The beauty industry is constantly evolving. Following a downturn in 2020, beauty brands are discovering fresh and innovative ways to engage with their customers. Both beauty influencers and direct-to-consumer (DTC) brands are shaping and responding to changing consumer preferences. At the same time, leading industry players are expanding their product offerings and enhancing their online experiences to meet emerging demands.
Overall, the future looks bright for the beauty industry.
- The beauty industry generates over $100 billion in revenue worldwide.
- The men’s personal care market is projected to hit $276.9 billion by 2030.
- Skincare is projected to generate up to $177 billion by 2025.
- Beauty companies spent an estimated $7.7 billion on advertising in 2022.
- Cosmetic retailers report $17.09 billion in online sales.
The beauty industry took a hit during the pandemic, decreasing by 8% in 2020. But things are looking up and the overall beauty industry revenue is expected to surpass $120 billion by 2025. L’Oréal is the leading beauty products company with over $40 billion in global sales. North Asia is the largest market for beauty and personal care products. In 2021, North Asia made up over one-third of the market. China has risen to become the industry leader in this region. North America makes up around 26% of the market, while Europe makes up 22%.
Effects of Covid
The COVID-19 pandemic disrupted industries worldwide, and the cosmetic labelling sector was no exception. With lockdowns, social distancing, and changes in consumer behaviour, the beauty industry faced unprecedented challenges. While some segments struggled, others adapted and even thrived in response to shifting demands. The impact of the pandemic reshaped the way people purchase and use beauty products, and its effects continue to influence the industry today.
One of the most immediate consequences was a decline in sales, particularly in categories that relied on in-person interactions. The closure of retail stores, salons, and beauty counters significantly impacted sales of makeup products, especially lipsticks and foundations, as masks and remote work reduced the need for full-face makeup. Consumers shifted their priorities from color cosmetics to skincare, leading to a surge in demand for products that focused on self-care, hydration, and overall skin health. Brands that catered to wellness and natural beauty saw a rise in popularity as people embraced a more minimalistic approach.
E-commerce quickly became the dominant channel for beauty purchases. With physical stores shut or operating under restrictions, brands had to strengthen their digital presence. Virtual try-on tools, AI-driven beauty consultations, and influencer marketing played a crucial role in engaging consumers. Direct-to-consumer brands benefited from this shift, as they were already well-positioned for online sales, while traditional retailers had to accelerate their digital transformation to stay competitive. Subscription-based beauty boxes also gained traction, offering consumers a convenient way to explore new products from the comfort of their homes.
Hygiene and safety concerns led to significant changes in packaging and product testing. The industry moved away from shared testers and samples in stores, leading to an increased reliance on digital shade-matching and virtual consultations. Sustainable and hygienic packaging solutions gained importance, with more consumers favouring touch-free dispensers, recyclable materials, and refillable beauty products. The pandemic heightened awareness of ingredient safety and transparency, pushing brands to focus on clean and science-backed formulations.
The supply chain faced disruptions due to factory shutdowns, labour shortages, and logistical challenges. Raw material shortages and increased shipping costs led to delays in product launches and stock availability. Companies had to rethink sourcing strategies and explore local production options to minimise risks. Many brands also reassessed their marketing and advertising budgets, redirecting resources to digital campaigns and social media engagement as in-person promotions and events were put on hold.
The pandemic also highlighted the importance of mental well-being, influencing beauty trends that focused on holistic self-care. Consumers turned to beauty rituals as a form of relaxation, leading to a rise in aromatherapy, bath products, and wellness-driven skincare. The concept of “skinimalism” gained traction, with individuals opting for fewer, but higher-quality, multi-functional products. The emphasis on natural beauty and authenticity prompted brands to celebrate diverse representations of beauty, moving away from traditional airbrushed perfection.
As the world emerges from the pandemic, the cosmetic industry continues to evolve. Hybrid beauty routines, combining skincare with makeup, are becoming the norm. The demand for personalised beauty solutions is growing, with technology playing an increasing role in customisation. Brands are investing in sustainable innovations, recognising that consumers expect ethical and environmentally conscious choices.
COVID-19 may have initially disrupted the beauty industry, but it also accelerated transformation in ways that will shape its future. The shift towards digital engagement, clean beauty, and conscious consumerism is here to stay. While challenges remain, the industry has demonstrated resilience and adaptability, proving that beauty will continue to thrive, no matter the circumstances.
Social Media
Beauty, cosmetics, and personal care influencers have some of the largest followings on social media. Brands can leverage these influencers’ reach, but they must be thoughtful in doing so beauty companies spent an estimated $7.7 billion on advertising in 2022. In an industry with so much capital, it’s only logical that beauty brands spend billions on advertising. Beauty advertising grows at a rate of 2.2% per year. The top advertising channel is still television, but digital advertising is gaining traction.
Beauty products may be slower than other categories at transitioning to online sales (many consumers still prefer to test and buy products in person), but as their target audience moves online, so do brands’ marketing efforts. One-third of beauty product buyers interact with brands on social media. Marketing emails have seen success, with a solid 11.5% open rate. Finally, the average CPC for beauty and personal care ads is $1.68.
Google’s study found that YouTube was the number one source of beauty content among women aged 18-54. Watch times for “makeup transformation” videos more than doubles each year. Videos showcasing sustainable and eco-friendly products are trending in both uploads and views.
As a visual medium, Instagram is the perfect match for beauty brands to connect with their audiences. The interactive nature of Instagram plays a key role in building a trusting, loyal following. In fact, brands report that influencer marketing is more effective than direct mail. Around 2 in 3 beauty shoppers say they turn to influencers to discover new products.
Beauty influencers have tremendous reach. Dutch beauty influencer Nikkie de Jager has around 14 million YouTube subscribers. And makeup artist Huda Kattan has over 50 million Instagram followers.
Influencers play a critical role in social media marketing, but brands should tread these waters carefully. Consumers know that influencers are paid to promote, so likeability and trust are crucial. 42% of consumers say they’d buy a product promoted by an influencer, while 43% said they were unsure and 15% flat-out said “no”.
Beauty eCommerce and Technology
The beauty industry has undergone a major transformation with the rise of eCommerce and technology-driven solutions. As consumers increasingly turn to digital platforms for their beauty needs, brands have adapted by integrating advanced technology to enhance the shopping experience. From AI-powered skincare tools to virtual try-on applications, technology is reshaping the way people discover, purchase, and engage with beauty products.
The eCommerce boom in the beauty industry has been remarkable, with online sales accounting for a growing share of total beauty product purchases. In recent years, the global beauty eCommerce market has expanded rapidly, driven by the convenience of online shopping and the increasing influence of social media. During the pandemic, digital beauty sales surged, with brands reporting double-digit growth in online revenue as consumers shifted away from traditional brick-and-mortar stores. The trend has continued post-pandemic, with beauty brands investing heavily in their digital presence to maintain customer engagement and loyalty.
One of the most significant technological advancements in beauty eCommerce is the use of artificial intelligence and augmented reality. AI-powered skin analysis tools allow consumers to receive personalised skincare recommendations based on their specific concerns, helping them make informed purchasing decisions. Augmented reality try-on features enable users to test different makeup shades or hairstyles virtually before buying, reducing uncertainty and increasing confidence in online purchases. These innovations have led to higher conversion rates for beauty brands, as customers feel more assured about their selections.
The role of social media and influencer marketing in beauty eCommerce cannot be overlooked. Platforms like Instagram, TikTok, and YouTube have become essential for beauty brands to reach and engage with consumers. Influencers and beauty content creators have a significant impact on purchasing decisions, with many brands leveraging partnerships to promote new products and drive sales. Live streaming and shoppable videos have further enhanced the online beauty shopping experience, allowing customers to interact with brands in real time and make instant purchases.
Subscription-based beauty services have also gained popularity, with beauty box subscriptions offering curated selections of products delivered to consumers’ doorsteps. This model has been particularly effective in introducing customers to new brands and products, fostering brand loyalty, and encouraging repeat purchases. Personalised subscription services that use AI to tailor product selections based on consumer preferences have seen strong adoption rates, further demonstrating the power of technology in enhancing the beauty shopping experience.
Sustainability and ethical considerations have also influenced the evolution of beauty eCommerce. Consumers are becoming increasingly conscious of ingredient transparency, eco-friendly packaging, and cruelty-free practices. Brands that incorporate these values into their digital marketing strategies and provide detailed product information online are gaining a competitive edge. Technology has played a crucial role in making sustainability more accessible, with innovations like blockchain tracking for ingredient sourcing and AI-driven carbon footprint analysis helping brands and consumers make more responsible choices.
The future of beauty eCommerce is expected to be even more immersive, with advancements in AI, virtual reality, and voice-assisted shopping shaping the next generation of beauty retail. As personalisation becomes more refined, consumers will receive hyper-tailored product recommendations based on their skin type, preferences, and even real-time environmental factors. The integration of smart beauty devices, such as AI-powered skincare tools that sync with mobile apps, will further enhance the way people care for their skin and choose products.
Technology and eCommerce have revolutionised the beauty industry, making shopping more interactive, personalised, and accessible. With rapid innovation continuing to drive digital transformation, the intersection of beauty and technology will continue to shape the way consumers explore, experience, and purchase beauty products in the years to come.
The future looks bright for the beauty industry. Online experience innovations, new clean and organic product lines, and a willingness among consumers to buy premium products indicate growth opportunities across all categories.
Social media’s influence on the beauty industry and the shift from in-store to online shopping points to a potential explosion of DTC and eCommerce brands. And while big brands like L’Oreal and Estee Lauder will still get the lion’s share of sales, there’s plenty of room at the table for up-and-comers able to get in front of the right audience.
