From 2022 to 2023, the beauty industry grew a whopping 10%, performing better than apparel and other sectors of consumer goods. A closer look at the data and trends tells us it’s not just inflation and price increases; there’s more to the story for retailers. And it’s not all online, either. Physical channels are growing, too, which is a big reason why more retailers should be excited about beauty.
To understand the beauty sector’s meteoric rise, let’s review the key trends: demographic shifts, online retailing, and specialty retailers are creating a unique moment for beauty product demand.
Here’s what’s going on behind the scenes…
The rise of the beauty sector in retail
Influencers, Gen Z and Millennials
A recommendation from a trusted influencer is often enough to convince shoppers to buy — with or without sampling the products first. This isn’t a replacement for the traditional beauty counter, but it does represent a shift in how consumers think about beauty and skincare.
Two big generations of consumers, Millennials and Gen Z, grew up with the internet and are turning to beauty influencers for guidance on everything beauty and skincare. As a result, business for beauty-focused retailers such as Ulta and Sephora as well as the beauty sales of traditional department stores are on the upswing.
Online beauty communities
Niche online communities arise organically on platforms such as Instagram, Reddit, Facebook groups, and via TikTok hashtags, bringing together Gen Z (and even Gen Alpha, the youngest segment of consumers) around similar interests.
Here, a brand can go viral and almost overnight become a must-stock item for retailers. Buyers take note: what’s happening here will directly impact what product will move on the sales floor and online.
The standalone beauty counter
Specialty beauty retailers brought the beauty counter out of the back of the department store. Now, retailers like Ulta are flagship retailers in malls across the US, testifying to the sales power of beauty and skincare.
These disparate forces, taken together, are creating a valuable moment for retailers.
How retailers can leverage beauty’s growth
Beauty experiences are accelerating past sampling towards multisensory, ‘wowful’ moments that allow consumers to enter their favorite brands’ stories. Curated opportunities to touch, feel, and learn about favorite brands in person is helping to build fandom and buzz around new product lines.
This takes square footage and planning, so department stores like Macy’s are prepping for luxe treatment rooms, virtual reality pods to transport shoppers to exotic locales for ingredient sampling, relaxation zones, and themed brand events to lure high-value consumers.
Many beauty customers are eager to learn, so Macy’s will also host skincare and beauty masterclasses. Retailers are taking advantage of shoppers’ know-how and building on the trend, providing chances to test their learnings and move into premium product experiences.
Retailers can also strengthen the power of these premium experiences by following their customers’ journeys. For example, the retailer ARI has stores located in airports around the world. ARI attracts travel-obsessed Gen Z shoppers with in-store experiences for beauty customers on-the-go. They’ve placed themselves in the middle of their customer journeys from a marketing perspective and on their literal travel paths.
Why retailers stand to prosper from adding beauty assortments
Popular brands can attract the types of customers retailers want: shoppers who are ready to spend on premium products and exciting experiences.
Adding beauty to your assortments helps appeal to a diverse, young, and savvy crowd of shoppers who are making decisions today that could shape their future habits and preferences tomorrow. And, of course, as they browse your physical stores, shoppers can discover other exciting categories and collections firsthand.
Ready to discover new beauty brands?
Check out NuORDER Marketplace — it’s 100% free for retailers.
