Gen Z Fragrance Shops for the ‘Vibe,’ and Other Takeaways From the CEW State of Beauty Report

Between the continued growth of dupe culture, surging skincare sales—and the category’s new Gen Alpha advocates—and the rise of US social commerce and AI-based personalization, the inner workings of the beauty industry are changing rapidly.

On Thursday, in CEW’s State of Beauty Report 2024 experts from Iced Media, CreatorIQ, Spate, Google, Mintel, NIQ and Circana presented key themes and insights on the state of the beauty industry.

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Here, the best themes and take away.

From social commerce to AI, early adoption is key

With social commerce forecast at $70 billion in the US this year alone, Iced Media founder and chief executive officer Leslie Hall is joining the Shop TikTok juggernaut. Beauty is the top-selling category on the platform, which has helped catalyze sales for some early adopters such as The Beachwaver Co., which Hall said has sold more than 300,000 units of its rotary curling iron since launch. it was on the scene last summer.

Prestige brands both in the United States and abroad can “exclusives and bundle [offerings]that won’t ask them to discount their products,” said Hall, as a way for TikTok Shop to succeed without being discount-driven.

Meanwhile AI programs such as Meta’s Advantage +, TikTok’s AI avatar and Snapchat’s recently launched AI Chatbot can be effective methods towards consumer acquisition and personalization.

“The AI ​​revolution is here and you don’t need to fear it; try and experiment with different tools, and find what works best for your business,” Hall said.

Engagement over impressions

CreatorIQ highlighted five brands acquired in 2023 – K18, Naturium, Dr. Dennis Gross, Mielle Organics and Creed – and the unique factors behind their respective social media successes.

K18, which Unilever compiled in December, was the fastest-growing hair care brand by average earned value in 2023, with 409 percent year-over-year growth in the metric. Most of this growth was driven by TikTok’s effective strategy, with the platform accounting for a whopping 43 percent of the brand’s total EMV.

“TikTok is growing in general, but in general it’s driving maybe 20 percent to 30 percent of most brands’ EMV on average; Instagram remains the dominant platform and drives around 70 percent to 80 percent of the typical brand’s EMV,” said Alexander Rawitz, director of research and insights at CreatorIQ.

Meanwhile, Elf Beauty-owned Naturium saw a 170 percent year-over-year increase in engagement, driven by high-profile figures in the skin care community, such as Hyram Yarbro.

Although Dr. Dennis Gross in fewer posts in 2023 than in previous years, the brand still had 135 percent growth on TikTok EMV because “the TikTok content that the brand appeared in was just much more effective ,” Rawitz said.

Mielle Organics experienced significant social growth thanks to new creators – 50 percent of users who mentioned the brand in 2023 had not posted it in 2022, with the brand’s Black Friday activation particularly driving buzz.

Creed’s growth was largely driven by Instagram, where the Kering-owned fragrance brand saw 87 percent EMV growth and 55 percent engagement growth, despite only 2 percent growth in impressions.

Other brands tapping into social include Patrick Starr’s One/Size, Saie Beauty, Hailey Bieber’s Rhode, Tower 21 and Refy, Rawitz said, adding that “seeing engagement is more decisive than impressions for growth.”

Education, mind body beauty and inclusion through AI

Mintel predicts that three key trends will take hold in 2024. The first is “sophisticated simplicity,” referring to the growing focus of value-driven consumers on “how quality and efficiency interplay into buying equations,” said Sarah. Jindal, senior director of beauty and consumer health products.

The link between mind and body beauty will also continue to grow as mental health becomes a growing concern, and wellness ingredients such as adaptogens are increasingly being used in topical products. Psychodermatology is also emerging as another aspect of this phenomenon. “We’re seeing more research on this intersection of dermatology and psychiatry, and we’re getting a better understanding of how our brain affects our skin, whether it’s psoriasis, eczema, acne – there’s a psychological link at things like that,” Jindal said .

Finally, the growing impact of AI on beauty will allow brands to identify new, eco-friendly formulation and packaging options while creating a more comprehensive beauty landscape “through different algorithms that are trained to look at these different data sets and find out how to attend. with a wide range of beauty needs within the consumer groups.”

Gen Z wants good products and better vibes

Not only is the skin care category growing, but interest in cultures has surpassed pre-pandemic levels and hair care is also on the rise thanks to hair density and growth products, Google Search data shows .

Fragrance, meanwhile, was the fastest-growing beauty subcategory in 2023 by search interest, increasing by more than 35 percent. “Gen Z, specifically, is associating fragrances with their energy and wit; they have different fragrances for different moods, energies and emotions – we expect to see that in 2024,” said Sam Mintz, head of sales strategy and insights at Google.

Gourmand fragrance ingredients like vanilla and strawberry are more popular, and K-beauty is also making a comeback thanks to brands like Medicube and Skin1004.

For hair care, Amika and Kérastase led the search; makeup topped Rare Beauty, Laura Geller and Elf Cosmetics; Valentino, Paco Rabanne and Jean-Paul Gaultier led perfume searches. Meanwhile, By/Rosie Jane and Ffern were among the top emerging fragrance brands in terms of search growth.

The interest in small size products is increasing, especially together with lipstick, Beauty Blenders and perfumes, with discovery perfume sets seen with search growth of 29.1 percent year on year.

Maximize omnichannel strategies – and don’t be afraid of the dupe

Beauty saw double-digit sales growth in Africa, Europe, North America and Latin America in 2023, although growth slowed in parts of Asia due to continued pressure on the real estate market.

Inflation has contributed to the growth in dollar sales in part – NIQ reports that it costs $132 today to buy $100 in 2019 – but also, in general, consumers are spending more money on beauty, with significant growth seen in markets such as India thanks to the growing middle class in the country.

In the United States, the TikTok Store claimed its spot as the 12th largest e-commerce destination for beauty and personal care in 2023; Amazon maintained its position as number one. NIQ’s Tara James Taylor said “While online is incredibly important, it’s also important for brands to consider the in-store experience – don’t lose sight of that when managing your online and omnichannel strategies.”

Hispanic consumers in the United States take six more in-store beauty shopping trips per year than non-Hispanic US consumers, she said.

Interestingly, wellness and beauty/personal care went head-to-head in terms of overall sales growth, netting 11.8 percent and 11.7 percent growth in 2023, respectively.

Celebrity beauty brands, which continue to be relevant in the US thanks to brands like Selena Gomez’s Rare Beauty and Tracee Ellis Ross’ Pattern Beauty, surpassed $1 billion in US sales.

“Over 60 percent [of celebrity beauty brands] is still growing, even though 37 percent is not growing,” Taylor said.

NIQ also found that the top five dupe beauty brands have an average sales growth of 54 percent, indicating that their performance is not affected by dupe products.

Original “dupes”, or private label lines, have seen 12 percent growth, with the strongest increases in hair and bath and body care specifically.

The growing market share of Masstige beauty

Data from Circana shows that US beauty sales will grow 11 percent to $108.2 billion in 2023.

Prestige sales grew 14 percent, while mass market sales grew 11 percent. Masstige brands – although they represent only 11 percent of total beauty dollar sales – are growing faster than the other segments, increasing by 16 percent.

Masstige brands account for nearly 20 percent of total hair care sales, although they have seen the softest growth in the category (masstige brands logged 10 percent growth in hair care; 12 percent in makeup; 18 percent in fragrances and 28 percent in skin care ).

“Massige brands are capturing a larger dollar share at the expense of both traditional prestige and mass brands, which makes competition wider and more complex if you’re a traditional player in the beauty space,” said Larissa Jensen, vice president beauty and industry consultant. of Circana.

“Prenatal” has emerged as a trend with younger consumers, who are increasingly “using minimal or non-invasive cosmetic procedures to reverse signs of aging such as tired eyes and expression lines,” Jensen said, adding that it is clear whether the trend will have a negative impact. sales of traditional beauty products among Gen Z.

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