• Linda Ellett, Partner |
7 min read

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.


Personalisation is gaining prominence as customers seek tailored solutions for their unique needs and preferences. Businesses that segment their market, with products pitched at 45 to 55-year-olds, for instance, overlook the diversity of their customer base and miss out on opportunities to personalise and engage.

Online technologies allow deeper and more granular dissection of data to better understand customer behaviours and define individual needs. Already the beauty industry is experimenting. Virtual try-ons and personalised skin-care regimes are as likely to be delivered by artificial intelligence (AI) powered chat bots as human beauty advisers online.

Key takeaway: Staying in tune with customer needs is vital for maintaining relevance in the competitive beauty market. Businesses that adapt, innovate and can decipher fads from long-term shifts are more likely to be able to prioritise, deliver sustainable growth and succeed in transforming the industry.

The power of digitalisation

Oxana marvels at how much beauty business models have evolved in the past 20 years, and at what is yet to come.Who would have thought we would buy make-up online, inspired by TikTokers, YouTubers and Instagrammers, and be colour matched by technology, without first sampling products in store?” she asks.

With Gen Z more comfortable to shop online rather than purely physically, digitalisation and engagement with emerging technologies, like AI, are top priorities for industry leaders. They have got to get it right because end-to-end digitalisation makes it easier than ever for newcomers to enter the market and increase competition among established brands.

Oxana explains that the strategic focus has shifted from a product and physical store presence to delivering a seamless and end-to-end digitalisation of business models. “It’s about how you go to market; how you reach more customers; how you talk to them in a more personal way and how you use digital technology so that customers can experience products remotely.”

“It’s about how you go to market; how you reach more customers; how you talk to them in a more personal way and how you use digital technology so that customers can experience products remotely.”
Oxana Miroshnichenko, Strategy Partner, KPMG

The human element will not be lost to digitalisation, at least not at Avon with its global network of five million sales representatives. “Human interaction remains our key differentiator,” says Angela, “but we can empower our reps with instant access to knowledge and tools that enrich their authentic relationships with customers.”

Key takeaway: Digitalisation is reshaping the beauty industry, enabling greater personalisation and engagement, while complementing the value in authentic human connections.

Becoming future fit

An industry that is thriving amid economic disruption cannot be complacent. Agility is essential for responding to longer-term trends. Digitalisation, and the adoption of emerging technologies, mark a turning point, in which traditional vertical corporate thinking will be challenged and organisational practices will be reset.

Hierarchical setups with multi-layer chains of command can be slow, rigid and resistant to innovation. Flatter and more nimble structures can facilitate collaboration internally, as well as integration of external players, like technology providers, R&D platforms and consultants. Ecosystems will emerge, perhaps loose networks of partners, formal collaborations or joint ventures, bringing together specialists to bridge gaps in knowledge and capacity and better anticipate and meet customer needs.

Avon has set up an open research platform to enable co-creation across the beauty space. “Because technologies and knowledge are evolving so fast, I think there have never been a better time to call upon an ecosystem of partners. To own it all in-house is a fatal mistake,” Angela says.

“Because technologies and knowledge are evolving so fast, I think there have never been a better time to call upon an ecosystem of partners. To own it all in-house is a fatal mistake.”
Angela Cretu, CEO, Avon

Meanwhile, Oxana anticipates greater separation in supply chains as businesses outsource ingredients and formulations and even venture into third-party production. She believes this shift could lead to further specialisation and democratisation within the industry.

Key takeaway: The beauty industry must remain agile amid disruption, while digitalisation will open doors for co-creation across the beauty space. Ecosystems of players will work together to foster innovation, while outsourcing will bring specialisation to supply chains.

What next for beauty?

Looking ahead, Angela envisions seamless omnichannel experiences, integrating in-store, website, app and social media interactions. Instant gratification will become standard, and relationships will flourish and conversations flow during every exchange.

Technology will enhance connectedness, according to Oxana, blurring the lines between physical and virtual retail spaces. Consumers will no longer be passive observers; instead, where core values align, they will actively engage, create with and advocate for the brand.