Income/sales. Although there are some exceptions, in general, for all products, the higher the household income, the more people spend. This still proves to be true, but it is also true that because of their absolute numbers, Generation Y and Millennials have become significant drivers of the beauty market.
Sales tracking is done industry-wide, but the data is often broken down by cosmetics, skincare, etc. However, data can often be found for more specific product categories. an interesting barometer developed in the 1930s was the lipstick effect. This is the theory that even when money is tight, women will still buy lipstick as a luxury. Sometimes nail polish is considered to be similar to lipstick.
Selling. Historically this was done in local brick and mortar stores. This includes drugstores that sell consumer brands, large department stores that sell consumer and more exclusive brands, department stores that sell premium brands, and corporate stores that sell only private label brands. These still exist, but the number of beauty stores such as Sephora, Ulta and Bluemercury has increased, and big brands and niche brands are being sold on the Internet. Increased merchandise offerings, shorter product lifecycles and constant innovation will impact customers and create more volatile demand, which in turn will impact the speed at which the industry can operate.
Supply chain and logistics. Supply chains and logistics are an important part of the beauty industry, affecting the entire product development and delivery process. For example, some of the chemicals and materials needed to manufacture products are time sensitive, so the manufacturing and packaging processes have their own timelines. Beyond that, technology has brought many changes to the entire supply chain, bringing efficiencies and challenges – from inventory to turnaround times to tracking to the entire process.
Regulations. Traditionally, cosmetics and skin care have not been over-regulated, but this has changed with the changing nature of the products themselves. In the United States, the Food and Drug Administration, under the Food, Drug, and Cosmetic Act passed in 1938, approves cosmetics in certain circumstances, but does not regulate them. There is also a self-regulatory panel, the Cosmetic Ingredient Review (CIR), operated by the Personal Care Products Council, a trade association. In Europe, the EU has cosmetic regulatory authority externally through EU Regulation 1223/2009 but also has an independent panel of scientists called the Scientific Committee for Consumer Safety External (SCCS).
Increasingly international markets. The United States, Japan and Brazil are the largest consumers of cosmetics, while China, India, Mexico and Russia are increasingly becoming large cosmetic markets. In addition, the rise of beauty trends and practices in countries like South Korea (think K-beauty) and Japan (think J-beauty) is playing an increasingly important role globally. k-Beauty has become so popular that in October 2018 the K Beauty Expo was held in Seoul, a B2B exhibition dedicated to the Korean beauty industry and an online retailer specializing in K Beauty’s online retailer – external to Althea – was launched to sell products around the world.
Influencers. The Internet and its wide reach and various social media channels, such as Twitter, YouTube and Instagram, have given rise to digital “influencers”. These influencers develop their personal brands by building loyal, and sometimes very large, followings through social media channels. The audiences reached by these influencers are highly valued by companies as a way to reach potential consumers who may not have access to more traditional advertising channels. The role of influencers has gotten to the point where in 2017 Forbes even created a list of top influencers external to and including a beauty category, which the Federal Trade Commission addressed in 16 CFR Part 255 [PDF, 93.9 KB]. There is even a bi-annual conference – Beautycon – where industry representatives, influencers and their followers can connect. Many influencers also collaborate on their own product lines or collaborative projects, and companies like Morphe have become a top choice for collaboration.
Celebrity brands and collaborations. It’s nothing new that TV, music and movie stars are increasingly associated with specific brands, and they’re even more addicted to the beauty market. In some cases, it’s not just about being the face of a brand, but also collaborating on nail polish or eye shadow colors. In some cases, celebrities and even influencers have developed their own lines.
The power of the consumer is growing. The Internet means that people can experience brands beyond those sold in the stores they can visit. Not only can they find brands sold in other countries/regions, but they can also find niche brands and products that meet their needs and wants. For example, African-Americans often have a hard time finding cosmetics that work well. More and more companies are responding and recognizing that there are multiple shades of skin and that the range of foundations needs to be broader or at least more customizable. Another example is the increased interest in natural and organic beauty products.
Track trends. Look for resources such as the Pinterest 100, which is completed annually, and other formal or informal resources.
Customization. The Internet has also made it easier to develop lines or services that allow for customization.
Niche or small-scale brands. There is a growing desire to make and buy small, local brands that focus on narrow product lines sold through their own websites or platforms such as Etsy.
The growth of cosmeceuticals. Pharmaceuticals, loosely defined as cosmetic products with medicinal or drug-like properties, are most often thought of as skin care products such as anti-wrinkle and anti-aging products. Pharmaceuticals are not subject to review by the U.S. Food and Drug Administration (FDA), and the term cosmeceuticals is not recognized under the federal Food, Drug and Cosmetic Act. They have been tested for safety, but no tests have been performed to substantiate the manufacturer’s claims. They are the fastest growing segment of the personal care industry, with mass market retailers, drugstore chains and other large retailers accounting for the majority of sales and department stores, specialty stores, salons, etc. accounting for the remainder.
Interest in vegan and cruelty-free products has increased. Over the years, vegan brands and the promotion of zero-cruelty practices have increased in number as interest in them and the market has grown. In the United States, there is no legally defined definition or set of practices, but typically no ingredient used in the production of cosmetics can be tested on animals. This is not a market limited to the U.S., which generally does not have an official cosmetic regulator. Animal testing on finished products has been banned in the EU since 2004, but prior to that, brands like Leaping Bunny were developing zero-cruelty brands. In the EU, REACH regulations are designed to protect human health and the environment from risks associated with chemical substances and to support alternative methods. In China, testing has evolved, but products not made in China must be tested on animals. This also tides into what is called the Clean Beauty Campaign External .
Packaging. As part of the overall brand, packaging has always been an important part of beauty products, as well as to differentiate one price point from another.
The company
Understanding the industry means understanding the companies that make up the industry.
There are several companies that own multiple brands. Who own things that change over time externally but listed below are some of the major cosmetic companies and their brands as of November 2018 shown on their websites. For those U.S. public companies, additional information about these companies, including SEC filings, annual reports, press releases, current news, and company histories are available from the U.S. Securities and Exchange Commission (SEC) website.
This is a list of brands selected from a list of selected companies. To find other brands, business sites like Sephora External, Ulta External, Blue Mercury, External Others may be helpful.
L’Oreal External
L’Oreal Paris Lancôme Maybelline New York
Helena Rubinstein Biotherm Shu Uemura
Kiehl’s Ralph Lauren Giorgio Armani
Victor & Rolfe Karcher YSL Beauty
Diesel Skincare Essy
Body Shop IT Cosmetics Downtown Aging
Garnier NYX Cosmetics
Estee Lauder Exterior
Estee Lauder Becca Cosmetics Aramis
Clinique Provisions Tommy Hilfiger
Origins Chilton Apple
Bobby Brown Aquamarine Ada
Donna Karan (DKNY) Bumblebee and Bumblebee Joe Malone
Michael Kors Crusher Tom Ford
Too Faced Deciem (Plain, NIOD)
Boots Outside
Boots #7 Soap and Glory
Botanical
Coty Exterior
OPI Icarus London Rimmer
Honeysuckle Sally Hansen Covergirl
Wella Philosophy
P&G External
Olay Vidal Sassoon The Australian
Pantin
Moët Hennessy Louis Vuitton (LVMH) External
Dior Perfume Fresh Perfume Givenchy
Marc Jacobs Beauty Benefit Cosmetics Rihanna’s Fenty Beauty
Make Up Forever by Kate Von D Beauty by Jo
