The global beauty industry is described by many as ‘recession proof’. Over the past five years — through the pandemic and beyond — it has demonstrated an impressive five percent compound annual growth rate (CAGR). Projections for 2022 to 2027 are an even more robust 10 percent CAGR (Source: Euromonitor, KPMG Analysis).
But what makes this industry so resilient? Avon should know. It has been at the forefront of the beauty industry for decades, and being over 130 years old, has navigated multiple economic ups and downs. Avon’s CEO Angela Cretu, with more than 20 years’ experience in the sector, certainly understands why non-essential indulgences, like beauty products and fragrance, prosper when times are tough.
The “lipstick effect” is the positive psychological impact experienced when consumers prioritise emotional well-being with beauty products and other less costly luxury goods during financial hardship. Angela says that these small acts of self-indulgence allow Avon’s customers to face challenges with a renewed sense of assurance and confidence.
With that in mind, fragrance is fast becoming a must-have. A recent global Avon survey (Source: Avon Future of Beauty Report 2023). found that even in the most economically impacted regions, 63% of women say they treat themselves to fragrances. The stat reveals that people find emotional value in products that not only make them look good but feel good too, and that’s what is keeping beauty sales buoyant during challenging times.
But what happens when economic upheaval coincides with transformative shifts brought about by innovation, digitalisation and shifting customer dynamics?
Key takeaway: The global beauty industry shows incredible strength, surviving economic downturns and thriving while other sectors struggle. Avon understands that beauty products contribute to emotional well-being. With the industry set to grow, shifts in the industry such as digitalisation, innovation and an authentic voice that reflects consumer sentiment will support this reinvention.
Short-term fads; long-term evolution
Consumers’ beauty preferences are constantly evolving. To remain relevant and ensure sustainable and profitable growth, beauty businesses must respond with agility to short-term fads with quick and effective strategies.
Angela points to beauty trends during the COVID-19 pandemic. Initial demand for natural barefaced looks and a desire to look healthy, gave way to bold and colourful make-up, symbolising renewal and liberation from lockdown. And now, as cost-of-living pressures mount, we see a return to simpler palettes. “Demand remains, but it’s the traits of the demand that change,” she says.
While some trends come and go, others endure, which Angela predicts will lead to a reshuffling of market values and priorities. Deeper rooted trends include:
Inclusivity is having a significant impact on the beauty industry. “Inclusivity is not a buzzword, but a fundamental value,” says Angela. “It’s not the binary choice of a fragrance for women or a fragrance for men, but a fragrance for everyone.”
“Inclusivity is not a buzzword, but a fundamental value. It’s not the binary choice of a fragrance for women or a fragrance for men, but a fragrance for everyone.”
Angela Cretu, CEO, Avon
KPMG strategy partner Oxana Miroshnichenko agrees, noting that growth in specific male orientated beauty lines, once a high-performing emerging category, is starting to slow as increasingly products are seen as accessible to all rather than binary. She says: “Inclusivity resonates deeply with consumers.”
Authenticity is essential for building brand loyalty. Consumers seek genuine connections and transparent brand narratives. They find micro-influencers more relatable than celebrities with potentially filter-enhanced looks. Ethical sourcing and sustainable practices also top purchasing considerations.
Expect to see greater authenticity in marketing activities, and more honest dialogues from brand ambassadors about the products they use and how they make them feel.