Notes on Beauty

The Age of Hyaluronic Acid and The Miracle Broth™

Key Takeaways

  1. The rise of Gen Z consumers and the post-pandemic economy have created a prevailing trend focused on cosmetics with science-backed results at affordable prices.
  2. Consumers across the board are buying skin wellness products to combat maskne, blue light exposure, and lack of vitamin D, versus color cosmetics at an accelerated rate.
  3. Emerging brands must focus on building committed consumers through a flexible and dynamic marketing strategy necessary for these times.

Cosmetic usage is not a new pastime, people have been accentuating their physical appearance since ancient Egypt. Over the last year, the beauty industry has been disrupted by changes in how we live and work, strong consumer pushback on beauty ideals, and the rise of Gen Z females as the biggest spenders in the marketplace (WGSN). While analysts predicted that the industry would suffer a decline in sales this has proven to be largely false, with many heritage brands including L’Oreal reporting a rebound in sales over the third quarter of 2020. Despite strong sales overall, the prestige skincare sector saw a 19% decline in the U.S. over the last year, causing many brands to pivot their marketing tactics moving forward. Changing consumer appetites also ushered in the rise of new masstige brands targeted at the savvy consumer (WWD). Young independent brands seeking a foothold in this notoriously challenging market must analyze the track records of successful brands in order to understand how to best meet the needs of increasingly sophisticated customers during this unprecedented time.

Undercover FW15

There were many notable winners within the beauty sphere over the last year, both powerhouse brands such as those featured under the Estée Lauder and L’Oreal umbrellas, as well as smaller brands such as Deciem’s The Ordinary found like-over-like sales growth over the last year. L’Oreal’s 15-year-old brand CeraVe led the mass market in hand and body lotions with a 34% increase in year-to-date sales, as well as strong sales in facial cleansers and face lotion (WWD). This unlikely choice has become a favorite with Gen Z after appearing in multiple TikTok videos where users have touted the brand’s active ingredient efficacy and its wallet-friendly price tag (CNN). Since many people are now working from home, there has been a shift in the interests of consumers from makeup to skincare. The trend towards skin wellness began prior to the pandemic but these purchase patterns were accelerated by our new normal (NPD). 

Consumers of all ages have shown an “abundant interest in caring for the skin, primarily due to the effects of mask-wearing and blue light exposure, [which] has translated to increased sales,” according to Larissa Jensen vice president and beauty industry analyst with market research firm NPD. The current trend in beauty has been on proven results at a fraction of the cost, rather than simply as signifiers of luxury. While the wealthiest customers may not flinch at paying over $500 for serum from brands like La Mer, many middle-class consumers are turning to companies such as The Ordinary which has hyaluronic acids and Vitamin C serums for under $10. The brand’s reliance on clinical technologies and lower price points, as well as its quick transition to virtual consultations at the start of the shutdown, has led to its boom within the e-commerce sector (WWD). Aside from scientific breakthroughs, brands that tap into the zeitgeist and can solve the needs of their audience through product innovation have also proven to be power players this year.

Created in partnership with the French luxury conglomerate Kendo’s beauty division, Fenty has created the standard by which other brands measure inclusivity. Launched in 2017 with 40 shades of foundation (since expanded to 50) the brand has a rabid following thanks to its vegan formulations that celebrate diversity. LVMH’s decision to stock the Fenty brand exclusively at their own Sephora stores creates a synergy between the two enterprises, whereby Fenty can create products based on consumer data it gleans from the beauty retailer. Independent brands that are able to predict consumer behavior by analyzing their online sales channels or working with trusted management consulting firms can emulate this tactic in order to resonate with consumers. Fenty creates in-demand makeup and now skincare by formulating products for the multicultural consumer, who was ignored by mainstream beauty until now. 

In the spirit of Fenty’s mission to create “beauty for all,” today’s consumers gravitate towards purpose-driven companies. This explains the success of the new indie brand, Topicals which was created by two women of color. The company’s ethos revolves around the notion that imperfect skin is beautiful. While many brands now use models of different backgrounds in their campaigns, Topicals actually tests all of their products on different skin tones. In addition, the company’s founders believe in amplifying the mission of mental health advocates by pledging to donate 1% of their profits to the nonprofit Sad Girls Club, already surpassing $10,000 (CNBC). Both large and small brands have had to adapt to the evolving beauty landscape as the events of the last year have led to changes in consumer behavior, as well as shortages in the supply chain.

Unlike other luxury goods, makeup and, by extension skincare, brands depend on the introduction of new and substantially improved formulas to keep customers engaged. The COVID-19 pandemic has effectively stopped this. The crisis also hit when many raw materials were harvested for lotions and other creams. This has created longer lead times, with brands scrambling to figure out how to bring their products to market. Big brands have the advantage of larger cash reserves and the ability to postpone product debuts till 2021, pay more for better ingredients, and move up in a manufacturer’s waitlist by placing larger orders (BOF). Still, small brands have flexibility on their side. The brand Topicals sold out its first run of products, and instead decided to focus on growing its community on its website until they could expand their product run (Essence). While larger companies may be beholden to their shareholders, smaller brands are taking this time to build devoted followings.

The beauty industry has boomed over the last year with the larger cultural shift towards self-care and pampering. While luxe products saw a downtrend in sales, brands with a science backing saw theirs increase. The last year has shown that consumers want products that align with their belief system and offer accurate representations of our multicultural society. As more people will return to their daily lives, these feel-good and sentimental items will once again be in demand. While the types of makeup and skincare products that people buy have changed, the business itself shows no signs of slowing down. The last year has prompted consumers to care for their well-being and take time for themselves. For emerging brand creators seeking to navigate this industry, there’s arguably no better time for breaking in. Brands with a strong point of view, an innate ability to relate to today’s discerning customer, as well as a resilient mindset will go far.  

Photo credit: Eva O'Leary