Why Is The Skincare Market Growing At Such Breakneck Speed?

Why Is The Skincare Market Growing At Such Breakneck Speed?

Skincare, as a market segment, is growing faster than any other part of the beauty industry. Sales of skincare products grew by 13% last year in the United States, while makeup grew by only 1% in the same period. Online beauty retailers grew 24% in that time, with skincare leading the way. Net-a-Porter’s best selling category in its beauty department is skincare, and that grew 40% year-over-year.

L’Oréal reports skincare to be 40% of the beauty market, but makes up nearly 60% of worldwide cosmetics market growth. It’s hard to ignore the effect of Asia Pacific here – APAC is responsible for much of skincare’s global growth, particularly in the luxury market. But to what are all these many growth trends attributable? Why is skincare busting out?

Skincare’s growth is attributable to the unique position it occupies amongst a variety of trends: growing desire for health-promoting and self-care products, increasing interest in the power of regimens and routines, the ability of social media to more rapidly empower and inform consumers and, uniquely, the ability of new technology to simplify the unusually complex choices consumers have when they interact with skincare brands.

Health Consciousness

Consumers are more health and wellness-conscious than ever before. New breaking trends like Ayurvedic herbs, CBD, natural dental care, unplugging devices, developing personal rituals and gratitude are just a few of the emerging ways that significant segments of consumers are starting to develop a deeper relationship with their wellness. A lot of these trends, mainstream as they are now, would’ve seemed especially “woo woo” 10 or 20 years ago.

And by the same token, many of the skin concerns that drive interest in today’s products would’ve also seemed less relevant in the past. Pollution, sun protection, workplace stress reaching near-epidemic levels – all of these are not only aspects of life that consumers are more keenly aware of, but ones that particularly affect the quality and aging of the skin.

In order to counteract that, consumers are assuming that natural products will reverse and redress the accumulated issues they experience with their skin. These products, generally free of parabens, synthetic colors and phthalates, are also more expensive to produce and more likely to be sold at a premium – a win-win coincidence for skincare brands who are capitalizing on the particular way consumers are looking to address their modern concerns.

Regimens, Routines and Retention

This more wellness, mindfulness-oriented consumer is one that is also more likely to seek out and adhere to daily routines that they can trust and rely on. In this context, skincare routines not only become an important ritual, but also something that drives higher retention and lifetime value for brands.

For instance, in China, the number of daily mask users tripled between 2016 and 2018, when celebrities like Fan Bing Bing and Charmaine Sheh shared daily mask rituals as their secret to beautiful skin. Similar products are driving growth globally. According to GartnerL2’s Q3 Digital Beauty IQ report, “Across all etailers, skin care growth is being driven by ancillary product categories used in multistep skin care routines, such as serums, treatments and masks.”

That speaks to not only the overall change in consumer preferences, but how brands are starting to package their skincare offerings. Whether it’s through subscription boxes or simply direct-to-consumer offerings, challenger brands account for 10% of the beauty market are growing almost four times faster than established companies.

The emphasis on end-to-end experience offered by DTC companies is not only playing more directly into consumer desire for routine, but also the way in which and commitment with which they select brands in industries like skincare. At the same time, established companies have rapidly developed their own experiments with DTC approaches, signalling that this trend is only going to accelerate growth across beauty segments going forward.

The Power of Social Connection

The same GartnerL2 report referenced above also indicated that skincare brands enjoy 40% higher Instagram engagement rates compared to color cosmetic brands and a 44% increase in follow growth. Instagram stories has been a leader in this engagement by allowing them to deploy educational content, but brands are not limiting themselves to purely social channels – site traffic has also increased 38% since Q1 2017.

The average skincare brand now posts 12 times per week, reaching 2.5 thousand engagements per post at an engagement rate of .2%. Using deeply educational visual content more brands are not only educating consumers on ingredients, proper techniques and routines, but getting them to open up about their relationship with their skin and why they love certain products.

Ultimately, “skincare doesn’t judge”, and that’s why social communities are popping around every form of products offered. Communities like r/skincareaddiction number past 1 million members, and whether consumer behavior qualifies as actual addiction or not doesn’t matter: consumers finally have an outlet to actually learn about and discover products in what has always been an opaque, mysterious, non-visual category, and to continue succeeding, brands need to take advantage of everything that community can offer.

Skincare Brands Using Technology to Deepen Relationships and Grow

Social media isn’t necessarily enough. More skincare brands and retailers like Sephora, Kiehl’s, Vichy and Bobbi Brown are deploying solutions like virtual advisors to speak directly to consumers in real time, reveal their needs and concerns, recommend products and guide them through the sales process.

This isn’t anything different from the kind of consultation that consumers get in stores, but it’s critically different that it’s now available online. Skincare brands are growing because of the availability of information online, but consumers are also more confused by product claims than ever before. What’s more, they will actively avoid in-store associates while actually continuing to do research about products online.

At the same time that technology is allowing brands to overcome barriers to growth like this, it’s also accelerating the growth of the overall beauty industry. L’Oréal CEO Jean-Paul Agon has been a compelling advocate of the importance of digital solutions for beauty consumers.

“The market is accelerating, thanks to digitalization as beauty and digital are really a perfect match… It has never been easier to discover beauty, share it and shop it.” He further adds “Digital is also strengthening our power to connect with consumers… and beyond digital, new technologies around data and Artificial Intelligence are opening new horizons.”

Curating a different kind of relationships with consumers will be critical for skincare brands to differentiate themselves, not only as the market becomes more saturated, but as the complexity of choices consumers have increased by an even greater measure. With each new entrant and product, not only do skincare choices become more difficult, but feeling confident in the skincare purchases one is about to make becomes ever-harder to come by.

This can discourage consumers from taking action and hold back eCommerce growth in particular, but with a virtual advisor, your brand can cut through concerns and proactively engage the consumer with exactly the right information for them. It’s something that has always been good sales practice, but something that is only now possible at a massive digital scale with AI.

Still have questions? We’re fired up to help as many brands as possible to raise the bar of user and customer experience in eCommerce. If you need help implementing website engagement tools for your brand or want to talk further about any of the tactics in this article, we should talk ASAP!

These Makeup Products Can Actually Replace Your Entire Skin-Care Routine

Fresh-faced, no-makeup makeup is here to stay. But the minimalist trend is getting a nourishing upgrade with the emergence of skincare makeup hybrids that essentially fuse two products in one. We’ve been seeing these multitasking products everywhere over the last few years—notably, Ilia’s Super Serum Skin Tint, which caught our hearts in 2020. But thankfully for our skin, there are new iterations entering the market daily. To discover the best of the best, we’ve perused our favorite retailers and taken a peek into celeb beauty secrets.

Is Makeup Bad For Your Skin?

The novelty of skin-caring makeup leads one to wonder if traditional makeup is bad for your skin. It’s a complicated question, but let’s make one thing clear. Classifications like “clean” and “natural” do not mean that these formulas are safer for you. While the U.S. Food and Drug Administration has yet to make it clear what criteria constitute these claims, we see them as evidence that skin-friendly ingredients are at the heart of formulations. It’s all about understanding the ingredients inside each product in your routine—just as you would with the food you eat or the ingestibles you take.

It is this philosophy that has inspired many of our favorite brand founders to create products full of desirable, easy-to-understand ingredients. Saie founder and CEO Laney Crowell tells Vogue that she wanted to start her brand to offer makeup products that serve our bodies. “When you start formulating makeup with really clean ingredients that are good for you, you’re left with skin care,” she says.

What Is a Skin-Care Makeup Hybrid?

Kosas founder Sheena Yaitanes shares a similar sentiment. “Great makeup needs to give you the look that it promises, look great for the whole day, and feel weightless on your skin so that it doesn’t distract you and you can focus on living your life,” she says. Ultimately, skin care is meant to provide a positive, measurable change in your skin over time—so a skincare makeup hybrid should do both of those simultaneously.

“As a professional makeup artist, I know that good makeup does not happen without good skin care as well—in fact, it is the symbiotic use of both that elevates makeup to a professional level,” notes Sephora beauty director David Razzano. “This philosophy has led to the creation of hybrid products that melt the artistry of makeup with the science of skin care so anyone can easily use and benefit from them.”

Business of Beauty: A Resource Guide

While most people think of the beauty business as cosmetics, it has grown in scope and now includes covers a wide range of products. Beyond just cosmetics there is perfume, skin cleaners, a host of other skin care products, cosmeceuticals, etc.

Beyond the products themselves, the beauty business also includes the way in which the products are sold. In particular, price points and the places cosmetics are packaged and sold. Price points have always varied, but packaging has become ever more important. Where products sell has gone from physical stores that were very location driven, to being sold over the Internet to people all over the world.

This guide is not the science of beauty, it is a business guide that includes information on the history and the current market (as of the date of this guide). There is a U.S. and European focus generally, but the modern industry is very global. This guide is not comprehensive or exhaustive, but rather meant as a starting point for research in this area.

Maryan Barbara
Maryan Barbara

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