suit and look for ways to meet these consumer demands. This could revolutionize category innovation in the future.
Heading into the new decade, we need to consider what will define the next 10 years. If Pantone and dictionary.com are any predictors, the color and word of the year for 2020—Classic Blue and “existential”—could be indicative of a new era where we focus on sustainability and the role we play in protecting the ocean, the earth and ourselves. In beauty, opportunities will emerge across new categories as we become less defined in the consumer mind, and become more of a piece of her bigger picture. But as we look for those opportunities it’s important to remember that ultimately it is beyond identifying the trend; What is important is how the trend plays out in actual sales and acting on that intelligence. Chasing trends is so 2010’s. How will your brand adjust to meet the 2020’s?
About the Author:
Larissa Jensen is Vice President, Industry Advisor for U.S. Beauty business at The NPD Group—and a member of Beauty Packaging’s Board of Advisors.
